Recently, I wrote about the ROI of social media marketing. As you know, there are some misunderstandings and, to say the least, different opinions regarding this topic.
In the Social Marketing Forum, where I’m a member, some interesting opinions regarding the topic were posted when one of the members asked about the ROI of social media marketing.
I’m going to sum them up because it’s really interesting to have the opinions from different experts, with different backgrounds (performance marketing, social media management, B2B lead management marketing, web analytics, etc.).
So, this will be the longest post ever on this blog, but it’s one you might want to print…
The question asked in the forum basically was if you can measure the ROI of social media or not, as David Meerman Scott would have said.
Here are some opinions from other members of the community.
Jonas Klit Nielsen from Danish social media marketing company Mindjumpers said that “in his humble opinion it is very hard to measure ROI on social media right now.”
He explains why: “ROI is a pure financial instrument, a long story short – how many $ do I invest, and how many $ do I get in return. A lot of the activities on social media are brand building, customer relationship, involvement, engagement, etc. All that often measured with other KPI´s than ROI”.
He also referred to Oliver Blanchard, who indeed posted a lot about the topic on his blog.
It comes down to setting up ways to track things in social media based on the objectives you have at the start
Next, David Alston from Radian6 commented. He said that “there are two ways to look at this. First, the ‘social’ nature of social media means that relationships are often formed in all directions (those you interact with and those you indirectly touch). The many to many nature of it makes it nearly impossible to measure the ROI of the entire effort in a strict sense”.
On the other hand, he said that “you can also come at it from a different angle and say, that unlike the billboard, social media is much more trackable in terms of calculating ROI”.
David: “Because social media is digital in nature, all the ‘breadcrumbs’ of interactions and where those interactions lead over time and what impact they had (did that ‘follow’ on Twitter lead to a website visit and did that visit lead to a demo request and did that demo request lead to a trial and then to a sale?) can be tracked to help determine an ROI. Is it all perfectly linear? No. Does it mean we should throw it all about because it’s not all linear and neatly tied up with a bow? No, I personally don’t think so. Many of the traditional marketing measurements appear to be based on linear actions and many folks just take them for granted without really questioning whether they actually calculate the entire impact of a campaign or effort. I also find that many of the traditional measurements only look at a segment of the entire life cycle of awareness-to-sale, which again, would be incomplete. It all comes down to setting up ways to track things in social media based on the objectives you have at the start. It’s hard work but like all things that require an effort, the results are much sweeter in the end”.
Next to react was Siegert Dierickx, a web analytics expert working for interactive agency These Days (Wunderman).
This is what he wrote: “Sure you can measure the ROI of social media. However, it isn’t easy. In fact, it’s quite challenging! And as David (Alston) states: it’s not perfectly linear”.
Since Siegert has a lot of experience in the matter, I include his full comment.
Without measuring ROI and KPIs your social ship sails without direction
He continues: “Monitoring social media, and calculation the ROI, isn’t a straight or pure science, and there ain’t no silver bullet. Each business is different and each social media strategy has different objectives, so therefore the approach for calculating ROI will differ each time. In fact, the approach is quite similar to web analytics, but here all activity is performed on sites and channels you own, and which you can easily track. With social media, of course the difficulty is that this covers more or less the entire world wide web, which prevents the measurement or monitoring to be linear. All starts by defining the objectives of your social media strategy & individual social media campaigns (and I’m not talking about just creating a Facebook fan page and let it live it’s own life – because that isn’t social media and the ROI of it will be zero). Once the objectives are clear, it’s crucial to define 2 or 3 KPIs against which you measure the success. Not more than 3 or else you will lose the focus. The objectives and KPIs could focus on sales, in which case the ROI is quite easily measurable (definitely when the sales needs to be done online). If the objective isn’t a sale but still is an action such as a subscription, registration to a community, share info, etc., you can attribute a monetary value to this action, and calculate ROI based on this. If the objective is to create brand awareness, it becomes very challenging, but still you could create an ROI model in which you attribute values to number of followers/influencers, positive/negative comments, number of conversations, etc. As said, this isn’t a pure science, but you will create some benchmarks against which you can compare the evolution of the social media strategy and the impact of your campaigns. Believe me when I say this isn’t easy. And it’s lots of (manual) work to monitor and measure (via different tools and expert insights). However, it’s definitely worthwhile, and even mandatory, to do this. Otherwise your social ship sails without direction”.
The next comment came from Michael Kahn, who works at Performics, the number one SEM agency worldwide. He said “he totally disagrees with David (Meerman Scott, I guess)”.
Michael continues: “At Performics, a search and performance marketing agency based in Chicago, we have had experience buying micro-targeted ads on Facebook for major advertisers targeting very specific audience segments. For these campaigns, we are measuring actions taken (leads generated, products sold) on a ROI basis against goals. And these campaigns have performed comparable to search. In addition, you can measure ROI on other types of social marketing campaigns. A marketer just needs to pinpoint the engagements they want to measure and the value of those engagements. For example, page views, time on site, sign ups all have value, can be measured and be tracked on a ROI basis”.
The B2B perspective
The final word (until now, at least), came from Eloqua’s Steven Woods (who wrote the book ‘Digital Body Language’ and has a blog with the same name).
He said he thought the challenge comes down to two separate things: figuring out the ability of social media to affect an aspect of the buying process (i.e., awareness, discovery, perception challenges that affect selection/validation) and figuring out the ROI of a change in that aspect of the buying process.”
He says that “You can measure the tactical effect of social media on traffic, awareness, etc., but it is very hard to truly measure its effect on buyer perceptions. Similarly, many marketers do not have a true “top down” framework in place to truly know the value of each stage in the buying process. So, we can come closer to a good measurement, but only when the full buying process (of which social media is one small part) is well understood”. He also referred to an interesting article he posted in June on his blog (read it here).
Bottom-line: several opinions, several viewpoints, each one of them from people with another background. I relate most to the web analytics viewpoint and still stick to my post about the ROI of social media, that I posted here earlier.
But every opinion sure has its value.
You can follow the conversation in the forum here. Of course you can also join it, you just have to register.
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He says that “You can measure the tactical effect of social media on traffic, awareness, etc., but it is very hard to truly measure its effect on buyer perceptions. Similarly, many marketers do not have a true “top down” framework in place to truly know the value of each stage in the buying process. So, we can come closer to a good
I really think to sum up where things are right now is this quote right here:
Each business is different and each social media strategy has different objectives, so therefore the approach for calculating ROI will differ each time.
For some it’s enough to be able to simply create another touch on a customer or client. Or for another it’s become a platform for customer service.
Really it goes to the over arching point you are making. Nobody questions old forms of advertising but because social media is new and decision makes fear the technology somewhat it is held to a higher standard.