Saturday, November 22, 2008

Is the Social Media even about ROI?

This is a question which I have been contemplating for a little while now; is ROI truly that important in the social media? The more I think about it, the less convinced I become... Such a statement will invariably draw criticism, yet it is my belief that whilst certain forms of digital marketing require a specific, measurable means of ensuring viability, the focus of the social media lies elsewhere; namely in ensuring that the customer experience remains faultless. The quest for social media ROI is akin to the search for the Holy Grail; the question is though, are we looking for the right thing?

Whilst there
is little doubt that ROI provides a metric against which to measure organisational success, there has been little success to date in applying this basic model to the social media. Why; because the social media concerns qualitative, not quantitive data. In many a case, organizations base a number of their most critical decisions upon quantifiable information only. The need therefore to measure the return on social media spend is often seen as a contemporary imperative. Whether we are any nearer to recognising this goal today than we were ten years ago is debatable. In her post 'The ROI of Social Media: Get the Biggest Bang for your Buck', Clare Munn suggests that social media ROI is indeed measurable, highlighting that application difficulties often stem from misconceptions about the product thereof; it is frequently assumed that ROI represents capital returns only. Whilst I recognise her arguments that ROI needn't solely represent monetary returns and that measurement is an important aspect of organisational decision making, I still think that these steps are inappropriately focusing our attention. I find it somewhat concerning that so much emphasis is placed upon the quantifiable, whilst so little attention is paid towards simply achieving the qualitative. Next time you speak to your customer, ask them which of the two they are more concerned about...

What this
comes down to is how you incorporate the social media into your organisation. If the social media is the responsibility of a single department or team, then ROI similar to that described by Munn will be achievable. The results of a single team's participation within the conversation should be suitably contained to measure the results thereof. Within such organisations, ROI is likely to represent one of the sole means of proving the department's raison d’ĂȘtre. On the other hand, if your organisation creates a culture of creativity, in which all members of the workforce are encouraged to participate without feeling obliged, then measurement becomes all the more difficult. How exactly would an organisation go about measuring the positive impact that a single employee has had on a single customer through a detailed blog post or comment? Herein lies the difficulty. Within a culture of creativity, one must remember that employees are engaging of their own free will. I would argue that within such an environment, it is debatable whether these contributions represent an 'investment' at all. Despite these difficulties, it is these organisations that truly realise the potential of the social media.

A number
of my recent posts have examined the critical realization that the social media belongs to the
customer, not the marketer. Despite this glaringly obvious fact, many still choose to ignore this, approaching platforms such as Twitter as they would the more traditional media. This is completely inappropriate. The purpose of the social media is to engage in the conversation; to listen to the customer and to meet their needs in any way they deem appropriate. Although this customer satisfaction is likely to prove difficult to measure using traditional metrics, it will invariably be evident through the ever evolving online conversation. In my opinion, the social media is not about ROI; it is about using the social media to delight the customer, not simply to achieve organisational objectives.

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  1. Thanks for the link to our post. There are a few issues here that need to be discussed and explained further. Yes social media is qualitative. This is something that we do stress in our blog post. Many of the processes discussed talk about the qualitative nature of social media and the need to ensure that there is organisational wide integration and buy in.

    I think that the confusion arises from the reasons behind the measurement. Measurement should not mean measurement for justification as you suggest. Social media campaigns should be measured in order to inform.

    Your comment "In my opinion, the social media is not about ROI; it is about using the social media to delight the customer, not simply to achieve organisational objectives." How do you know you are delighting the customer? Any social media strategy that does not keep track of social media activities cannot be an informed social media strategy.

    Analysis and measurement are not the objective of a social media strategy, but they are part of an overall strategy. Any strategy has to have processes and can only work if it is informed. Yes I agree that that analysis and measurement should not inhibit social media. As we said in our post:

    "ROI is a trailing indicator, not a leading indicator. ROI focuses on historical data. This helps us make sense of where we have been and allows us to make informed decisions as to its historical effectiveness. Any future direction cannot be made solely on historical data, especially when you consider the pace of change within social media and its qualitative nature."


    "Do not overanalyze. With social media, over analyzing each individual part will make you lose sight of the whole. There are too many variables to consider. We do need to remember that we are dealing with people "

    I hope that clears this up. Yes to what you are saying about encouraging participation without obligation, and yes to measurement, not as justification or "proving the department's raison d’ĂȘtre." but as a tool to help inform your strategy.

  2. Alasdair,
    Thank you very much for your comment. Reading through, I agree with your suggestion that measurement should be used as a means of informing. To clarify my comment regarding delighting the customer, I think measurement thereof is precisely one of the main difficulties of the social media.

    I understand the need to measure the impacts of the social media to ensure that your organisational presence is targeted towards the appropriate platforms. As you correctly mention, this data will essentially comprise historical information. As such, ROI does indeed represent a trailing indicator. However, where employees actively participate of their own accord, I see this historical data proving difficult to accurately obtain.

    Empowered employees will invariably cover a wealth of social media applications, and it is highly probable that through these conversational efforts, customers will be delighted through natural processes. Proving the level of delight will invariably remain difficult to prove. Clearly an organisational effort to monitor the social media is simultaneously required; otherwise gaps in social media coverage may occur. Perhaps it is here that measurement should be focused.

    Thank you for providing your thoughts, Alasdair. I appreciate your insight into the subject.