Join the Party: Thinking About ROI on Social Media
September 7, 2012
If you’ve been following the news on social media, you might have run into a pesky little thing called “the ROI question”. The acronym, in all its vague splendor (it stands for Return-On-Investment), might sound like it doesn’t affect you at all, but the question can also be rephrased as “does social media work for business”? And thats something you should give a Little Jack about. There are two camps on the issue. One side thinks that social media, when used for business, should be held to the strictest standards of traditional advertising. This camp looks for precise metrics, such as month to month increase in sales, website conversion rates, etc. If these figures aren’t growing every month, people start to get worried and say social media marketing doesn’t work (and social media stocks take a nosedive!). The other camp rejects these metrics and instead considers social media as a revolution in advertising. They believe that social media provides an entirely new way for customers to interact with companies, a way which offers multiple benefits that cannot be precisely measured. These guys are the rebels of the marketing world. You might think that the temptation for a fun-loving, free-wheelin’, not-your-ordinary-kind-of-marketing-company is to join the second camp. Party on, Wayne. Our answer might surprise you.
Metrics, MaaanWithout it sounding like a cop-out, we want to argue that both camps are correct, each about certain things. Camp A has the right idea about holding social media to the strict standards of traditional business. After all, you aren’t doing hours of social media marketing just for the hell of it (or to make up for that bout of nerdism in high school). You want to see results. However, Camp B is correct that social media works a little differently than traditional advertising. ROI tends to be a little slower with social media than with other marketing methods. However, the trends are firm — businesses that use social media wisely tend to do very well in the long run.
Mind the Numbers (but Not Too Much)The problem stems from the difficulty of measuring key concepts like brand “friendliness”, responsiveness to customer feedback, or being seen as representing the cutting edge of your field. All these things undeniably matter to today’s wiser consumers, and yet, there are no standard metrics to measure them. They fall under the broad heading of “brand recognition”. To be clear: our answer is that there should be a clear ROI from using social media, but this ROI needs to be measured carefully, with understanding of the social media ROI “lag”, and with metrics that are carefully chosen to give you the correct idea about what you’re accomplishing with social media in the long term. Party on, Garth. [templatera id=”10395″]
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