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Wherefore art thou social media ROI?

As some of you may know, my first set of pieces for Memeburn dealt with the issue of ROI, of how it can be assessed, measured and if it’s even measurable at all.

I recently stumbled upon an article from John Heggestuen, who is a research analyst at Business Insider. The man is smart, like silly smart, and raised a terrifying statement that I feel like I am only now starting to understand. Now, I hate sweeping statements and I very much dislike people who have uninformed opinions on matters beyond their understanding. Heggestuen does not and has neither.

He stated that “some companies are starting to drop the idea that they can track social media’s dollar value”, which, when coming from the likes of a regular Business Insider commentator, you listen.

ROI Sucks

The study looks at many insights from various sources, noting aspects such as:

  • What proportionality of your marketing budget will you be spending on social media next year, in two years and in five years?
  • What do you believe is the single most important platform for your brand?
  • What do you believe the benefits are for using social media to market a brand?
  • What are the ROI related metrics in social that you believe are most pertinent to your brand and brands alike?
  • What causes the changes in the percentage of the fans you reach on Facebook?
  • What analytical tools are you using to measure your brands performance in social and what are the best tools to measure the performance against business objectives?

As you can see, it’s not the easiest set of questions to rattle off answers to, especially when, as a marketing type, you’re expected to know “everything about Facebook”. Why is all of this so disturbing? Well, here’s a little tit-bit from Cooper Smith, another regular Business Insider Analyst, who states that many large, consumer-focused companies globally don’t measure social media ROI. I know, right?


Apparently, in North America, nearly half of large B2C companies don’t measure social media ROI at all and in Europe a 52% majority don’t measure at all. Those who do, reside in the Asia-Pacific and Latin American regions where a positive result is more common than not measuring it at all. He goes on to state the following:

  • Fifty five percent of companies based in Asia-Pacific said their businesses have realized positive returns on their investment in social media. Only one-third said they do not measure ROI, and only 13% say they see negative ROI.
  • Forty one percent of companies in Latin America reported positive returns on social media, while 28% said they do not measure it, and 31% reported negative ROI.
  • In North America and Europe, more companies do not measure social media ROI than those that do. Although in both regions, companies measuring ROI tend to see a positive return. (These findings were based on Tata Consulting Services, which surveyed 655 representatives, mostly from consumer-focused companies with US$1-billion or more in revenue.)

Bit of a mixed bag, if you ask me. But, what does it all mean? Well, the crux of the analysis — and I could go on here — is that it feel like the stringency in which social media is analyzed here in South Africa could be for naught, bru. At least, that’s the feeling I’m getting.

Sure, it might not happen all at once, but as the core focus for social media globally moves from attempting to funnel and convert to more — dare I say — realistic metrics such as an increase in consumer awareness and brand affinity, consumer sentiment and towards building a better understanding of consumer trends, isn’t it time that we all started… getting along? I kid. But not really.

The real reason I raise this issue relates back to each piece I wrote on the subject and which I echo again, if you aren’t prescriptively closing the conversion loop within the social media environment then – I’m sorry to burst your bubble –but you’re doing a brand building exercise. End of story.

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
  • BrandsEye

    Nice to see this conversation being discussed some more. The sentiment sounds similar to that which came across in the online AVE workshops we took part in a couple months back – whether we should use or lose the metric, and if we lose it, what will replace it? http://www.brandseye.com/looking-beyond-ave

  • David_Alves

    Thanks for the comment, guys. Really appreciate that. I don’t necessarily believe it’s a snap decision to “use or lose” it, I simply think that it needs to be appropriated in the right way and connected to an online activity that allows for such measurement.

    Example: If you have 4 apples, and you take 2 away… how many apples do you have? The answer is still 4. Make sure you’re placing KPIs on matters that can be measured.

  • Su Little

    We need to stop focusing on the vanity metrics, ‘Likes’ and ‘Followers’ as these are quickly losing relevancy as we move from the social marketing space to the social CRM and social business arena.

    Soon users won’t need to ‘Like’ your page, but will still be able to subscribe to your content, like Twitter. Twitter users are often searching for content that is relevant to them as opposed to just consuming what is found in their newsfeed. Facebook’s GraphSearch will no doubt develop to be as insightful as Twitter’s search.

    True, long-term social media ROI is to be found within the ‘social business’, where we should be seeing innovation and actionable insights key metrics for social media success.

  • David_Alves

    Well said, Su. I believe users/”fans” have been able to engage with a brand’s content without liking the page for a while now – not too sure of its inception date though.

    I think most businesses are inherently social, because without total automation, you are still dealing with people and I’ve said this a hundreds times, if you don’t understand people, you don’t understand business. Whether it’s social media used for internal communications or outbound, social is a part of everything a business touches. People just need to understand what their objectives are before engaging in a branding exercise that can’t be reverse engineered to produce a business ROI.

    Thanks for the comment, Su.

  • Su Little

    The original post about the subscribe function was over a year ago, yet I haven’t see it in SA yet. Would be interested to know if any pages do have this function now http://www.insidefacebook.com/2012/07/24/facebook-tests-subscribe-button-for-pages-to-allow-users-to-receive-updates-without-clicking-like/

    We can still engage with pages content without liking the page, but that requires us to click through to the page. Whereas the ‘subscribe’ allows the pages content to appear in the newsfeed.

    Great article :-)

  • David_Alves

    Aaa yes, the “Subscribe” function. I can’t say I have seen it locally yet, but I do know that there is the ability to add a Brand/Fan Page to my “Interests List”, which allows me instant access to a page’s content. May or may not be similar to the subscribe function.

    Thanks again for the comment, Su. Appreciate the feedback and the comments. Also, thanks for sharing that link! Cheers.

  • Neil Duly

    Yeah, my favorite thing to answer. In my opinionated opinion you measure ROI against objectives – generally objectives are lacking. how can you measure the ROI on “cos the other okes are doing it” ?

    I don’t think I’ve ever ran into a situation where I have walked into a campaign and someone said “We need to achieve A, B and C realistically in the next year – now lets talk about how”. It’s not like I am the most experienced campaigner in the world, but I have worked with some that are.

    I say this coin can be easily flipped the other way around. Show me the ROI on some of the ridiculously stupid TV ads I see for brands that aren’t even having online conversations properly with brand/marketing managers that can’t even close their eyes and imagine the person they are trying to talk to.

    I’m finding this conversation far easier to have with small businesses where the entrepreneur knows the audience in a personal way rather than a person that is balancing a budget, a media schedule and “herding cats”.

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