Basics of Establishing An ROI of Social Media. Yes or No?

Please note: this is a cross-post by Alasdair Munn. You can find his website here.

Enter Alasdair Munn:

The ROI of social media debate rages on. People are getting quite bored of it, yet it is still intriguing as this is an important topic.

Following our previous post, The ROI of Social Media – Get the Biggest Bang for Your Buck, several thoughts need to be added in light of comments, reactions and conversation.

There are two camps, one saying that trying to establish the ROI for social media is wrong and goes against the very nature of social media. For this camp social media is about fluid, open conversations and the building up of relationships. To reduce this to mere measurement and numbers is wrong and represents everything that is wrong with how organizations have worked in the past.

The other camp says that measuring the ROI of social media is the right thing to do. Adhering to a plan or social media strategy requires measurement and analysis. The people who argue against this approach often argue that the two are mutually exclusive, that a quantifiable mindset kills the qualitative spirit. It is this assumption that is creating the problems.

I think we are getting caught up in semantics. The whole ROI debate is riddled with controversy because people are using the language and mindset of a previous paradigm. When at the beginning of a shift, as we are, the old paradigm’s language and mindset remain predominant while the new paradigm has to find a way to express itself. Often the new paradigm has to use the language of the old paradigm to gain attention. Entitling this topic as “How to ensure you are engaging in an effective social media strategy” will not grab the attention of marketers in the same way as using the term ROI. Yet using this term brings with it a whole history, one that has traditionally been about control, admin and justification.

Absolutely. You cannot measure the effectiveness of every social conversation. Yes it is difficult to quantify the good that comes from real customer engagement. But this does not mean you should not use analytics and measurement.

Measurement is not to be approached as justification and measurement should never inhibit the flow of social conversations and connections. But in order to be effective for business, a social media campaign has to be built on a strategy. Part of that strategy is all about engagement, participation and openness. It is about starting the conversation and seeing where it goes. Yes we should encourage people within our organization to participate freely, with no expectation or obligation. The other part has to include measurement and metrics. There is little point in having these conversations if they are not going to inform you. Here ROI is measured in relation to goals and objectives rather than in terms of money.

If you are integrating social media and social software into the very fabric of your organization, incorporating your CMS and your LMS and using analytics and measurement can turn your website or web presence into powerful tools. Not at the expense of your fluid and open social conversation and interactions, but in conjunction with it.

Comments

  1. says

    I think a big part of the “ROI” comes in the form of learning where to have these conversations. MySpace is big for bands, but not much else, and certainly not a place for b2b marketers.

    It takes some experimentation, but depending on the nature of your business, you may find the greatest concentration of interest in the community on Facebook, LinkedIn, Digg, Searchles, Twitter, or somewhere else. Each network attracts a unique audience, so there is no one-size-fits-all answer, and only some method of effective measurement will help you determine that.

  2. says

    Alasdair, thank you for taking this conversation a step further. I think you have built the bridge between planning and measurement that finally makes sense (at least for me).

    “You cannot measure the effectiveness of every social conversation. Yes it is difficult to quantify the good that comes from real customer engagement. But this does not mean you should not use analytics and measurement.”

    Exactly. It takes multiple interactions to move the needle from prospect to customer/client, I think we should, as marketers, PR or social media professionals, have some understanding about what worked in that particular situation. But I think part of the misunderstanding comes from planning/ROI is the notion that if it worked for some, it will work for all. That is simply not the case and social media just puts more of a spotlight on that misnomer.

    “Measurement is not to be approached as justification and measurement should never inhibit the flow of social conversations and connections. But in order to be effective for business, a social media campaign has to be built on a strategy….There is little point in having these conversations if they are not going to inform you. Here ROI is measured in relation to goals and objectives rather than in terms of money.”

    Agreed. There should be a plan to measure against, but it doesn’t always need to equate to Return = revenues and Investment = marketing budget. Simply, it could be, Return = conversations, loyalty, trust and Investment = time and understanding but you need to first have goal(s)/objectives planned to understand which you are looking for.

    Thanks for stretching my brain a bit more! I believe you have just answered some additional thoughts that were rattling around my head.

  3. Stephen says

    As Beth outlines in regard to how one can measure social media ROI effectively, she speaks of thinking of ROI in terms of conversations, loyalty, trust, investment, etc. I would submit that, while thinking of ROI in this way is both instructive and compelling, it’s important to begin the process of really thinking through how to tell that story persuasively (particularly to larger companies) in a business climate that has for some years now focused more acutely on short-term gain (the auto industry is a prime example). Overcoming this mindset is a long-term prospect that requires consistent and aggressive thought leadership, as well as clearly documented successes that are highly visible.

  4. says

    Alasdair:

    As you note: “Here ROI is measured in relation to goals and objectives rather than in terms of money.” – this is the point on which I could not agree more.

    Social media isn’t about getting your message out, it’s about presence, conversation and community. And it’s still an invaluable marketing tool.

    If we as marketers keep in mind that social media is one component (that does not stand alone) of a marketing strategy, and we know what goals and objectives we need it to fulfill, we’ll do a much better job of setting realistic expectations, creating something useful for both us and our constituents and making it a success all around.

    I know that sounds a bit preachy, but in the spirit of keeping the goal in mind, knowing what you want and knowing when you’ve got it are still the critical foundation.

    Thanks to you and Beth for engaging this conversation.

  5. says

    @Stephen. Well articulated. Yes this all part of the strategy. Understanding that this is a long term commitment is indeed key. There are no quick fixes. Those against measurement and analytics see the old ROI values of control and justification getting in the way in the short term before the long term investment is realised. As I have heard you say before, there is much education needed. Perceptions need to be altered.

  6. hhotelconsult says

    Well put, and well said. The problem here is that the people spending the money want solid, quantified ROI. Albeit archaic, and stuck in a previous model…. the ones with the money are the ones that will drive this, and they currently want hard ROI. I completely agree with the article… but VC, marketing dollars… won’t fund people to just goof around on the internet for long. If they want measurement we need to figure out how to give it to them as accurately and measured as possible. But darn it I agree with that article.

Trackbacks

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>