We know that over a billion people spend virtually infinite time on Facebook and Twitter, and much of that time is talking about, and interacting with brands. But what does all that time mean for advertisers? Some new studies reveal the real impact—or lack thereof—of various types of social interactions.
Nielsen and its SocialGuide division just released a report showing a direct correlation between Twitter and TV ratings, which could heavily influence media strategy, and ad buying on Twitter.
About 32 million U.S. television viewers take to Twitter to talk about TV, and more Tweeting about shows directly correlates to the ratings of that show.
This correlation is particularly powerful for the key 18-34 year old demographic, and the correlation strengthens over the course of the TV season. For 18-to-34 year olds an 8.5 percent increase in Twitter volume corresponds to a 1 percent increase in ratings for premiere episodes. For mid-season episodes half the amount of Tweets—just a 4.2 percent increase in Twitter volume, which corresponds to a 1 percent increase in ratings.
The real shocker: by mid-season, Twitter volume correlated to more variance in ratings for the key younger demographic than advertising spending. Nielsen stressed that "we don't know that Twitter actually caused changes in TV ratings, but did acknowledge statistically significant correlation." And this strong correlation is sure to influence broadcasters and advertisers behavior when it comes to both paid ads and what they call "earned" social media—the free conversation.
We can expect TV channels and shows to invest heavily in their social media presence—look out for more Tweets from official show Twitter handles, plus actors, or even the characters in the show, with the goal of engaging fans as much as possible. It would also make sense for TV programs to invest in 'Promoted Tweets' and Trends to drive the conversation and boost the power of that free conversation. And advertisers are sure to examine ways to run messaging within Twitter to correspond to their in-show messaging, looking to tap into that 'Second Screen' experience to make their ads more powerful.
Nielsen's Twitter-TV study follows Coca-Cola revealing some of its findings about the impact of social media. Twitter buzz may correlate with higher TV ratings, but Coke said social conversation does not drive short-term sales, despite the fact that it's the most popular brand on Facebook—with 62 million followers, and 876,000 people are talking about the brand, and nearly 700,000 Twitter followers.
(Read More: Facebook Is Better Than Google in Near Term: Analyst)
In fact, Coke noted quantity of buzz has no impact on its results, a finding which Facebook supports. Facebook said instead of focusing on the quantity of buzz, brands should focus on their reach—citing a study of 60 plus campaigns, which found that those focused on reaching more people rather than driving more conversation generated a 70 percent higher return on investment.
Coke isn't changing its strategy, but is focusing in on measuring the impact of its ad spending. Coke said its display ads, including those on Facebook, are 90 percent as effective as TV ads.
In contrast search ads are only half as effective as TV ads. And bottom line, Coke said its success lies in a multi-platform approach: "It's the combination of owned, earned, shared and paid media connections—with social playing a crucial role at the heart of our activations—that creates marketplace impact, consumer engagement, brand love and brand value," Coca Cola's Wendy Clark wrote in a blog.
One thing's for sure—measurement is sure to be in focus for television networks and brands as everyone tries to figure out how to allocate their ad dollars to drive the biggest impact.
—By CNBC's Julia Boorstin; Follow her on Twitter: @JBoorstin