Why Social Media ROI is Still Elusive

eMarketer reported yesterday that marketers still aren’t measuring the investment on their social media investments,

Despite widespread adoption of social media, measurement still lags. Only 16% of those polled said they currently measured ROI for their social media programs.

Lately, it’s become very fashionable to talk about the ROI on social media. You hear the dreaded term everywhere – at conferences, in meetings, on research reports, at your child’s daycare (no kidding) so the question begs to be asked and answered – Why is social media ROI so elusive?

So, here are my top reasons (and please feel free to add your own below in the comments):

#1 This report and many others are making a very flawed assumption – these reports assume social media is a “program” and it needs to be justified like any other short-term program or campaign. Newsflash: Social media is not just a program, it’s a fundamental shift in way your customers and employees consume information and communicate. Social media is fast becoming as ubiquitous as email and when’s the last time your IT department did a ROI analysis on your email network?

#2 Should you measure, track the results on your social media activity? Absolutely! However, you’ll find that with any new channel, the “I” will always be substantially higher because you’re still making investments in this new media and may not have realized any of the efficiencies yet, so any ROI analysis on the new media is skewed. 

#3 In many cases, it doesn’t even make sense to do the financial analysis on some social media activities because it’s pretty much, the cost of doing business. Here’s an example: Adding social sharing tags to your email so your customers can share your marketing email with their friends and family on some social network is a no-brainer and as essential as providing an URL link to your website. It doesn’t justify a ROI analysis, although I would recommend analyzing the click-through/share rate. This is something you should do in any case, regardless of whether or not, any social tag is included.

#4 Having a blog or Twitter account is not a social media strategy. Social media success is dependent on the sum of different parts. Just like you wouldn’t utilize just one traditional channel to market your product or services, it’s ridiculous to think that one Twitter account or a blog by itself is somehow going to generate ROI overnight. That’s why it’s essential to remember that not everything that’s important in business (and in life) can be measured and just because  you can measure it, doesn’t make it important or relevant.

#5 I’ve blogged about this before, but social media will not solve your pre-existing business problems.

A guy goes to the doctor with a broken arm and asks, “Doc, can I play the piano once my arm has healed.”

The doc says, “Of course, you can!” 

The guy says, “Great, I never knew how to play (the piano) before.”

Bottom line, if you weren’t able to accurately track the results from your traditional marketing activities because of your internal tracking/lead management issues, you’re not magically going to start doing it just because you’re using social media.

One reality that most ROI proponents gloss over is that even the most traditional, established media activities don’t have a clear defined ROI. Not to pick on events but let’s look at event sponsorships like Golf tournaments etc.?  How on earth do companies measure the ROI on those or even television ads for that matter?!

Attribution was an issue with traditional media and it will continue to remain an issue, no matter which media you choose.

Trying to assign a specific dollar amount to any social media marketing activity is an exercise in futility because individually these activities are weak but done in coordination, these can move the needle. That’s also why marketing is still part science and part art.

Rather than looking at ROI on specific social media activities, marketers should be looking at their key business objectives, selecting/incorporating the right social media elements to meet those objectives, and then evaluating the overall results. Ultimately, what matters is not whether the social media activity was a success but whether the business objectives were met.

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9 responses to “Why Social Media ROI is Still Elusive

  1. Pingback: Twitter Trackbacks for Why Social Media ROI is Still Elusive « Marketing Mystic [marketingmystic.wordpress.com] on Topsy.com

  2. As with any social activity how can you quantify results? You can’t expect to measure the effectiveness you have at a gala event, yet you show up anyway. Businesses need to realize in this service oriented culture that the longer you sit on the sidelines the more its going to hurt your long term goals. Implementing various social media practices is the best way to keep your company relevant and providing the services that people expect, if not demand.

  3. Great points. Another analogy would be measuring the ROI of customer service. Probably difficult to do, but doesn’t mean an org would ditch customer service.

  4. Great post. Very well thought out. We are trying to address some of these points over at Viralheat. http://bit.ly/rgfK

  5. great post..i dont think its wise to calculate social media marketing ROI interms of some junk numbers..i came across some logs which derived some equations to calculate ROI from social media initiatives which i personally feel a dumb one

  6. Most don’t realize how many variables there are that add up to action by potential buyers or how inaccurate web analytics truly are. Most attribute all sales to either first OR last click but only those that can track EVERY visit can come close to showing a clear picture.

    Olivier Branchard has a great idea posted in his BrandBuilder blog about using timelines to track the effect of significant activities undertaken. Most don’t realize that there is a latency between any activity and when it generates leads and sales.

    This is true even for pay per click ads for inexpensive items one would think would be impulse purchases. Even for those there is a 7-10+ day delay between new ads and sales.

    MiaD wrote “Social media success is dependent on the sum of different parts.” I would add that ALL business success is dependent on hundreds of individual improvements from advertising to usability to linking to Social Networking to customer service.

    Although some things can be measured, breaking out individual ROI for each of these is not really necessary. Doing them all extremely well WILL work.

  7. Hey, I found your blog in a new directory of blogs. I dont know how your blog came up, must have been a typo, anyway cool blog, I bookmarked you. 🙂

  8. But what do you do if your ‘boss’ is a numbers guy and wants to ‘What’s (how many dollars) in it for me?’??

  9. Pingback: Online Reputation Management | Web Works Marketing LLC

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