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Reassessing ROI in social media

The burning question on everyone’s social media-laden lips is, “what’s the return on investment (ROI) of social media?” As the social web has matured over the last 8 to 10 years, so has the need, nay, the desire for people to prove its worth as a reputable marketing channel. To be honest, it’s been plaguing. And in many respects, has been the cause of much debate and anger between a new breed and those traditionalists already firmed rooted to the marketing plateau of their advertising value equivalency, circulation and reach values.

Circulation and reach? Really? Those are the metrics for which print media is valued. In other words, brand X takes out advert Y on page who knows what of magazine Z. John Doe happens to buy magazine Z and due to the disposable nature of magazine Z, might just happen to leave it lying on the train, or bus, or restaurant table to be possibly seen by Joe Blogs. On top of that, whatever number they pull from thin air, they then multiply that by 3. That’s the degree of disassociated consumption of how print media measures ROI or at least values their reach. C’mon!

Personally, the idea of ROI is a broken metric, one that has needed redefining for as long as modern-day traditional media has been around. I don’t think the metrics used by traditional media will change — simply because their “safe zone” has been around for that long that anyone brave enough to challenge it would probably be burnt at the stake — and there is no doubt in my mind those flames will be fanned by a few magazine Zs picked up along the way, you know, by other people and what not. Because that still happens, apparently.

I feel as though we’re asking the wrong question. Simply asking what the return on investment of social media is, is akin to asking what’s the return on investment of a hug or a pat on the back, recognition, a random act of kindness or your parents. To date, the metric within the social environment cannot be measured. Scaling it is a completely different story. Scaling a relationship between a consumer and the brand you’re marketing for in the digital space is now — more than ever — easier to do.

Gone are the days when the local cafe owner used to know how your mother’s knee operation went, or how your cousin’s wedding was last weekend. That attention to detail and customer care (an ancient phrase that is barely muttered nowadays) is almost a thing of the past.

With the readily available tools at out finger tips, why isn’t this kind of service more easily practised? What is everyone so caught up in that people cannot scale a customer’s or potential customer’s affinity to a brand? It’s not hard work; it just comes down to caring more. If that customer felt as though you were proactive enough to recall his last comment or complaint and retouch on it the next time he engaged, I guarantee you that customer would slowly but surely be coaxed along the scale from indifferent to optional to advocate.

Now, I’m not saying that this is a sure-fire way to show return on investment nor can this strategy work for every business model. It’s safe to say that some brands just don’t belong in the online social environment, but play there anyway because they got caught up in the hype. Chances are, if your business didn’t have social at its core, you’ll never make it utilising social media.

Social media. There’s another one I personally have an issue with. Going back to what I discussed earlier with regards to a broken metric, the word ‘media’ has ruined this industry for us all. Lambasting the word ‘media’ on it surely means it can be measured? Surely you can just drop a value on each one of your fans on Facebook? Surely your tweets must be worth this much if you have this many followers? Thanks for nothing ‘media’! It’s not that simple. It’s scalable. It’s complex and it takes time to nurture a relationship with consumers. Why are people still trying to close on the first conversation? No one’s ever managed to close on the first conversation because consumers have wisened up to the bullsh*t. It’s time brands started caring and they can, if they take time to start scaling.

Going to back to ROI, the wrong question being asked took a shift one day when I realized we needed to create context with regards to what we were asking. The broad brush of “what’s the ROI in social” is broken. Instead, ask the following:

  • What’s the ROI of the sentiment around product X?
  • What’s the ROI of the content for product X over this time frame?
  • What was the ROI of shifting 25% of our digital budget from traditional web to social media in 2011?
  • What was the ROI of our social media-driven product Y awareness campaign in the last quarter?

When one begins connecting the core of the measurement to an actual contextual timeframe and objective, then you can begin starting to understand why measuring the return is not a difficult metric to harness.

If you’re as obsessed as I am about creating context for the content you create, take it a step further and measure it in the same way. Measuring and scaling little victories like this will eventually win the war. Now, I know what you’re thinking, KPIs and ROI must always be tied to business objectives — and I totally agree — but isn’t it now time we started showing those who set those business objects what is possible to be measured in social media? Increase in positive sentiment, desire and likelihood to buy and awareness. How is that any different to circulation and reach?

As someone in digital, if your goal is to convert optional buyers of your brand’s product into advocates and you succeed in doing so, even on a small-scale and that consumer then becomes a lifetime customer — I don’t know, some might call that a return on investment.

Author | David Alves

David Alves
As Business Solutions Manager in eCRM, it is David's responsibility to take the lead in managing all CRM developments, strategies and implementation across Pernod Ricard's brand portfolio. David has a passion for tutoring, sharing knowledge and embracing new technologies as quickly as they arrive and dissipate. He can be found... More
  • I cannot agree with you more Dave. You have hit the nail square on the head! If we were not capitalists, we would not have a problem at all when it comes to social media metrics and the elusive “Return on investment”. Maybe we need to drop the term ROI in the first place. ROI implies that so much money went in and in return we expect a greater amount back. This is very difficult when the aim of social media is to start conversations around a brand and to generate an “emotional” attachment. You cannot measure emotions in $$$$. Well done on a really great article. You have set the standard and i eagerly await the next :)

  • Howsit Dave, thank you so much for the comment. I appreciate the sentiment and the support, man. It feels good to be heard, I just hope that I resonate with more than a few marketers out there. With regards to dropping the ROI metric, I don’t believe we can do that, ever. But as I expressed in my piece, I think it needs to be re-evaluated and reassessed. We need to start from the beginning again.

  • Hello David(s), great article. ROI is an interesting discussion that could rage on for weeks :)

    My colleague @Selina_Nisbet asks an interesting question about ROI: What is the “Return on Ignoring?” What does it cost you if you’re not involved.

    As you say, so many people are busy trying to measure how quickly they can ‘close sales’ via social media, but this is very dangerous if you haven’t spent time nurturing people so they actually trust you.

    To paraphrase @GaryVee, another great analogy is “what is the ROI of a surfboard?” For many people it is zero dollars, since they don’t surf. For me, a surfboard has a negative ROI because I buy all the accessories like wax, wetsuit, board bag etc. And for Kelly Slater the ROI is enormous because it’s the tool that he has spent his life mastering and he’s won 11 world titles!

    3 completely different ROIs, depending on how proficient you are with the tool.

    Thanks for the opportunity to comment!

  • Surely having some sort of measurable outcome makes the medium more useful in real terms? It may not be wholly measurable but including some sort of metric adds credibility to social media platforms as tools.

  • Adam, that is awesome! Such a great comment and to paraphrase one of my industry mentors, Mr.Vaynerchuk in a comment to my piece truly made my day. I love; “What’s the ROI of your Mother?” Has to be my quote of the last 2 years. You’re very right, ROI is different to different businesses. Tying it back to business objectives is always best practise, but now one needs to reconsider where those business objectives are coming from in order to properly assess what that true ROI will ideally be. Thank you again for commenting, Adam. I appreciate that! Cheers.

  • There is real value in not ignoring what customers are saying just from a reputational perspective. The costs of ignoring feedback can be disastrous because it can have very real commercial consequences.

  • Totally agree. Thanks for the comment, Paul. Appreciate the input.

  • Agreed, Paul. I’m have not said, ignoring metrics, benchmarking or scaling in any way is the right move to make for any business within the social sphere, but I have alluded to the fact that business might need to be making better decisions about what those more realistic ROI goals are. If brands begin to scale relationships between consumer and brand, then a brand is beginning to show true value in the social space. Thanks for the comment, Paul. Cheers.

  • I agree with you there. Smarter metrics are far more useful than metrics for the sake of metrics.

  • “Metrics for metric’s sake”…love that, Paul. Totally stealing it. Thanks again for the comment, man!

  • Great piece, David. We need more people to think this through in more enlightened fashion. I see it like this: Engagement > Positive Emotion > Sales > Retention > $$$. You’ll make the $$$ eventually, but you won’t necessarily be able to measure the interim stages in $$$. Despite that, it’s a no-brainer!

  • Hi there Sunny, thank you for the comment. Really appreciate that. It’s a common mistake to see social as a sprint…it’s the brands that are taking this as a marathon that will and ARE winning – not to quote Charlie sheen, but they really are, winning. Thanks for stopping by and dropping a comment! Cheers.

  • Amen to that! The best reposte to the cry for ROI I have seen to date.

  • Simon, wow. Thank you for the comment, really appreciate that. Word of the day: “reposte”. Love that. Thank you.

  • Talk no cook rice.

  • Struggling to pick up what you’re putting down here, man. Care to share more?

  • Kaveer

    Shew. I feel so much better. This needed to be told. While we strive to figure this out, has no bearing on whether or not companies should be engaging with their stakeholders, through among other channels, new media. Good governance demands it!

  • Thanks for the comment, Kaveer. I think that even though the metric in itself needs defining and redefining, the practise to create achievable and understanding business objective orientated ROI metrics is a must for any business – the discussion of this topic however – needs to be redone with clients, from scratch. Thanks again for reading and interacting. Cheers.

  • Dave, your last statement: ‘As someone in digital, if your goal is to convert optional buyers of
    your brand’s product into advocates and you succeed in doing so, even on
    a small-scale and that consumer then becomes a lifetime customer — I
    don’t know, some might call that a return on investment.’; this couldn’t be put better. This addage is the key to CRM. You build the relationship with your customer through your time and effort and that customer becomes a ‘lifetime’ customer, that relationship will bring you ROI. If digital media helps you cement that relationship with that customer, then you most definitely will receive ROI.

  • Si-Munky, thanks for the comment, bru. Really appreciate you taking the time to read and comment. As I said, it’s a marathon, not a sprint. Taking time to scale relationships in any business, makes good business sense, regardless of the industry you’re in! Thanks again, man. Much appreciated!

  • Pingback: Is your social media investment working for your business? | Serendipity Online Marketing Ltd()

  • Great article Dave. “if your goal is to convert optional buyers of your brand’s product into advocates and you succeed in doing so, even on a small-scale and that consumer then becomes a lifetime customer — I don’t know, some might call that a return on investment.”
    I might well call that a return on investment. The lunch that I have as I seek to build lasting relationships? What’s the ROI on that? The sundowner? The time taken to answer questions, educate, share knowledge, advise, mentor and yes, listen … what’s the ROI on that! A lifetime customer. A brand advocate. A social influencer. Not everything that can be counted, counts. There’s wisdom in that …

  • Brandon Fairweather

    Agree with this sentiment. If Social media is viewed as an expense, then it is a necessary one. Almost like electricity or medical aid. The power of social media should not be underestimated, and more often than not the ROI is the steady and sustainable growth of followers that eventually become an instant and influential marketing force. A house only has value once it is built, but it is done brick by brick, one day at a time….

  • Love that, Brandon; “brick by brick”. Thank you so much for the comment and for taking the time to read through the piece. Really appreciate it. As I have reiterated over and over again, this skill is a marathon, not a sprint. Brands that are sprinting now will tire when the more patient and attentive brands start to get into their stride. Thanks again, Brandon. Cheers.

  • You’re so right, Darren. Because of the fast paced life we all live, there are hundreds of actions, moments and interactions that we ourselves take for granted, that if truly taken the time to consider how it would factor into measure an ROI would mean the more than we ever realised. However, if everything means something – big or small – that means we all need to be operating at 100%, all the time. That’s a challenge unto itself.

  • Sarah-Jane Boden

    Well said! I think the most valuable ROI provided by social media platforms is the slow and steady build up of real brand fans – a tribe- so to speak – who have consciously opted in to hear your message and share the brand love. There are so many other advantages that dont fit into traditional ROI metrics but what is immensely powerful about your argument is the phrase ‘Lifetime’ – you have the potential to catch fans attention and engage with them when and how it suits them essentially putting them in control of how and when the conversation happens. Priceless. If you do it right – and this of course is where
    Content and connecting comes in- you have the chance to create a lifetime relationship- well

  • Sarah-Jane Boden

    Sorry this comments system a bit buggy on mobile – my last sentence was saying – well as long as the platforms that we operate on continue to exist- which from my POV looks so far so good in Africa. Now how do we even begin to measure the value of something so unusual – the consumer in control of how you communicate with them.not easy, but it means bein really conscious of retaining them & making that lifetime relationship conversion the top objective in my opinion. #JustSaying

  • Howsit Sarah, thank you for the awesome feedback. Seems like Disqus cut off your initial comment, but thank you for taking the time to follow up and provide your full comment. I totally agree with you in many respects, and trust me, if I could have…I would have continued to write on this point until the cows came home – which is a long time – so-to-speak. I think that even the best social media measurement tools and scaling abilities can still mean nought if your social engagement strategy is not strong enough and is not practising retention and longevity tactics and I use the word tactics very loosely because it’s not a tactic, it’s more of a business practise more than anything else. If brands don’t begin investing in their customers they’re going to land up wondering where the conversation went and in turn, where their customers went. Thank you again for the comment, Sarah-Jane!

  • The Internet is a machine.
    It used to be what you put in you got out.
    Now it’s just put in, put out, or get out.

  • Pretty profound, man. Thanks for the reply. Take care.

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  • How long have you been waiting to use that one? LOL

  • Joe_HTH

    You’re a friggin’ idiot. This is quite common in the games industry dumbass. The vast majority of console games start development on PC. Sony has had a number of games displayed on PC as well you toss pot.

    This is nothing but click bait bullshit, especially for a 2D game. Idiot.

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