Google the phrase “Social Media ROI” right now. You will be presented with 55,600,000 results. We estimate that if you wait until tomorrow, you will have to comb through a million more. And so on and so on.
We also estimate that less than 0.0005% of the search results make a proper reference to the “R” in ROI. Which means a lot of people are writing about the wrong thing (but no doubt getting lots of readers, who are desperately seeking what can’t be found).
It is all Dell’s fault. Sometime back in 2009, the company announced that it had sold a thousand or so used computers on Twitter. The revenue claim was equivalent in scope to what Dell spends on photocopy paper in one day. Nevertheless, social media ROI was born.
Fifty-five-million stories later, and there hasn’t been much more than Dell to tout. Sure, there have been gabillions of “likes” and “retweets” and “views” and “shares.” But these and their ilk are not what “R” refers to.
Return on investment is a financial construct, not a subjective, qualitative dart toss. The return – aka the numerator – is equal to operating profit. That can only come from increased revenue or reduction in cost, and must be definitively attributed to the marketing investment made (which goes in the denominator – i.e., the “I” of ROI).
To see it in action, click here for our look at the ROI of the Hispanic social network site formerly known as Que Pasa.
Since no one uses the “R” properly when it comes to social media, the phrase “social media ROI” should be embargoed by all publishers, ISPs, and search engines.
The digital marketing industry site Digiday has been running a series on “the biggest challenges to measuring” social media ROI, interviewing various marketers for insight. Here are excerpts from today’s offering that help reveal why a dagger should be, um, dagged into the heart of social media “return”:
Joe Barbagallo, Volvo
“…the relationship-building nature of social media isn’t designed to directly [drive sales]…in the end, social media campaigns are designed to drive awareness and consideration.”
Erich Marx, Nissan
“Until there is agreement organizationally on what the social goal is, and what is ultimately most important, measurement of ROI that has any meaning will be a struggle.”
Scott Gulbransen, H&R Block
“Sometimes when people ask you what the ROI of a social program is, we need to…tell them it’s the wrong question in the first place.”
And, finally, to prove our long-running point about how f*cked up Campbell Soup is:
Adam Kmiec, Campbell Soup
"The challenge isn’t what to measure or when to measure. It’s not even how we derive insights from the metrics. The biggest challenge is convincing people to believe the ROI metrics."