Social 2011 – Measuring ROI of Social Media Efforts
By: DiannaZheng
ROI. Return on Investment.
As a business student at Boston University’s School of Management, I’ve had this performance measurement drilled into me. We use it to analyze the efficiencies of a variety of investments in order to help pick the best investment. ROI makes sense in any business and I always wondered how ROI was intertwined with marketing efforts. More specifically, how to measure the ROI of social media marketing.
Last week, I had the honor of going to Radian6’s Social2011 User Conference where I found the beginning to my answer. The event was filled with very influential people/speakers within the social media industry and even some star power such as Isaiah Mustafa. Besides being blown away by the people and the topics covered, what really struck a chord was on the last day when Social Media ROI was covered. Here are some key things that stuck:
“Don’t try to reinvent the wheel.”-KD Paine
I feel like this quote really sums up the fact that there has been a lot of confusion (and even panic) regarding measuring social media ROI. What the guest panelists were getting at is that yes, social media is a new platform and “unknown”. But, that doesn’t mean we need to throw every marketing ROI out the window because it may seem irrelevant now. That also doesn’t mean we need to make everything seem impossibly complex. And it especially does not mean we should quit on social media. Every component is still pretty much the same with just a few new little twists when calculating ROI. There is no need to reinvent that wheel.
ROI Will Be Different For Everyone
It will be hard to compare ROIs across companies simply because each business has different objectives. Some companies may just want to use social media to complement their promotional campaign and drive short-term sales. Other companies may have already engaged the consumer and want to encourage word of mouth. So really there doesn’t seem to be a standard ROI measurement that applies to everyone for comparison evaluation. There only exists the right ROI performance measurement for an individual company and its individual objectives.
Listen To The Data
Programs such as Radian6 gives marketers a platform to help measure, listen and engage with the entire social web accurately. It is important to have such programs because marketers do not want to set themselves up for failure from the start. What I mean to say is that it makes sense that if the metrics, the data, or the lack of data are unclear and unreliable, whatever objective you have for your ROI will end up seeming ineffective and failing. With a quantifiable ability to measure effectiveness, it will allow marketers to measure and adjust to the needs of the consumers.
Lastly…
I think firms need to remember why they are using social media. Don’t use social media for the sake of using social media. Social media isn’t like traditional media where all you do is push marketing initiatives onto the consumer. Social media very much a consumer controlled world and they can, and will, weed irrelevant information, brands, and even people out. A marketers job is to provide a place for consumers to become aware of a brand, connect and engage with the brand, and then talk about the brand with others. And at the end of the day, this really is no different from addressing the original Consumer Purchasing Process we all know.
Dianna Zheng is a Senior at Boston University studying marketing and advertising, she blogs at http://adbinge.wordpress.com and you can find her on Twitter.
