Is “Social Media ROI” an Oxymoron?
B2C marketers have scored some big social media wins recently. For example, in the past month alone, Nike’s “Write the Future” YouTube campaign during the 2010 World Cup and Procter & Gamble’s blockbuster Old Spice YouTube videos made headlines worldwide, connected with tens of millions of consumers and created what most of us think will be positive, long-lasting brand associations.
But, even so, one big question remains: How will all of that translate into sales?
Most marketers I talk to are still scratching their heads when it comes to social media ROI, and often it is a fundamental factor holding companies back from launching campaigns to engage with their customers online.
With ROI pressure looming larger than ever for marketers, no one wants to invest in an initiative that doesn’t pay off. And, with limited resources and budget, we want to make sure there is a positive return for the time, effort and budget expended. But, how do you evaluate social media marketing success in financial terms? Is that even possible? Maybe there are benefits to social media that aren’t financial? If there are, how can those benefits be measured?
Questions like these are thorny, timely and incredibly valid –and that’s why I was thrilled to see Augie Ray, an analyst from Forrester, tackle the issue of social media ROI head-on in a blog post earlier this month.
According to Ray:
Many marketers can draw a straight line between investments in social media marketing and financial results, but many more cannot. This doesn’t mean social media marketing is ineffective; it just means that marketers have to recognize benefits beyond dollars and cents. Facebook fans, retweets, site visits, video views, positive ratings and vibrant communities are not financial assets—they aren’t reflected on the balance sheet and can’t be counted on an income statement—but that doesn’t mean they are valueless. Instead, these are leading indicators that the brand is doing something to create value that can lead to financial results in the future.
Ray then goes on to provide a “Social Media Marketing Balanced Scorecard” that considers metrics from four different perspectives: Financial, Brand, Risk Management and Digital. As he says, marketers can only make sound decisions about social media marketing investments after measuring results across this four-part spectrum. “It is only by recognizing all of the benefits delivered by social media marketing that the complete value of these efforts can be understood,” Ray concludes.
I would add one more wrinkle. I think that it’s also important to recognize the negative effects of ignoring social media. These days, customers increasingly expect to engage with brands online. They expect companies to offer information, assistance, or simply feedback. Surely, ignoring those kinds
of expectations is bound to prove detrimental as social media marketing approaches become more widely accepted.
But, what do you think? How is your company tracking and measuring social media marketing ROI?