[REPORT] The 2015 State of Social Business

1. Preview Only A Best Practices Report The 2015 State of Social Business: Priorities Shift From Scaling to Integrating July 15, 2015 By Ed Terpening With Charlene Li and Omar Akhtar Includes input from 10 managers of social business and 113 survey respondents for organizations with more than 250 employees

2. Preview Only EXECUTIVE SUMMARY The Real Work Is Just Beginning. It has been more than 10 years since social media began to disrupt organizations. In that time, it has gone from being a “bright shiny object” that confounded business leaders, to becoming a widely adopted means of customer engagement. Having mastered the nuts and bolts of social media, today’s social strategist is focused less on scaling social engagement and instead looking inward, partnering with leaders to help social business cross silos, support a broader digital vision, and achieve new levels of employee engagement and advocacy. This will require leadership to articulate a social business vision beyond marketing and communications, while also ensuring a governance structure is in place to keep an increasing number of autonomous departments and employees acting together to support a unified, cross-channel customer (and employee) experience. 2

3. Preview Only Table of Contents Executive Summary ............................................................................................................................................................................... 2 Key Findings ................................................................................................................................................................................................ 4 I. The Top Priorities of a Social Business .............................................................................................................................. 5 Strategists Focus on Business Integration Instead of Scaling Social ........................................................................... 5 Top Priority: The Integration of Social Into Digital ................................................................................................................ 5 External Priorities Focus on Deepening Relationships and Employee Advocacy ...................................................... 7 Social Business Metrics Prioritize Brand Health and Customer Experience ............................................................... 9 Social Business Program Maturity Varies, With Many New Efforts On The Horizon ............................................... 9 While Progress is Evident, Challenges Remain ...................................................................................................................... 11 II. The Social Media Organization Evolves Toward Integration ............................................................................. 12 Social Business Involvement Continues to Spread Throughout the Organization ......................................................... 12 Growth in Hub and Spoke Indicates Increased Empowerment of Business Functions .............................................. 13 While Core Social Teams Grew Slightly, Roles Shift to Meet New Priorities ................................................................... 15 Marketing Remains The Dominant Home for the Social Team .......................................................................................... 16 III. Social Business Budgets Shift to Support New Priorities .................................................................................. 17 Social Advertising’s Share of Digital Ad Budgets is Increasing ........................................................................................ 17 Summary....................................................................................................................................................................................................... 19 3

4. Preview Only KEY FINDINGS Our analysis is based on interviews with thought leaders, brands, technology vendors and a survey of 113 strategists (social, digital and/or heads of social) at companies with more than 250 employees.1 We found that: Integration of social with digital suffers from the lack of cohesive strategy. “Scaling social business” is no longer a top priority of strategists—instead, more than half of the social strategists surveyed have the deep integration of social as a top priority. Additionally, 82% of businesses report they are either fully integrated, in the process of, or planning the integration of social with digital in 2015. But only 36% believe they have in place a multi-year digital strategy that includes social initiatives. Breaking down social silos remains a top priority for many. Breaking down silos requires engaged leaders. Expanding social’s use as a general business tool— especially to negotiate internal department silos—requires more engagement from leaders. Getting buy-in from executives was a top priority for over a quarter of responding strategists, and with good reason—across all organizations, only 27% reported that executives at the VP/Director level were active on social, with a measly 9% reporting participation from the C-Suite. Shifting a leader’s mindset from “Social is something my teen does” or “This is marketing’s job” will take education around the specific impact social business can have on priorities important to these executives.2 Employee-focused initiatives need HR partners. Two top priorities in 2015 are programs that are employee-focused, namely employee engagement and employee advocacy. 60% of responding organizations had employee engagement social business programs in the planning stage or in their first year of use. And interest in employee advocacy has grown 191% since 2013, with 45% of respondents naming it a top external objective. Both of these initiatives point to the need for close collaboration with HR, yet only 19% of respondents said HR was regularly engaged in a cross- department working group. Digital content and social advertising are growth areas to align. 38% of responding organizations plan to spend more than 20% of their total advertising budgets on social media channels in 2015, up from 13% a year ago. To support these activities, only 35% of organizations have team members from advertising departments regularly engaged in social business planning, while many organizations have a dedicated social advertising role in their core social team. Eventually, these separate advertising functions need to align to obtain maximum value.3 4 Additionally, the rise of social advertising puts pressure on the traditional paid, owned, earned media model. This is reflected in our finding that 55% of respondents named developing an integrated digital content strategy as a top social business priority for 2015. 4

5. Preview Only I. THE TOP PRIORITIES OF A SOCIAL BUSINESS A key focus of this research was to identify how the top priorities of a social business have shifted over the past few years. The maturing of initiatives has driven the focus toward integration, especially with overall digital efforts. While new initiatives like employee advocacy have taken the spotlight, significant gaps remain, especially in the area of developing a cohesive content strategy that supports a cohesive digital and social strategy. “We’ve learned a lot of lessons, it’s now more than ever focused on achieving measurable business results.” Matt Gentile, director of social media, Century 21 STRATEGISTS FOCUS ON BUSINESS INTEGRATION INSTEAD OF SCALING SOCIAL The leading priorities of social strategists indicate that their focus in 2015 is on integrating with broader digital initiatives (particularly content strategy), and increasing the use of social data to inform decision-making (see Figure 1). Compared to 2013, social strategists are more focused on getting support from leadership for cross-silo strategy (164% growth) than they are on scaling social programs (30% decline). This is an important mind shift: from one of “doing more” (which often meant chasing after the latest social tool) to one that uses leadership to integrate social with the business more deeply. Matt Gentile, director of social media at Century 21 is keenly aware of this shift. “There was a wave of excitement/energy three-to-five years ago, there were a lot of hyper-inflated ideas of what social could achieve,” says Gentile. “We’ve learned a lot of lessons, it’s now more than ever focused on achieving measurable business results.” A key tool for integrating social with the business is education, which has remained in the top three priorities since 2013. Listening, analytics and education were reported as key priorities in our discussion with Matthew Tennant, global director of social at McDonald’s. “You can imagine the complexity of managing a global brand that spans 119 countries with thousands of franchise-owned restaurants focused on local market needs,” Tennant says. “Analytics can be foundational to managing social’s opportunities and risks at scale.” TOP PRIORITY: THE INTEGRATION OF SOCIAL INTO DIGITAL Strategists recognize the importance of integration of social with digital: the vast majority (82%) has either accomplished this goal or plan to start integration this year. It’s not surprising that social isn’t yet fully integrated into digital efforts, a level only 39% of organizations have achieved so far (see Figure 2a). It’s a complex process to integrate rapidly evolving social platforms (like Facebook and Twitter) into the complex digital ecosystem of businesses. However, we found a significant difference in social/digital integration at organizations focused on B2B (see Figure 2b). For them, 24% consider social separate from digital and have no plans to integrate them. This is likely due to the nature of relationship building in large B2B organizations, which tend to rely more on personal, face-to-face interactions and have been slower to move to digital channels to manage relationships. 5

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7. About Us Ed Terpening, Industry Analyst About Altimeter Group Ed Terpening (@edterpening) is an Industry Analyst at Altimeter Group focused on Social Business research. As former VP of Social Media at Wells Fargo (7 years), Ed led the charge to develop the first social media team of any national US bank. He founded CNET’s first Online Community Team, where he added user ratings/reviews to CNET.com and “Talk Back” to NEWS.com. He is a founding member company of SocialMedia.org. Altimeter is a research and consulting firm that helps companies understand and act on technology disruption. We give business leaders the insight and confidence to help their companies thrive in the face of disruption. In addition to publishing research, Altimeter Group analysts speak and provide strategy consulting on trends in leadership, digital transformation, social business, data disruption and content marketing strategy. Charlene Li Founder and CEO of Altimeter Group, Industry Analyst Charlene Li (@charleneli) is Founder of the Altimeter Group and the author of the New York Times bestseller, Open Leadership. She is also the coauthor of the critically acclaimed, bestselling book Groundswell, which was named one of the best business books in 2008. She is one of the foremost experts on social media and technologies and a consultant and independent thought leader on leadership, strategy, social technologies, interactive media, and marketing. Altimeter Group 425 California Street, Suite 980 San Francisco, CA 94104 Omar Akhtar, Editor Omar Akhtar is the managing editor of Altimeter Group. He oversees the editorial process behind all of Altimeter’s publications, including its research reports, daily blog and multimedia content. Previously he was was the editor-in-chief of the marketing tech blog The Hub, and a technology and finance reporter for Fortune Magazine. info@altimetergroup.com www.altimetergroup.com @altimetergroup Learn More About Altimeter Social Business Offerings Altimeter provides individual industry analyst advisory, workshops and maturity assessments to organizations that face technology disruption. We work with Fortune 1000 companies to: • Conduct internal audits of social business strategy and governance maturity and readiness, and provide a roadmap for a social business strategy with pragmatic recommendations. • Present the state of social and digital practices to leaders to help build the case internally for attention and investment. • Facilitate education and strategy workshops for clients that wish to bring together key stakeholders from across their organization to develop social business strategy and governance. For more information, contact us at sales@altimetergroup.com. 7