SocialMediaBust

In June, 2009, Dell Computers, one of the few major manufacturers of computers remaining in the marketplace, announced that it had achieved 3 million dollars in sales they could confidently attribute to the use of Twitter.

Later in the year, actually in December, they announced that revenue the company could credit to the use of Twitter had hit the 6.5 million dollar mark. Not exactly chump change. Most businesses would love to be able to generate a fraction of that amount using social media.

Of course, as one would expect, this good news was repeated around the world as evidence of the power of Twitter in particular, and social media generally to enhance the bottom line for many businesses.

Also, as you would expect these numbers were repeated over and over again on various social media platforms, including Twitter, Facebook, countless privately owned blogs and print publications. Since Dell is a huge international player in the market, coverage of their “successes” appeared in reputable and reliable business and technology publications.

By all accounts, a success.

Sort of.

Well, maybe not.

In Dell’s announcements on this issue, they were very diligent in reporting the data, and not drawing many, if any, conclusions about the data they had collected. This commendable approach, something that in research is called “staying within the data” either involves straight factual reporting, or, if it goes further, it involves clearly labeling interpretations and speculations as such.

“Your chances of doing as well as multinational Dell are about zero, and do you really need the five bucks?

Unfortunately, all media, including reputable print publications, failed to observe this simple precaution. Dell Computers became the poster child/company to “prove” the effectiveness of social media, and Twitter in particular.

Except that based on the data Dell made public, the 6.5 million in sales that funnelled through Twitter that the enterprise could hardly be deemed a success when put in the context of the work involved to create that revenue over the THREE years previous, the hundreds of Twitter accounts that Dell has, and the sales relative to overall sales.

Dell reported total sales for the year 2007 as $61,000,000,000. In case you are wondering that’s 61 BILLION dollars. So, using Twitter, by what percentage did they improve their sales? The number is so small that it’s best expressed using scientific notation as follows.

2.4590163934426229508196721311475e-5%

For those of you who aren’t up on using exponents, mantissas, and scientific notation (just kidding), here is how well Dell did.

It attributes a 0.00002459016393442623% in sales to its use of Twitter. That’s not even a one percentage point increase. It’s not one tenth of a percentage point increase. It’s not a hundredth of a percentage point increase. You get the idea.

That’s one of those numbers that comes along now and again for which most of us have no real reference point, because it’s so extreme. It’s like a trillion, or a googol, the latter being a number with 100 zeros after it.

How small is this increase, really? Is there some means of explaining its smallness in terms most of us can understand.

Some calculations done quick and dirty yield the following.

If you own your own business, and do a modest $100,000 of sales each year, if you succeed as well as Dell did on Twitter, and get the same results proportionately, you will increase your sales by less than five dollars a year. It’s that small an increase.

However, there is even more sane analysis of the data that most people, particularly social media proponents either never saw or never read,

First, Dell tracked sales coming through Twitter by offering special discount codes to customers who found the information on Twitter. When customers made their purchases online, they had incentive to use the coupon codes associated with Twitter, allowing Dell to track sales associated with the Twitter discounts. That’s a pretty common and relatively accurate way to track ad and offer effectiveness, often used in various media, including television and print.

It’s not perfect though. We could be really picky and suggest that it is quite possible that some people who used the Twitter related discount codes had never visited Twitter at all. They could have received a code from a friend over the phone, or on some website, or in a number of other ways that did not involve Twitter at all. That would be true, of course but it is picky.