Social Media and that elusive ROI

Posted on February 27, 2009. Filed under: Uncategorized |


A good laugh with my meeting makes it so much better...

Alright, here’s a provocative post written some months back by a man whose tag line is “Relationships Through Social Media Marketing”, Jacob Morgan.

There Is No ROI from Social Media

Go read it in a new window, and come right back.  Or if you don’t have time for that – here’s the recap:  you can’t put a dollar value on the relationships you create in any number of online communities.  It’s a quality thing, not a quantity thing.

Clearly Morgan believes in Social Media Marketing, or he wouldn’t use that tag line right at the top of his blog.  But if I’m interpreting him correctly, his message is that you can create Facebook pages, upload videos to YouTube, recommend others in LinkedIn and tweet all day – and none of those things will result in a direct monetary transaction.

Fair enough.  There is no “buy now” button in any of these venues, and thank goodness.  I’ve always been a bit suspicious of the long, long “squeeze page” online that tries to talk you into a purchase at first glance.  This is a long-standing form of internet marketing that builds on the AIDA model: attention, interest, desire, action.  It’s all there in one marathon sales pitch, and in that formula, it really doesn’t matter whether you like the product maker/service provider or not.  It’s all about features and benefits – if you want the benefits badly enough, you may read to the bottom and hit the “buy now” button. The formula has made multi-millions online, and I’ve written a couple, myself.

Social media, on the other hand, embraces a longer sales cycle – one that’s built on people coming to know, like and trust you.  Isn’t this the strongest basis for any business/customer relationship?  The results are much more difficult to quantify, but that doesn’t mean you won’t see any.   It’s just more indirect, and more like the way most of us have always chosen who we do business with.  It’s who you know, and who you know that cares about you.

That’s the route that I want to take as I bring my services online.  If I have to track the circuitous route for each of my clients from Twitter follower to email correspondent to proposal writer to contract signer to happy customer to loyal advocate and referral source, so be it.  The cycle starts at relationship.  That’s a sales cycle I’m quite happy to track, even if it is more difficult to quantify!


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3 Responses to “Social Media and that elusive ROI”

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Good post, Catherine. I can’t say I agree completely with Jacob’s post, either.

That’s partly for tactical reasons: if you go into a budget review in today’s harsh financial climate, and shrug off any questions about ROI, all you’ll get is a big pair of scissors right in the line item.

But there’s a more fundamental reason, too. Marketing is constantly called on to estimate the returns when quantification is very hard to come by. Was that conversion because of the banner ad the customer clicked on, the earned media she viewed two days ago, or the conversation she had last week with a salesperson? Marketers use some sophisticated tools to draw inferences about how much of the share of the conversion value should be assigned to each interaction – but those are ultimately still inferences.

The same can apply to social media marketing. For instance, we can conduct broad measures of brand and product awareness before and after a social media campaign; track visits that come from referring blogs, follow them through to conversation and estimate a value from there. Condensing drops of useful information from the cloud of data isn’t easy, but it can be done.

What that doesn’t change – and where Jacob’s post may be pretty important, and valuable – is the fact that this is still only the tip of the iceberg. We won’t and can’t capture and quantify the whole of the value of social media efforts because so much of that value goes into aggregates and intangibles.

What’s it worth to be seen as an organization that communicates openly with our customers and supporters? What’s it worth to have a collection of friends talking about us below the radar? And how much of that can we attribute to social media instead of other factors?

Yet those have real, monetary value to the organization. And even intangible values get measured sooner or later – for example, when a company acquires a brand.

One challenge for marketers is to encourage organizations to do a better job of measuring that value on an ongoing basis. Even if the precise contribution of social media is difficult to ascertain, rough estimates can help ensure smarter, better-informed decisions… and make a stronger case for social media.

My argument wouldn’t be that there’s no ROI from social media. It’s that there may well be a lot more than we know… and we need to get a better handle on measuring it.

first off thanks for sharing and linking to the post 🙂

the trouble with tracking social media is boiling it down to a dollar amount. so far there is not tool or platform that can translate a relationship into a dollar amount. now that being said, roi can be a lot of things such as site traffic, pr, hr, sales, leads, etc. however it will never be possible to say “this is how much this relationships is worth” in dollars and cents.

clearly social media is a valuable tool and there are a few great examples such as dell, who have used tools such as twitter to generate sales of over $1 million. However at the end of the day, the most important thing for any business is customer relationships and that is what social media allows for.

in relation to bob’s comment, you don’t need to shrug off roi, you just need to understand what it is you want to measure before you get involved in social media and work from there. you must define your roi and in order to measure it.

makes sense?

Sounds like we’re all in agreement: in social media, connect first. The money may follow if you do a good enough job of developing your online relationships and presence.

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