I recently came across an article at CopyBlogger (a well respected site) entitled “There is No ROI In Social Media Marketing.” The article was written in the form of an extended conversation, but boils down to the following points:
- There is no ROI in Social Media
- There is no ROI in any marketing
- Asking for an ROI is like asking for ROI on email – you can’t quantify it, but it clearly adds lots of value to the company, and would be a detriment if it was absent.
The authors at CopyBlogger suggest ROI is an inappropriate term to use, because it’s only true appropriate use is in the context of a business investment (like an expansion, or acquisition) and the expected revenue from that investment. They suggest we use the term “profitability,” instead.
As a realist, I’m going to caution against correcting your boss’s grammar.
Regardless of what the accountants say, the people who actually run the company, and employee the accountants, view marketing as an investment. In the mind of every business owner from the sole proprietor working alone in a small plumbing business to the CEO of a Fortune 100 company, marketing is an investment – it’s money they’re spending (and risking) in the hopes of making more money off the messaging and publicity they gain from the expenditure. It’s their money, they wouldn’t spend it unless they knew they could make it back, plus some.
Stop Whining and Do It
Start with justifying the expense of social media marketing campaign. A finite time period, and a constrained set of variables will make it easier for you to show the ROI of that particular marketing expense. There are tons of ways – and a lot of options for tracking the path to purchase. You CAN show real world monetary profits from a social campaign. Figure out what those are, and sculpt your campaign around it.
If it’s not possible with the constraints that exist in your business (I’m very familiar with this) – do some homework in advance – find your average lifetime value, per customer. Then segment out facebook fans, for instance, and show their average lifetime value. It’s higher. I promise. Show ROI based on acquiring new fans, subscribers, etc. You may have to get creative . . . but you can do it.
In some circumstances, you can show sales lift, coupon redemptions, basket size variance . . . there is no limit to the ways you can show a positive ROI on your campaign. Find the one or ones that work for your company, and play to them.
Once you’ve established this, it’s going to be easier to justify the ongoing expense of nurturing a proper social media strategy. You can also move into showing ROI by cost reduction (an active online community leads to fewer support calls, for instance).
Wrap it Up
We can dream all we want to about getting business and business leaders to use what we believe is the appropriate vernacular for social media marketing metrics. But what matters is giving them what they want. Call it ROI, call it profit . . . just don’t call it impossible, unrealistic, or unreasonable. Or do… makes it easier for me to get a job when I talk to them later.