Does Social Media Need an ROI? No and Yes.

David Spark of makes the case that social media isn’t all about ROI.

“We’ve been trained that everything gets measured down to a sales lead. If that’s how you measure social media, then forget it,” said David Meerman Scott, author of The New Rules of Marketing and PR and World Wide Rave.

Here’s my two cents: There’s a reason I argue that social media is best left in the hands of public relations and communications rather than marketing (where I’ve lived for most of my career). The corporate-reputation guy can think long term about the value of the company and its brands, while the marketer generally has to sell product quickly.

It’s also true, however, that the sustainability of social media by corporations relies on an even value exchange between people and the enterprise. There needs to be a perceived financial return to substantiate the continued investments by corporations in social media.

Just as a consumer will “tune out” interruption marketing that is too company-centric, corporations will eventually fatigue of soft programs that can’t be tracked to something: improving reputation, increasing awareness, and ultimately driving sales). There is a happy medium.

8 Replies to “Does Social Media Need an ROI? No and Yes.”

  1. I believe that there IS already an ROI, however it’s not that scalable. It’s almost a “yes/no” switch. Was there an ROI?

    Particularly w/ Twitter, being able to answer yes is essentially being able to say “we had a person run it and they had fun with it.” Because if you have fun with Twitter and actually talk back to people, those people are automatically engaged. That is ROI. Something that works on Twitter spreads pretty quick, something that doesn’t dies pretty quick.

    I believe the key to success on there is mainly conversation. If I don’t see @replies on a campaign’s account, I’m almost positive it will fail or at very least not pop in any way that I would consider successful.

    And if you so need to measure how big of a success it was, I’d say go by how many followers. People unfollow shit they don’t like and it doesn’t bother them. It’s easy to do and no one knows you unfollow them. They don’t worry about offending. That is what is so great on Twitter, it’s not like MySpace/Facebook where it’s based around the concept of “friends.”

    The concept of it is just to be interesting and find interesting things/people. If a marketer can keep that in mind, I don’t see how they can be a total failure on the service.

  2. Personally I believe everthing that is to have uptake in the corporate world needs to prove ROI through measurement of what C’s and corporate stakeholders care about. The key is to understand what the measurement value is. Is it a direct tie to sales? profits? reputation? That is still being determined by the marketplace. But, when trying to sell anything, what the buyer wants is what is important and I’m not sure the industry has figured out what the buyer really wants (needs) which is why so many of these services have such low price points. Price is indicitative of perceived value.

    That being said, there arey many technologies currently availabe that can actually measure the business impact of social media. For example we are now seeing SM analytics blended with the WCMS to drive targeted and measureable advertising, Business Intelligence systems to take SM metrics, compare it to sales activity and then forecast overall performance as well as other applications from the Knowledge Management and Sales 2.0 spaces. I’m sure we’ll begin to see many more as well.

    Basically, the market will evolve past the “hype” phase into a real tangible marketplace over time as customers begin to see value. This value determination will be provided by the SM industry.

    PR is only one of many “components” of the entire social media value proposition.

  3. I think it depends on what you are trying to accomplish with social media. Is it customer retention? brand awareness? customer acquisition?

    On its own social media is difficult to measure in terms of customer acquisition for many companies mainly because the sales cycle is longer when you interact at the stage that is most common on Twitter etc.

    However, if you measure the impact of social media in increasing the reach of typical customer acquisition programs it is easier to measure a real ROI. If you spend $5,000 on a campaign to generate 500 leads on any given day and change it up to test adding social media elements to increase the number of leads by driving more traffic with a fairly low incremental expense and end up with 750 leads from the same campaign it is measurable.

    If you are using social media for customer retention it is even easier. You can intercept customer support calls via Twitter and answer questions that may take 5-10 minutes on the phone in seconds. Increasing efficiency and decreasing resource requirements for these types of calls. That’s measurable. You can also intercept unhappy customers who aren’t telling you they aren’t satisfied, help them and increase their loyalty significantly. You can use it as a tool to answer quick questions and filter those who need hands-on assistance to the right channel.

    Brand Awareness is also more measurable in this medium than in several others. Think about print advertising and tradeshows. Typically you are guessing at how many you “reached” based on questionable measures at best. But with a social media campaign for brand awareness you can use searches to measure RT’s, brand name mentions, new followers, link views, downloads of promoted materials etc. These are people who have an increased awareness of your brand.

    Ultimately, without a clear strategy social media is very difficult to measure. ROI is the measure of the return $$$ to the investment $$$ made. We can’t recreate what ROI is to justify social media expenditures. But we can use complimentary measures such as increased efficiency, incremental lead generation, increased reach/exposure, operations budget savings and increased loyalty and repeat business, which ultimately have an impact on the ROI of the marketing budget.

    Social media is another outlet for marketing organizations and like any outlet it should not stand alone but should be measured in conjunction with the entire mix.

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