Socialnomics – Social Media ROI or Social Media Measurement?

While I don’t like to equate social media with ROI, but rather positive measurement, here is some good stuff:

The technical definition of ROI is (x-y)/y where x = sales and y = investment.

Social media is a marketing tool (as well as other functional organizations’ tool such as customer support). Marketing is NOT sales – Marketing increases the probability of sales by creating awareness and generating qualified leads. While this is still an endless debate in companies, marketing should not be measured on sales. There are other applicable measurements that should be made to evaluate the effectiveness of marketing. A sales organization wins sales, but they require the support of marketing (and many other organization partners).

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17 Comments

Filed under marketing, measuring social media, sales conversion, social media, social media marketing, Social Steve, socialmedia, SocialSteve, Uncategorized

17 responses to “Socialnomics – Social Media ROI or Social Media Measurement?

  1. This certainly has been a contenscious subject. Many individuals just think that the benefit is too fuzzy. Others of us think it can be measured. The whole issue seems to be maturing. I’d bet that in another year, some better models exist.

  2. This was awesome, Steve. Thanks for sharing.

  3. Dear Steve

    I like this this video also how you point out what ROI really is …. scorecard.

    I agree wholeheartedly, no way we get ROI for social media… since it is a financial outcome … but we can most certainly do a cost-benefit analysis as we outline here:

    http://commetrics.com/articles/metrics-2/

    If you are interested we also focused on KPIs here and how they help in evaluating the benefits of social media engagement:

    http://commetrics.com/articles/implement-5-tips/

    Thanks for posting this Steve.

    Regards
    Urs
    @ComMetrics

  4. Great presentation.

    However …

    Having a company on Twitter DOES cost money. It’s not $0. It’s a proportion of someone’s salary.

    Reducing customer care phone / email queries is great if you can get them to use social media … but you can’t depend on other customers to help with specific issues. The customer care resource will simply be moved to social media, and, if successful, more people will engage with them, not less (as you’re more visible) … therefore it costs more.

    The theory is great. In practice it’s a different story.

    Ilana.
    ASOS.com

    • Ilana -

      I agree the cost is not $0. I agree that there might be budget transfer as well. I do not agree that it will cost more because more people will engage. Social media is more cost effective than customer support call centers, for example.

      Thanks for your input.

      Best,
      Social Steve

      • Thanks for posting, good video and discussion. Isn’t it possible that as use of SM grows and the Brand Managers and Marketers that are currently engaging customers via SM eventually become overwhelmed by volume/activity that it will be the customer support contact centers that end up handling SM interaction? After all these centers currently handle the interaction for all other channels from voice, email, & chat. This would have to entail some cost although perhaps less than current phone interaction.

      • John – You make a valid point in your reply below. What I do see helping to limit the time demand on the Brand Managers and Marketers are more automated tools. For example, I have defined a social media marketing dashboard that will automate communication outbound and monitor/collect appropriate information on the web that should be reported to the managers. I am currently looking to potentially add this to an existing social media technology’s portfolio. I am sure there will be many other solutions brought to market as well.

        Best,
        Socisl Steve

  5. Steve:

    Thanks for posting my video and it’s been great chatting on Twitter. I appreciate the Soicalnomics support from leaders like you!!!!

    Erik Qualman
    Author of Socialnomics

    Also, for the $0 cost discussion. Agreed it’s someone’s time (soft cost) – that slide is quick so it just compares the hard costs. But there are also soft costs involved with Billboard development (creative, shipping, production, etc.). Thanks for viewing.

  6. Good post, amazing looking website, added it to my favorites!

  7. Always a healthy dose of social media marketing insight – keep the ball rolling, Steve!

  8. Hey Steve..thx for the post. In IT, there are as many ways to measure ROI as there are ways to customize Siebel. Regardless of the definition of ROI, the point in practical terms is this. How many organizations, given the amount of energy spent on the topic, actually use ROI (or IRR or whatever other business case metric you choose) to justify moving forward with a project? And, the sample gets even smaller when you try to find companies that actually hold a named executive accountable for delivering the results of that forecasted ROI.

    So, in reality, ROI is a guise for inertia.

    • Barry -

      I agree … not enough companies measure and look at ROI, IRR, or any other “how are we doing” parameter. I think a recent statistic I heard was that 86% of companies using social media don’t even measure anything. Risky (or riskier) business. This does it make it right or good sense.

      Best,
      Social Steve

  9. All,
    Great comments on a super video.
    R

  10. Hi Steve;
    Another great post – thanks for sharing.
    Our clients asked us so many times how they would calculate the ROI of their Social Media Campaigns (and for marketing campaigns in general), that we put some serious effort into answering their questions. For those would like to read our answers, here are the links:
    1) How to calculate the ROMI of your website as a whole: http://bit.ly/6bFSvs
    2) A list of the 10 best free ROI calculators on the web: http://bit.ly/7fwBkF
    3) How to build your own ROI calculator (perhaps for your social media campaign): http://bit.ly/6IGZQh
    The approaches sacrifice 100% accuracy for ease of use, but they are accurate enough to be useful.

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