Social Media ROI: Still Chasing Its Tail

Posted by Michael Neubarth
Michael Neubarth
Michael Neubarth is Vice President of Marketing for and founder and Director of eMatrix Media Comm...
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on Thursday, 15 December 2011 in Social Media

I examined the controversial topic of social media ROI in depth in a series of articles in 2009. (See “Social Media’s Elusive ROI”). Two years later, social media ROI is still a nagging and hotly contested issue.

Olivier Blanchard has noticed this too, and is extremely frustrated, writing in a recent post:

“As annoying and curious as it was, back in 2009, when so many so-called ‘experts’ and ‘gurus’ couldn’t figure out how to explain, much less determine the ROI of anything relating to social media, it is inexcusable today, less than a month from 2012. We’ve talked about this topic how many times?” 

What’s the problem?

One key difficulty lies in the inability to trace or correlate, with any certainty, conversations that take place in social media networks about products with the eventual sale of products that may occur. 

Another impediment is that many marketers do not believe that social media’s aim should be to sell anything, or should be measured at all.

The argument basically pits two camps against one another—the moneybaggers and aura builders. The aura builders believe social media has obvious value to a business, like PR, but the value is not quantifiable and need not be quantified or justified.  

The moneybaggers believe no marketing should be undertaken without the goal of selling and making money and that all social media efforts should have a clear and justifiable ROI case. (See “ROI Is The Thing, The ONLY THING When It Comes to Social” by  Tim O’Connor.)

As Rick Curtis of Amaze said of this problem, “Social practitioners favor soft metrics, such as reputation, engagement and participation, whilst senior management prefer metrics that are very much at the hard end of the scale.”

Pressured to produce ROI figures for social media, a number of analysts and marketers in the moneybagger camp have put forward formulas and methodologies they say solve the problem—among them Olivier Blanchard.

That his formula has not been widely recognized and adopted is the root of Blanchard’s indignation. “At the very least,” he says, “they should have heard a rumor that the ‘question’ had been answered. Right?”

Curtis, meanwhile, cites an Altimeter Group report that showed that 74% of the corporate social strategists surveyed said their primary duty was to measure and report on return on investment of social media, with almost one-half saying the creation of ROI measurements was their top internal objective for the forthcoming year.

“But,” Curtis says, “developing a commonly agreed set of key performance indicators (KPIs) for social media is notoriously difficult.” 

Curtis and the corporate social media strategists he cites obviously don’t consider the ROI matter settled.

But Blanchard has no patience for them. “What will it take for the asshats pretending to be experts to stop talking about ROI as if it were some arcane mythical metric?” he asks.

Meanwhile, there are many marketers and metrics specialists who continue to scratch their heads while pronouncing social media ROI unclear, unanswered, and too difficult to formulate.  Among them is Nick Robinson, who in "Social Media ROI: Why the Status Quo Is Broken" wrote: 

“One of the hottest topics within the social media space is ROI or return on investment. The problem with the formula is that marketers don’t have the ability to connect 10 interactions on 10 different social networks to bottom line revenue or cost reduction.”

Santorini Simon is another puzzled marketer, writing in “Social Media ROI and being realistic” that social media ROI is not clear to him, and musing that "Leads generated via social media oriented destinations convert (sometimes, generally) to trackable website traffic which you then funnel to a sales transaction = Measurable ROI…It’s not that simple, though…" 

Among those who see ROI as irrelevant is Sherilynn Macale, who in "Social media ROI: It's not about immediate results" wrote:

“To borrow a phrase from Gary Vaynerchuk, the author of The New York Times and Wall Street Journal Best Seller, Crush It!, measuring immediate return on investment in social media is like measuring the ROI of your mom and everything she’s done for you." 

Blanchard, however, is apoplectic over what he sees as the blindness of these marketers. "Seriously," he says, "you have to be either completely disconnected from the channels you claim to be an expert participant in, or purposely avoiding this stuff to still get it wrong." 

What's the resolution? There is none. Both camps are right, and both ways of looking at ROI are valid—for different aspects of social media. Some social media initiatives and gains are measurable and some are not. Some benefits are hard and some are soft. There is no single, simple, general formula for measuring ROI across all forms, and forums, of social media.

The answer, as it often is, is “It depends.”

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Michael Neubarth is Vice President of Marketing for and founder and Director of eMatrix Media Communications. Michael has a comprehensive marketing, communications, PR, analytical, and editorial background, including strategic marketing, communications, and market intelligence roles at IBM, FatWire Software, and Brodeur Worldwide, and as an analyst at Meta Group covering advanced technologies. His experience includes roles as editor-in-chief of Internet World, NetGuide, and Windows magazines, and expert contributor to Michael is a well-known writer on information technology, digital marketing, and social media issues, and his articles and blogs are cited widely online.


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