It seems almost a no-brainer. Social media has become a massive part of online activity and now plays a part in our everyday lives. The lines between social and the traditional web have become increasingly blurred. Of course Google would therefore use social media as a ranking factor. Right?
The theory....
Google intended social to be the silver bullet to replace links and PageRank as the main off-page ranking factor. Google+, the ill-fated social network, wasn't set up just so Google could capitalise financially on social, but also on the information contained within it. At the time Google didn't have access to any of the social networks (this is before they had the Twitter Firehose API) and they knew the data in social could help them map out and understand relationships and popularity.
Google+ was very likely a ranking factor and was immediately useful for SEO. Google wanted people to use it and connect themselves to the content they created through it. Circles are about mapping not just who is connected to you but the nature of the connections (friends, business, family, etc). Google wanted to connect content to people and people to each other. You were meant to be the next ranking factor.
Things didn't work out as planned, Google+ didn't take off. Sort of. Every Google user automatically gets a Google+ account, making Google+ a massive network of well over two billion users. Except it's not. Only around 1% of those accounts are actually used, with the numbers of regular users in the low millions. So Google+ isn't the resource Google intended for social data, leaving them with a problem.
Google's problem with social
Google has 3 main parts which power the search functionality: crawling, indexing and ranking. In other words the discovery, cataloging and displaying of content. When Google crawls content this is done on a page by page basis and that content is stored page by page within Google's index. If you want a much more in-depth explanation check out this post all about how search engines work.
There are around 4.6 billion pages on the indexable web. That's a whole lot of content and Google is busy trying to crawl and index all of it. In comparison Facebook alone has 3 million new posts per minute. That would mean it would take Facebook about a day to create the same volume of 'pages' as Google is trying to crawl across the entire web.
Considering that just incorporating Facebook would require Google to double their capacity it makes more sense when Matt Cutts explains that Google doesn't use social signals as part of rankings:
Correlation and causation
This flies in the face of many studies and tests published by various SEO's which show a strong correlation between social signals and rankings. It's not surprising that this is the case. If a page is popular on social media it is likely to have many of the attributes that will boost SEO signals, such as inbound links.
This correlation doesn't mean causation. Because these signals are linked doesn't mean that one directly causes another. There has been more evidence though that Google is taking steps to index increasing amounts of social media content. As they aren't able to index anywhere near all the content, it makes sense that there must be metrics which will influence what content will or won't get indexed and become searchable. These would be the most likely places to find new social signals in the future.
How is social content treated once indexed
It makes sense that Google doesn't use social as a specific signal, as backed up by what Matt Cutts says in the video. This doesn't mean that the social content they do grab isn't treated just like any other content. So the links within these could, therefore, have an influence on rankings. Except that the majority of social sites nofollow any user generated links.
All in all through, it builds a strong case for social content having no direct impact on rankings. Google doesn't appear to be, and certainly isn't admitting to, using the number of followers a brand has or social reach as a way of measuring authority. Also the number of times a page is shared, tweeted, liked, pinned or anything else doesn't act as a ranking signal.
Google won't give up on social
It may no longer be the silver bullet, but that doesn't mean it's not still seen as the long term solution. Links as a ranking factor will likely go on for a long time, but their influence is diminishing. Links are a constant battle for Google, they can be manipulated too easily and are becoming less relevant. In fact much of the purpose links used to serve is now being handled by social - the sharing of content.
Here are some of the key factors Google needs to overcome to use social as a ranking signal:
Volume : As discussed before, there is way too much information for Google to be able to cope with using the current indexing infrastructure. They would need to build an entirely new solution.
Timing : Unlike on the web, social media content doesn't last long. It's typically only relevant at the time it is published. Google would have to be quick to assess new content and the signals from it would likely be short-lived.
Context : Mapping the relationship between social media users and their content would be key to understanding its value. A mention from a popular authoritative account, connected to lots of other similar accounts, would be more valuable. However, these would need to be within the context of the content. Maybe a celebrity tweet about quantum physics would be less valuable than a Cambridge professor's.
Fake followers, friends and likes : In fact this is about any form of fake engagement. If the social media sites themselves with access to all the data can't filter these out effectively, it's doubtful that Google is going to be able to.
Paid engagement and endorsements : These are rife already. Now add in a direct benefit to rankings and social media accounts for rent will become far more prevalent. Google doesn't like people buying their way into the rankings (that's what AdWords is for).
Demographics : Different social media sites are popular amongst different age groups, meaning signals would be more of less meaningful depending on the demographic of the target audience of the page. In the 55+ age group, social media usage falls off sharply, leaving a lot of content missing a ranking signal.
The rate of change : Younger users especially tend to adopt new technology quickly, swapping from one network to another. Google would have to be able to pick out what was going to stick around and be quick to incorporate new networks.
Social is coming, just not yet
Google will be increasingly using social signals, and as they iron out the problems it will feature more prominently. Social is too important and forms too large a part of our online use and interaction to leave out forever. It's also worth bearing in mind the impact social can have on its own, let alone the increase it can bring to rankings through secondary effects.
The bottom line is that whether or not these form a direct ranking signal doesn't matter all that much. If you're not using social media you're missing out on an entire marketing channel. When it does become more prominent you'll be missing out there as well. If that's what you're waiting for, you can bet that Google will be looking at older more established and popular accounts as more authoritative. So whichever way you look at it, social is good for business.