How valuable is social media to business? The answer probably depends more on your opinion of social media than it does hard facts.

But a new study makes a bold claim: “deep engagement with consumers through social media channels correlates to better financial performance“.

Those words appear in a press release issued by Wetpaint and the Altimeter Group. Wetpaint offers a community platform for brands and consumers and Altimeter Group a digital consultancy founded by Charlene Li, previously of Forrester Research.

According to their study, the top 10 corporate “Social Media Mavens” are:

  1. Starbucks
  2. Dell
  3. eBay
  4. Google
  5. Microsoft
  6. Thomson Reuters
  7. Nike
  8. Amazon
  9. SAP
  10. Yahoo! and Intel (Tie)

Wetpaint and Altimeter Group calculated that socially-savvy companies “grew company revenues by 18 percent over the last 12 months, while the
least engaged companies saw revenues sink 6 percent on average over the
same time period
“.

The findings are part of the ENGAGEMENTdb Ranking the Top 100 Global Brands report (PDF) which is a must-read for anybody interested in social media use amongst the world’s biggest brands. There is some great information, including details on the size of the social media teams at some of the top-ranked brands.

For instance, you might be interested to learn that the top-ranked brand in the study, Starbucks, has a dedicated six-person social media team that keeps the company active across 11 channels. But the report is more than just numbers; it goes beyond the quantitative to provide interesting qualitative insights that should be of use to companies looking to learn from social media case studies. Useful stuff.

That said, the conclusion that the claimed correlation between social media and financial performance is meaningful seems a bit specious to me. Correlation is not necessarily causation; as interesting as the ENGAGEMENTdb report is, there is little provides no real insight into the mechanisms by which social media is driving revenue. For instance, there is no explanation of how 1,406 comments and 12,382 “likes” on Facebook when Starbucks announced its mini-Starbucks card translated into dollars and cents.

Both quantitatively and qualitatively, there are broader problems.

One only need look at the lowest-ranked companies to understand why revenue at these companies declined over the past 12 months. The bottom of the ENGAGEMENTdb list is heavily weighted with major financial firms and one would have a very difficult time arguing that Merrill Lynch (#75), Citi (#90), AIG and Allianz (#99 tie) struggled in the past 12 months because they weren’t using Twitter. ‘Toxic assets‘ and the bursting of a global financial bubble were to blame here, not a lack of customer engagement online.

Conversely, not every top-ranked company is a financial stud. Take top-ranked Starbucks, for example. In Q2 2009, it saw a less-than-pleasant 7.6% decline in year-over-year revenue. While Starbucks’ social media prowess is definitely an admirable trait, it’s pretty clear that its social media efforts have done little to reverse troubles that started even before the full-on financial collapse. Which begs the question: if you make the statement that “deep engagement with consumers through social media channels correlates to better financial performance” but the company that you rank as the most engaged has seen steady declines across many key business metrics (not just total revenue), how can you legitimately suggest cause and effect?

In my opinion, this is a good reminder that social media needs to be looked at in the context of the big picture. There’s no doubt in my mind that social media offers great opportunities to companies willing to take a strategic plunge. But like most things, it’s easy to get carried away and social media’s credibility has already been strained by snake oil salesmen. Now legitimate operators will have to contend with the expectations that social media is somehow a driver for financial success, even though that’s sort of like saying that companies advertising most with PPC or on television, for instance, perform better financially than those that don’t. I’m sure it wouldn’t be too difficult to come up with statistics showing both.

In the overall scheme of things, social media, like most marketing mediums, is best thought of as fuel, not an engine. For companies with an engine that isn’t working so well, additional fuel is of limited use. Just ask Starbucks.

Photo credit: greggoconnell via Flickr.