Do Branded Communities Really Work?

You hear all the time that brands leveraging communities online are great ways to increase brand recognition. A new report from Powered, a social marketing company, has released its findings that support these claims. Conducted along with Next Century Media Global, the annual report shows that the return on investment for social marketing online delivers an average of $60 for every $1 invested. That’s a 10% increase from 2006.

The ROI Report and Benchmark for Social Marketing is specific to companies backed by Powered, so the findings are very narrow and can’t be fully applied across the board. But the report iself does bring up some interesting points to consider as marketers and online communities look to better engage users, especially for branding purposes.

Powered questioned social network users and found that about 66% of respondents sated they were more likely to purchase products and/or services as a direct result of the learning process offered in a branded community, as well as stating that their overall perception of the brand improved based on the community. As far as brand loyalty goes, about 63% of respondents stated that they had a more ongoing positive opinion of the brand after interacting with the community.

What’s that mean for brands? Creating branded online environments can pay off. While a correlation has been proven by Powered as a result of its own marketing offerings, the causal relationship of brand recognition and consumer interaction could be left to a great many factors. The very act of seeing a brand reach out to consumers online could help improve the perception of that brand. The ability to interact with other consumers, even in a branded community environment, still takes advantage of an open forum approach that enhances any material a brand may be pushing out to consumers.

The common thread here is still the fact that much of the power lays in the hands of the consumers. As long as the consumers feel as though they are in control of the content and the online experience, brands have a better opportunity of engaging these consumers and disseminating information. The concepts brought to light through Powered’s study can be applied to stand-alone communities or even applications that operate within the realms of a larger social network such as Facebook. As we saw yesterday with BLiNQ‘s study, the ability to engage consumers in such online environments is a necessary and useful step that brands and marketers can take for moving their brand forward.