One of the biggest 'criticisms' of social media that companies have, is the difficulty in measuring the return on investment for their efforts.  Many believe that widespread business adoption of social media won't happen until a clear benefit to the company's bottom line can be measured.  Of course, these people are totally missing the point of what social media is, and why it works.

First, let's back up a minute and remember where social media came from.  'Social media' is a fancy term used to describe tools such as blogs, podcasts, wikis and social networking sites, where people create content, share it with each other, and connect.  Really when you think about it, message boards, chat rooms and IMs could just as easily be called 'social media' under that definition.  For years, people used these tools to write blog posts, create profiles, and connect with each other.  And they did so pretty much without the rest of the world catching on to what they were doing.

But around 2005, blogs in particular started getting a lot of mainstream attention.  Then there was the 'MySpace Phenomenon'.  In 2006, YouTube and Facebook got on everyone's radar.  So suddenly you had all this mainstream media attention being thrown at social media.  All the facts and figures on how many millions of people were actively using these tools made marketers take notice.  The thinking was that if all these hundreds of millions of people were using these tools to communicate, then why could companies start using social media as a way to push their marketing messages to these people?

So in the last year or two, there has been a rush by companies to get involved in social media.  And of course when companies got involved in social media, they wanted to have a way to measure their efforts, they wanted to know that they were getting a return on their investment.

And this is where the trouble started.

The trouble isn't coming from companies wanting to know the ROI of their social media efforts.  That's a completely valid and necessary consideration.  The problem is, many companies that start using social media, are attempting to measure the wrong things.  Many companies want to see a direct line drawn from time/money spent on social media, to a direct impact on the companies bottom line.  They want to know that if they write X number of blog posts, that sales will increase by Y percentage points.  That if they leave X number of tweets on Twitter, that Y new sales this week will be the result.

In short, traditional marketers are wanting to measure the ROI on social media as they would many of their traditional marketing efforts.  But that's the problem, because blogs, Facebook, Twitter, and other social media channels were never intended to house and push marketing messages.  They are personal communication tools.

Let me say that again; social media are PERSONAL communication tools.

Now you see where the problem lies.  Companies are wanting to treat these personal communication tools as if they are marketing channels, and measure their effectiveness as such.  As social media expert Jason Falls said: The problem with trying to determine ROI for social media is you are trying to put numeric quantities around human interactions and conversations, which are not quantifiable.

Bingo.  In order for companies to accurately measure their return on their social media efforts, many need to fundamentally rethink how they view social media, and what they want to accomplish with these tools.  If social media are fundamentally communication tools, then doesn't it make sense to measure your social media efforts by viewing them through the lense of how effectively they allow you to communicate and connect with your customers?

Instead of measuring how sales or revenue has been impacted from your blogging efforts, what if you started measuring comments per post?  Or emails you get from readers?  How about tracking what percentage of online mentions are positive/negative, and how that changes as your social media efforts unfold.  What about subscribers to your blog?  

The point is, view social media as a way for you to better connect with your customers, and to build positive relationships with them, and measure your efforts with those goals in mind.  And as you increase the number of positive interactions with your customers via your social media efforts, positive online mentions of your business will likely increase, and your customers will be far more likely to evangelize your business online, and to trust you.

And come to think of it, what do you think the net result that increased trust and positive interactions with your customers might have....on your company's bottom line?  

Exactly.  You can definitely measure the ROI on your social media efforts, you just need to realize what social media IS, and perhaps just as importantly, what it IS NOT.  

November 18, 2008





Mack Collier is a social media consultant, trainer and speaker. He has been actively immersed in social media since 2005, and in that time, has helped advise, teach and consult with businesses of all shapes and sizes on how they can better connect with their customers via these amazing tools and sites. While being passionate about the social media space, what truly excites Mack is the human connections that can result from the proper use of these social tools. His motto is "Don't focus on the tools, focus on the connections that the tools help facilitate." His goal is to help his clients create those connections with their customers, and nuture them into relationships that help grow their bottom line.

His social media 'homebase' is The Viral Garden, which in 3 years time Mack has grown into an influential marketing/social media blog with a monthly readership of over 175,000. He is also a frequent contributor to the website Marketing Profs, as well as the marketing blog Daily Fix, and small business blog Search Engine Guide. His writings have been referenced in several mainstream publications and websites, including The Washington Post, MSNBC.com, Ad Age, CNET, and The Boston Globe.

Mack is also a requested speaker and has presented at some of the top social media conferences and events, including South By Southwest Interactive, Marketing Profs Digital Marketing Mixer, and Small Business Marketing Unleashed. He is also passionate about teaching companies how to use social media sites and tools more effectively, and offers training and seminars privately to companies, in addition to his public speaking schedule.

You can learn more information about Mack's social media training and consulting services here. If you need a social media speaker for your event, or want to know where Mack will be speaking next, click here. If you want to email Mack, click here.

Mack wrote this bio. The third-person thingie is just for fun.






Comments(5)

Thanks Mack for stating what should be common sense: Quantifying relationships results in disappointment. Imagine ranking friends based based on the number of people you could potentially interact with through them? Transforms the entire concept of friendship into an myopic, egotistical activity.

On a daily basis, I find myself explaining decisions to connect clients with a blogger only possessing 5,000 monthly readers with 400 Twitter followers (or some variation). "But Blogger X has a Twinfluence of 10 million. He can potentially reach 10,000,000 readers. Why not him?" My response - participating in a conversation where your opinion is actually valuable builds a trusting relationship capable of spreading your ideas further in the future.

Thanks for letting me rant Mack - Would be interested in reading your methods for tactfully reminding PR and Marketing professionals about the true value of "social" media.

Andy Angelos

Mack, Andy:

I absolutely agree that social media campaigns need to have metrics that make sense, given the long term goals. If you use the 1 day, 1 week, 1 month time horizons and expect to see measurable results/positive ROI, it's time to realign expectations.

How many people do you meet and expect to become friends (or good friends) with in that short time frame? Because consumers anthropomorphize brands, brands should think about social media as a tool to develop relationships with those who are open to it. Why would brands have different expectations?

I don't think it's a big secret that I love SnagIt (software), Nordstrom's (department store) and Whrrl (web 2.0 app).

Why do I love them? Because they consistently, repeatably demonstrated amazing service and I feel like I have personal relationships with these organizations. These interactions require a longer time horizon, thus metrics should be tied to long term goals.

I don't think it is really possible to capture an ROI for social media marketing. How do you put an ROI on branding?

Thank you for your dead on insight.

I couldnt agree with you more. I get asked time and time again, how can I make money today with Social Media. I answer "you cant". Companies wants to get involved in Social Media but have no idea what to do with it.

I am bookmarking this article as a reference to give to clients when they ask about our ROI.

The process that the organization uses to ensure repeat business/usage of its products/services on an ongoing basis

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