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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.


What’s up with Facebook (virus)?

I walked into work (my real job) this morning and found a warning from the corporate information security team in my Inbox. They had verified reports of a worm virus spreading via Facebook related emails.  

As I’ve realized since, the problem isn’t just confined to ‘related emails’, these are malicious emails within the Facebook system. The link takes to a website to look at a video clip. If you, the user tries to watch it, a message appears saying that they need to install the latest version of Flash Player in order to watch the clip. Unfortunately, by the time I received this warning, I had already received such an email in my Facebook  Inbox from a co-worker. I am so embarassed to even admit this, but yes, I did click on the link. So when I got this email from the security team, I did a virus scan, it detected and deleted the ‘Koobface’ virus.

I am extremely paranoid when it comes to online security and highly unlikely to click on anything if it’s even remotely suspicious, regardless of whom it came from. If I had received that email via Outlook or Gmail or Yahoo! mail, I would have deleted it right away. However, I was completely fooled by that, this email came from a trusted source and came to the one place that I thought was ‘safe’ – the FaceBook Inbox.

What ticked me off most of all in this sordid saga on a monday morning is that I couldn’t find any mention of this email security threat, anywhere on Facebook. There’s no warning or any kind of information related to this. Would it really have been that difficult to put a note in everyone’s Inbox that there’s a virus threat and not to click any links even if the email is from someone you know?

What’s also extremely disturbing is that if the user accounts can be manipulated to send out malicious viruses to other other accounts, how secure is the Facebook platform?

But questions around Facebook platform vulnerability aside, first things first – make sure you update your virus definitions and run a complete virus system scan. And lastly, don’t trust anyone…I mean don’t trust any emails with links no matter where they originate.

UPDATE: Here’s more information from Mashable on the latest phishing scams on Facebook.

If no one wants to pay for your product…

…is it still a great product?

Seth Godin’s post "If no one reads your post, does it exist?" got me thinking along the same lines about all the ‘cool’ products out there. Everyone loves to use them, but they don’t have to pay for them. For example: Myspace, Gmail, YouTube (Google) zillions of social networking sites and the list goes on…

Hence the question, if no one wants to buy (or pay to use) your product, is it still a great product? I think success or ‘greatness’ (from revenue-generation pov) of any product, comes down to 2 things – 1) purpose of the site and 2) the revenue model behind it. Gmail is more of a platform more than a product, which can be used to drive business to other synergistic web products. In other words, it is a means to an end, not the end itself. On the other hand, for all their popularity, it would be interesting to get a closer peek at how Myspace and other social media sites plan to make money.

Personally, I am leery about advertising-only revenue models. I am not sure this model is sustainable (Online ad spending rates are leveling off, according to this eMarketer article). I would love to see concrete data on the click-through-rates or conversion (to sales) rates that highlight the return on investment in this media.

I am all for democratization of the Internet and I think it’s a very powerful thing, but will people of the free world be willing to pay for something that they have come to expect as free?

Fad or Trend?

The recent launch of Vista and now the Google Enterprise apps has created all sorts of buzz.

Here’s a not-so-meaningful analysis on how Microsoft Vista might be impacting google on Too much ado about less than 2mths data. There’s no explanation given for similar dips in the Google numbers over the last year.

I would like to see more data on 1) Is search really convenience-based? If that’s the case, shouldn’t MSN be the top-dog instead of Google? I believe that search results matter and branding matters even more ie. how many folks are Googling vs. Yahooing vs. Living
2) How much of the search is done by businesses vs. consumer
3) Who’s buying Vista? Biz or consumer?

That would make for a much more interesting discussion.

Definition of Insanity

Benjamin Franklin said, the definition of insanity is doing the same thing over and over and expecting different results.

Hmm..doesn’t that definition hold true for many marketing initiatives today?! Why is it that even when certain vehicles don’t pay off, marketers continue to use them rather than change their strategy and try something different?

Is it management pressure? Is it inertia? Is it lack of creativity? Is it risk-aversion?

Is it all of the above? Probably.

Seth Godin says in his post:

…if you want the word to spread, if you expect me to take action I’ve never
taken before, it seems to me that you need to do something that hasn’t been done
before. It might not feel safe, but if you do the safe thing, I guarantee you
won’t surprise anyone. And if you don’t surprise anyone, the word isn’t going to

That’s a great point, predictability may feel safe, but it will lead to zero increase in interest/awareness.

Marketing = Long-term Survival

I have seen too many ‘marketing’ job opportunities out there, which are just thinly veiled sales jobs. Marketing is NOT sales and for companies keen on surviving and even prospering over the next decade and beyond will do well to remember that.

Marketing is about future survival of the company, while Sales is about the present. Your sales team is focused on making the sale right now, as they should be, but marketing on the other hand is and should be concerned with the present and the future. A marketer’s primary goal should be to ensure future sustainability of the company’s products and she (or he) does that by constantly monitoring the customers, competitors, and the business environment. It matters if your product is selling well today but it’s even better if you can make sure it sells well tomorrow and day after.

Companies who make the mistake of focusing only on the present (sales) and don’t pay enough attention to the future (marketing) do so at their own peril.


Well..after a long hiatus and move to CA, I am back.