In 2011 New Media Trends, I covered the trends we’re seeing with Facebook and its climb to a billion members. According to its statistics page, the social network is now at 750 million plus members. One billion should be achieved by the end of 2011.
Despite this soon-arriving monumental milestone, measuring the use of social media — social marketing ROI — is still a sore subject for many marketing experts.
The challenge exists because ROI calculations require a determination of revenue, sales, or some other transactional gain. When similar calculations are applied to social marketing ROI, the attempt breaks down because social media typically fall in the brand-building category, where calculating ROI, ROMI (return on marketing investment), or CPA (cost per acquisition) remain near impossible.
And because social marketing is typically only one within a much larger set of media in a campaign, pointing specifically to social marketing as the single reason for success is not an exact science. Brand-building requires multiple impressions and consistently seeding your position in the mind so that when a purchase consideration arises, the prospect knows why to choose you versus the competition.
According to the June 13, 2011 issue of BtoB magazine, which cites the “Emerging Trends in B-to-B Social Marketing: Insights From the Field” survey, “While 93% of marketers are engaged to some extent in social marketing, 75% have no ROI attribution program in place to measure the effect.” The article states that most survey respondents are using typical website analytics to gauge effectiveness: “Among companies that try to measure social’s impact, its highest value lies in its ability to drive website traffic, cited by 64% of survey respondents.” Some of the additional metrics listed were listening to social buzz, branding, customer feedback, and search engine optimization. The article’s unspoken conclusion was that establishing an ROI calculation isn’t likely in the near future.
My conclusion is that we just need to set proper expectations in measuring social marketing. The frustration in all this is when your finance department comes calling and asks you to justify your investment in social marketing. That means they want to know the ROI. But the good news is in the purported bad news. Brand positioning is a necessary component in marketing. Together with other tactics and media, the brand tide should rise with the use of social marketing. You may however need to reset your finance department’s expectations around ROI. Because as of July 2011, a standard social marketing ROI calculation or tool doesn’t exist.