Why Measuring Social Media ROI is so Difficult

Posted by CFOWISE under Social Media
From http://www.cfowise.com 5320 days ago
Made Hot by: ThomasPickering on October 18, 2009 9:32 pm

Nice position on social media filling the role of branding, not advertising.

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Written by m4bmarketing
5235 days ago

Just my two cents worth. The same questions about ROI were and still probably made about brand advertising. One issue is that unless companies have a tracking mechanism in place it is difficult to track. In the case of advertising one measure is brand health which measured the engagement among other things with customers.

To Zane's point about social media agencies, perhaps they do not have the experience in measuring these types of metrics.

The issue companies may be grappling with is that they are probably using a combination of tactics including social media. Again it can be difficult but not that difficult to separate out the elements and track results. This should be a huge opportunity for research companies to assist agencies and their clients.

Just one other point. With advertising, you have a budget for production and media and usually outsource these functions. It is easy to allocate in a P&L. With social media companies are needing to spend time, which they are not used to allocating and perhaps do not know how to measure the return on time.

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Written by ShawnHessinger
5235 days ago

Zane,

The interesting thing about this discussion is that it is almost never held by businesses that are doing well. Rather, it is usually the companies that already know the ROI for their existing marketing is slowly shrinking. The question these businesses should be asking themselves is not "What is the ROI on social media?" but rather "Can we afford not to try it?"

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Written by ZaneSafrit
5235 days ago

Shawn I like your last sentence. Social media can offer substantial savings on delivering a brand's message, personal or professional, than traditional advertising/marketing efforts. On the other hand, if the recipients of that message do not become customers, do not lead to customers,...then what's the point? What's the point of their being targeted?

There lies the metrics social media agencies seem reluctant to discuss: sales, revenues, customers, conversions. If you're marketing/advertising/networking, regardless of budget or resource, does not lead to more customers, more revenues, then those are metrics a company needs to acknowledge. And conversely, if the result is more customers and revenues...those metrics need to be acknowledged, too.

Otherwise, what's the point? If what you're doing is not bringing more customers and revenues, then you can save even more by not doing it.

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Written by ShawnHessinger
5314 days ago

Ken,

Here's just one worm for the can. We might actually say that social media (including blogging) fulfills duel roles of marketing and networking. Certainly, as you observed, branding is a part of this. However, I would argue, so is advertising. The question is not whether there should be an ROI for social media but whether there was ever truly a reliable one for any of the other of these functions. If I operate a global business, I would argue it is possible to bolster my brand, advertise my product and network with potential business partners who may help in many aspects of my business all from a single blog. This form of social media will have combined the marketing and networking done through social channels like chamber membership and handing out business cards and the marketing and advertising functions done through traditional media all at once and at a substantially reduced cost. When figuring the value of social media campaigns it would be far better to consider what a company can save in getting its message out rather than how much it can earn by doing so.

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