Brands and companies are feverishly attempting to “harness” social media, using a wide range of tools to track buzz and related measures. However, since few have quantified the relationship between social media and results, most companies are “flying blind.” Companies are also in the very early stages of learning how to cultivate and shape social media – suggesting the potential, a recent study by NYU professors found that viral product design strategies can increase peer-to-peer influence by as much as 400 percent (http://bit.ly/o3KXnF). For insights on forming, strengthening and leveraging communities, see Dr. Michael Wu’s blog (chief Scientist, Lithium) at http://j.mp/hsjg1d.

Quantifying the relationship between social media and outcomes is difficult for a number of reasons – for instance, (i) effects vary by product category; (ii) influence and susceptibility vary across individuals; (iii) exogenous factors (seasonality; weather; etc.) impact; (iv) lagged effects and nonrecursive (e.g., interdependent) relationships – buzz –> sales –> buzz – confound analysis; and so on (other challenges summarized at http://bit.ly/o9U8dX).

Despite these challenges, companies are making headway – for example, GeoIQ (www.geoiq.com) is linking social media and business results with geo- and contextual data, removing some of the confounding effects and revealing important relationships by location (disclosure: GeoIQ is a client and sponsoring a whitepaper we’re preparing on Social Media Analytics).

The Wharton Customer Analytics Initiative (http://www.wharton.upenn.edu/wcai/) is a great resource for cutting edge research on these issues – see, for example, “What Do People Talk About? Drivers of Immediate and Ongoing Word-of-Mouth,” by Josh Berger and Eric Schwartz (forthcoming in J. of Marketing Research) and other articles available on WCAI’s website.

Dr. Phil Hendrix, immr and GigaOm Pro analyst