Preparing for class recently I came across a media report which illustrates the confusion and sloppiness that surrounds marketing metrics. I realized the problem we often have talking about the top and bottom line.
Impact Of Social Media
An important question is the bottom line impact of social media. How can you persuade the CFO to fund social media? By showing it is profitable. Thus I was searching for examples of the impact of social media. This article came up in Google: “Businesses Increase Revenue With Social Media“.
So far, so interesting. Reading the article revealed a problem that seemed emblematic of the field. The story quotes a researcher as saying:
“Now there is proof that customers who engage with a business through social media contribute more to the bottom line than customers who do not…..
“Our study showed that social media activities help strengthen the bond between the customer and the firm. Participating customers on a firm’s social media site contribute 5.6% more revenue and visit the business about 5% more than non-participating customers, he explains.”
Did the media misquote the researcher? It is always a worry that media will misconstrue what is said. It is also possible the researcher had a mental blip when briefing the press. I always a worry this will happen to me so I’m sympathetic — we all do it. The problem isn’t the mistake, it is that we are so used to the sloppiness that we often don’t see the obvious mistake.
Confusing The Top And Bottom Line
The researcher claimed to be studying 1) revenue and 2) visits. These are both potentially important metrics but they aren’t the bottom line. Indeed revenue is the top line. If the top line and bottom line are completely interchangeable then business metrics become some sort M.C.Escher world. Confusing beyond belief.
If you are trying to show bottom line results (i.e. profit) saying that you have increased revenue is at best confusing and at worst disingenuous
At the risk of stating the obvious, the top is not the bottom. Increasing revenue is usually a good thing but it isn’t the same as showing bottom line results.
For more on profit measurement see here.
Read: Phys.org, 2013, Business Increase Revenue With Social Media, March 25 2013, Click here.