By Megan Bykowski-Giesegh, VP & PR & Social Media Director
November 26, 2013
Everybody loves ROI. It’s the oldest and easiest way to prove that we’re not wasting our time. Plus, it involves numbers, so it’s irrefutable evidence, right?
With the rise of social media has come a fresh ROI challenge for marketers. How can we connect our tweets to the client interaction and ultimate sales they generate? How can we tell if our brilliant Facebook campaign contributed to our recent boost in revenue?
But even more concerning is the bigger question: are such connections even possible? Or are we all just wasting our time with old school business strategies that don’t apply to the digital world?
Social Media Is Not a Choice (Anymore)
Before we discuss whether there is actual, measurable ROI in social media, I’d just like to point out that it doesn’t matter. Either way, we still have to do it.
For better or for worse, if you want to be competitive in today’s marketplace, you’ve got to get social.
Sure, social media participation was once a choice that was made by weighing the costs against the potential return. But today, less than a decade after Twitter’s initial launch, all that’s out the window.
Now, you have to do social media just like you have to pay the heating bill on your office building.
Why? Because that’s where your customers, potential customers, and influencers are, and it’s a marketer’s job to reach people where they are. Social media is the easiest and cheapest way to open a direct dialogue with your audience, including potential customers, and to connect with them in a personal way.
Secondly, social media is the technological equivalent of word-of-mouth marketing, one of the most powerful marketing tools in existence. Get people talking about you and watch the organic marketing magic happen.
Social media is also a gleaming opportunity for your company to prove your expertise in your field. Even potential customers who don’t have a clue about your industry can see the nuggets of wisdom you’ve tweeted and think, “Man, these guys really seem to know their stuff.” And that’s how little seeds of trust are born.
In today’s market, participating in social media doesn’t show that you’re going above and beyond. It just shows that you’re keeping up. However, notparticipating, at this point in the game, can suggest that: a) your company is outdated, and b) you don’t care about connecting with your current or potential customers. Ouch.
So the question is no longer whether your company should engage in social media—it’s whether you’re doing it effectively and what percentage of your resources should be devoted to it over other marketing efforts. That’s where we need to be spending our internal marketing think tank hours.
Social Media Is Not an Investment
Um…I guess that blows this whole conversation up right there. You can’t have ROI without an investment, and therefore, no social media ROI.
Investments are assets that you can sell later if they’re not working for you.
Social media is an expense—and a necessary one, as we just discussed. It should be baked into your business planning right alongside product development and execution.
Sean Jackson (CFO at Copyblogger) suggests thinking of it this way: what’s the ROI of email? How much are you getting paid back for the dollars you put into your email system just so your employees can communicate easily?
You probably don’t know. Or care.
Online Marketing Is Different
Marketers sometimes cling to the habit of assuming that since you can buy something online, whatever online marketing you do for that product should lead to direct sales.
As Business Insider pointed out, we never expected this of TV or billboard ads, but because it’s physically possible for online ads, we decided that that was the way to measure online marketing success.
To understand how people consume and react to online marketing, we have to think about how people use the internet. Specifically, in recent years, a massive percentage of our web usage has shifted to smartphones.
This shift introduces a new challenge for marketers: the Inbetweener Effect. We’re constantly in between activities—waiting in line, waiting for our spouses/kids, sitting on public transportation. This few-minutes-here/few-minutes-there approach to surfing makes our web interactions extra short, distracted, and generally not conducive to buying things.
Even if online marketing was the impetus behind a purchase, it can be anywhere from cumbersome to straight-up impossible to track sales back to specific social media marketing efforts. Unlike, say, coupons, which span a limited period of time and are easily measured, social media is used to create awareness and shift perceptions over a long period of time.
Social Media Success = Attention, Not Money
The rules of social media are the same whether you’re there for personal or business reasons. It’s all about real, genuine connections. Authenticity is modern marketing currency.
And there’s just no room for sneaky sales pitches in authentic connections.
Luckily, the real goal of social media is not to make money. That might be the ultimate goal, in which social media plays a role, but your social media accounts are not mini storefronts for your business.
The only real goals of social media are: get people to notice you and, ideally, get them to like you.
Focus on Profits and Efficiency, Not ROI
I know: your executive team probably isn’t going to be impressed if you show up at your quarterly meeting with blank graphs and try to argue that social media is exempt from the ROI conversation.
I’m not suggesting that you pretend money doesn’t exist. But I would suggest thinking about it differently.
Instead of traditional ROI, think about the financial benefits of social media in terms of profits and efficiency. How can you use social media to reduce overall marketing expenses (after all, it is a free marketing platform) and increase revenue, thereby increasing profits?
Next, how can you optimize the specific amounts of time, money, and resources you’re spending on social media to widen that expenses-to-revenue gap even more?
What’s Really Worth Measuring
When it comes to social media, the best thing you can measure is people’s likelihood to buy after interacting with your company on social media.
I mean… if it were possible to measure that.
In the absence of mind-reading technology, we’re stuck with these slightly more tangible measurements:
- Engagement. How many retweets, shares, follows, direct messages, etc. are you getting?
- Efficiency. Are there ways you can be a more productive social media machine? (For example, do you have a time-consuming content approval process you need to axe?)
- Influence on profits. As you pour more/less effort into social media and less/more into other marketing efforts, what happens to your profits?
Unfair Expectations Lead to Inaccurate Results
When you talk about ROI, you’re talking about putting money in and getting money out. When it comes to social media, that’s just not an accurate, or even helpful, approach to take. Social media is not a slot machine.
Social media is there to help you connect with customers, and to maybe-someday influence a future purchase decision, but not to generate immediate sales.
Oh, and hopefully this goes without saying, but we need to stop estimating future social media ROI, too. That’s like counting the presents you’ll get over the years from a new friend—it might be a nice surprise if it happens, but it’s certainly not the point.