Thrudigital

These posts are written from a presentation I gave at Mediapro 2009. The first post explored the concept of social media, and the second looked at methods of engagement. Before going on to explore the major opportunities for brands and give case studies of industry leaders who are seeing some success, this post debunks some myths and exposes some truths about the ROI debate.

What’s the ROI?

It’s one of the most asked questions in this field currently. And at this early stage, there are not yet firm results from social media projects in every industry. In fact, Seth Godin would tell us that if we wait for a case study, we will be too late to catch up (I disagree with that, but I also digress…). So let’s have a look at this in more detail.

Social media does cost.

Many of the tools might be free, but the time spent in using them, and especially paying an agency to use them, is certainly not. Anyone who is looking for a solution that is completely free, is probably going to be disappointed. However, it certainly does lower the cost of many activities.

Social media does takes time.

A pay-per-click campaign or magazine advert might yield immediate results, but it takes time to listen to and engage with your audience. It takes time to be accepted as part of the conversation as a valid and valuable voice. But the results are much longer lasting. That’s because the results are founded upon relationships.

Social media is hard to measure.

Some aspects are directly measurable. Costs cut. Revenue gained. The trouble is, many companies aren’t measuring these effectively anyway. So the ROI question is irrelevant until the company becomes functionally data-driven. Because social media goes way beyond a single business function and impacts process, perspectives, and cultures as well as specific campaigns, it is very difficult to calculate a cumulative effect. However, what can be measured, should be measured.

But what’s the ROI?

As Nick Tadd puts it very eloquently, “Social media is just communicating. You say 5000 words a day, yet no one tries to establish an ROI for talking!” I would take this a step further, and say that if I was in a sales meeting, or speaking at an industry event, I could theoretically place an approximate valuation on the effect of my words. But in every other circumstance, it would be a completely fruitless exercise. In just the same way, the ROI on specific social media uses and campaigns should certainly be measured. But don’t go trying to assign a revenue line to ‘talking’ in your P&L…

Why the sudden focus on ROI?

What’s the ROI on your office location? What’s the ROI on your email system? What’s the ROI on your office lobby? What’s the ROI on your phone line? Because its the new kid on the block, social media suddenly is forced to prove itself form the ground up. Again, where this is possible, go for it. But instead of trying to prove a positive six-month ROI for your CEO’s twitter account, go do something more useful for your company’s strategic success, like watching this. Only joking. Actually, go watch this awesome presentation by Olivier Blanchard on Social Media ROI.

Right, now that I’ve got that off my chest, the next post will look at the valuable opportunities available to brands. And yes, it will include some quantifications of value returned by social media investment! As in, actual numbers.

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