BrainTrust Query: Dollars and Sentiments – The Real R.O.I. on Social Marketing

Jun 16, 2010

Commentary by Doug Stephens, President, Retail Prophet

Through a special arrangement,
presented here for discussion is a summary of a current article from the Retail
Prophet Consulting blog.

Alice in Wonderland speaking to the Cheshire Cat…

Would you
tell me, please, which way I ought to go from here?”
depends a good deal on where you want to get to” said the Cat.
don’t much care where –”  said Alice.
“Then it doesn’t
matter which way you go” said the Cat.
“– so long as I get SOMEWHERE,” Alice added as an explanation.
“Oh, you’re
sure to do that”  said the Cat,  “if you only walk long enough.”

Like Alice, marketers often find themselves needing to “get somewhere” but
may not be precisely sure where that somewhere is. This has become
particularly true of social marketing efforts. With the fervor around social
media, marketers are feeling pressured to begin incorporating it into their
program but aren’t
quite sure how. In some cases, they’re not even completely sure why social
marketing matters so much – they just feel they ought to be doing it. So, like
Alice, they often set out in a direction, only to find that after considerable
time and effort, it got them nowhere.

In talking with marketers
I’ve come across three common pitfalls that,
from the beginning, can lead them astray.

Pitfall #1: Believing that all social marketing means creating social

While social marketing may involve social media, there’s
a fundamental misconception that all social marketing involves the development
of content – blogs,
videos, Facebook apps, etc. But depending on your company’s objectives,
you may never want or need to create your own content.  The key lies in defining
what results you want from the program.

I like to think of social marketing
as a spectrum of engagement ranging from passive to active
The objectives you target will directly affect the activities you undertake
and your engagement level.

Pitfall #2: Setting program objectives that aren’t

A head of marketing for a major regional shopping centre recently told
me her objective around social media was to generate foot traffic for the mall.”
This sounded like a reasonable objective but the problem is that the mall has
no empirical means of credibly measuring foot traffic.

The objectives you set
should meet three key criteria. They should support the overarching strategy
and positioning of your business. They should be credibly measurable. And
lastly, they should be meaningful to the people in your company that control
the financial and/or human resources you’ll
need to continue or expand your social marketing effort. After all, there’s
no glory in meeting an objective, if it doesn’t at least win you the
resources you need to continue your program.

Pitfall #3: Confusing social activity with return on investment

Part of what gives social marketing a bad rap is that too many marketers
simply measure and report the company’s social marketing activity
that is, blog posts, YouTube videos, Tweets, etc. They also tend to confuse
return on investment with non-financial consumer responses, like blog subscriptions,
YouTube views, Re-tweets etc. The result can often be a nebulous set of metrics
that neither support nor negate the merits of their program. What they fail
to measure is the amount of sales, profit or cost-savings that the social marketing
program is (or isn’t) generating – the real return on investment.

of the problem is that we’ve been told that financial R.O.I on social
marketing can’t be measured – that it needs to be valued against
softer metrics – which is simply not true. A great Slideshare
presentation here
Olivier Blanchard of The Brand Builder demonstrates an excellent methodology
for measuring financial R.O.I on your social marketing spend.

We’re beyond
the “shiny tool” phase with social marketing
and the onus is back on marketers to show the return on their work in this

Discussion Questions: Do you believe that marketers can or should be held
accountable for demonstrating a monetary ROI on social marketing spend? What
are the common hurdles in attempting to do so?

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22 Comments on "BrainTrust Query: Dollars and Sentiments – The Real R.O.I. on Social Marketing"

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David Dorf
10 years 10 months ago

Measurement is the tough one and the most important. Social media efforts should be focused on influencing consumer behavior, so that’s what needs to be measured. Collecting metrics for number of posts/tweets, level of interaction, retweets/forwards, etc, are all important metrics but they don’t quantify the impact on behavior. But at least they are a start. Any effort, no matter how small, needs to measured in some way.

David Biernbaum
10 years 10 months ago

It’s 2010 and if you are still living in the past, you are missing the boat. It’s not possible to measure the ROI on social marketing, at least not in an accurate way, but in much the same way that you look at public relations, which also is almost impossible to measure, social marketing is a current necessity for many consumer brands, and if its overlooked, or handled in a less than dynamic and effective way, then your maximized opportunities are being lost.

Nikki Baird
Nikki Baird
10 years 10 months ago

You know, I’m a little conflicted on this one. While I agree that every good corporate citizen should be able to explain how they are contributing to the company’s top and/or bottom line, and this includes social marketers, I’m worried about too much emphasis on the financial impact at the expense of some of the softer things. I totally agree that marketers need to pick some measures that give them an indication of some kind of progress or success, but there’s something to be said for the enthusiasm and influence elements of the ‘softer side.’

I also think some people are getting ROI confused with Revenue when it comes to social marketing. Absolutely there should be a way to verify that you are generating a return on investment, however that return is defined, but are a lot of people generating revenue directly from their social investments? I don’t think so.

Bob Phibbs
10 years 10 months ago

I think part of the problem of measuring ROI is confusing desire marketing – people searching for what you have to offer right then which can be tracked vs. intent marketing – people who “might” be interested on social media.

Social media to me is just putting breadcrumbs out hoping people might pick them up and follow you to your site/store. Don’t confuse that with your core customers looking for the whole loaf of bread.

Joan Treistman
10 years 10 months ago

I’m astounded that marketing or media plans can be built on the basis of choosing a medium that is “hot” for the sake of being part of the trend. A specific ROI can be about building brand awareness or repositioning a brand. But just throwing money into a social media plan for the sake of being part of the in crowd seems irresponsible.

We know that less than 10% of the population engages in social media, including reviews of products and services. I believe the metrics begin with this acknowledgment and accountability has to be based on what can be achieved.

Ryan Mathews
10 years 10 months ago

Metrics are critical. That said, we haven’t come close to developing an appropriate set of metrics for social media yet. What we need to do is work far more aggressively to understand that a new road requires a new roadmap.

Ben Ball
10 years 10 months ago

Challenging initiatives of all sorts to “show an ROI” is popular–but also the easy way out for managers–particularly senior managers. Almost all ACTIVITY is measurable in some way. Whether it it upticks in advertising awareness, increases in ACV distribution or display penetration, or “clickthroughs.” The onus that should be placed on the manager is to achieve the measurable goal for the activity at the cost approved by management. It is management’s job to determine whether those results then generate a reasonable ROI for the business. The only ROI that matters is the one on the financial statement that we all generate together as a team. Attempts to push that down in the organization are far too often a senior management smokescreen for not accepting their role as ‘judgment in chief.”

Roger Saunders
10 years 10 months ago
Marketers have been, and will continue to “jump into Social Media”–it provides them with access and a connection to the consumer. Those same marketers have to keep in mind that those same social media are part of the overall mix of media–traditional and new–that have to be viewed in a holistic frame of reference. The two have to be tied together. And, marketers need to monitor the shifts as to how the consumer is being INFLUENCED by each of the media. Gone are the days when a marketing/media division could work with 3 to 5 media choices, and use 1960-style metrics that monitored GRP or circulation numbers in a vacuum. There are 25+ legitimate media solutions that are being offer by the communications media, with more to come. The industry has to step up and look at them in a holistic manner, and consider INFLUENCE on the consumer in terms of their purchasing decisions. The consumer knows the answer, and they are willing to share it with marketers–the later need to monitor, listen, observe–and then… Read more »
Dan Desmarais
Dan Desmarais
10 years 10 months ago

Social Media Marketing is similar to the original internet marketing. You knew you had to do it to keep up with the competition and you had no idea if it was working.

The opportunity for Social Media is to build your brand. Coca-cola and Adidas are unlikely to be able to justify ROI for the 3B they’re spending on the World Cup. They’re doing it because they believe it’s important to build their brands.

Social Media provides the opportunity to appear accessible and show quick response to unhappy customers.

Jonathan Marek
10 years 10 months ago

The idea of measuring REAL ROI–that is sales and profits–is dead-on right. Sometimes, when I hear the talk about social marketing, I think we’re back in 1999-2000, talking about eyeballs and land grabs. We all know what happened next. It’s hard to remember how relatively unsexy Google was back then (text ads?!?), but they showed real ROI and they won.

This too shall shake out, and when it does, only those social media that show real ROI will win.

Joel Rubinson
10 years 10 months ago

There are two aspects of social media: “social” and “media.”

In terms of “social,” it is a cultural change. As someone from General Mills said at an ARF event, “what’s the ROI of sending a card to your mother on mother’s day?”

In terms of media, campaigns need to be thought of differently than running a TV campaign and no one quite knows the right metrics yet. When you have an effective social media campaign it results in a community that gives you a permanent runway into your customer base. It is not obvious how to fully determine the ROI of this but you DO need to set quantified objectives.

Dan Berthiaume
Dan Berthiaume
10 years 10 months ago

Marketers are still figuring out how to use social media, and many of its benefits–enhanced brand awareness, more personal relationships with customers, etc., are “soft” benefits that indirectly show up in terms of dollars and cents. As social media evolves, better ROI models will develop but retailers who ignore social media today because they can’t demonstrate a hard profit will regret it tomorrow.

Peter Fader
10 years 10 months ago

I hope we can soon get to the point where we stop talking about “social media” and acknowledge that it’s just a part of the broader media-mix bucket. Attempts to isolate social media and treat it differently will end in failure — and this is a good thing! A really good media-mix strategy has such a deeply woven fabric of different media that it is very difficult to tease them apart. Thus, in some sense, difficulty of measurement for social media (or any other single component) is something we should be prepared to live with….

Gene Detroyer
10 years 10 months ago

For at least my 40 years in business there have always been demands that any venture into new media require an ROI. That struck me as a very empty demand, because the most pervasive mediums that millions were being spent on, could not be adequately measured either.

Ed Rosenbaum
10 years 10 months ago

The world of technology and social media/marketing is so new and ever changing. Once we think we know what we are doing and looking to achieve, something newer and more exciting comes along to change our direction and focus. We are so new to this that it becomes something we work by trial and error. Once we find the correct formula we stay with it until “tomorrow” when it changes.

At some point not too far away we will reach a leveling off in the change mode so we can have measurables to focus on for an extended period. There are enough college grads coming into the job market today. Those lucky enough to find jobs can work on these formulations while the experienced people focus on driving sales.

Craig Sundstrom
10 years 10 months ago

“I know that half my advertising dollars are wasted, I just don’t know which half.”- John Wanamaker (c. 1900)

Were he alive today, I’m sure Mr. Wamamaker would repeat this message…perhaps on Twitter.

Bill Hanifin
10 years 10 months ago
Measuring the effectiveness and return on Social Media has its issues but is not all-together different from measuring other forms of direct marketing. In any case, I find it interesting that brand and media advertising are given more of a pass than are DM and Loyalty programs. Social media might be the latest excuse for brand advertisers to shift focus from why they can’t measure the results of their own efforts. There is a huge difference between activity and results. I have coined the term “relevant traffic” to measure results of my own efforts online, whether it be paid or natural search or other social media “campaigns.” Traffic by itself is interesting and may raise page rank for a site in Google, but conversation of visitors to inquiries and sales is more important to me. Since I am a content creator, I tend to disagree that the passive parts of the matrix shown in the article constitute participation in social media. This is more observation and research, but does not mean that a company is… Read more »
Ralph Jacobson
10 years 10 months ago

The truth is YES, one can measure ROI of social media efforts. There are tools mentioned here already as well as others on the Web via a simple Google search. There is a report that was just published that states Facebook fans are worth $136 apiece….

Devangshu Dutta
Devangshu Dutta
10 years 10 months ago

I’m sure there would be plenty of people on both sides of the divide: social media as a science and social media as an art.

But Business ROI 101 would tell us: “If it is an investment, there must be a return.”

There isn’t an effective set of measurements yet, but that doesn’t mean that we shouldn’t try and measure the impact of social media marketing efforts. To paraphrase John Wanamaker’s statement to today’s context: “We know half our social media efforts are wasted. We just don’t know which half.”

Unless we measure, we’ll never find out and fix the half that’s not working.

Barbara Thau
Barbara Thau
10 years 10 months ago

Please see this story: Retailers Get Social With Their Customers – CNBC. It seems that, for now, there is no real way to measure clear-cut results from social media.

Jeff Hall
10 years 10 months ago

While there are many challenges in determining social media ROI utilizing metrics usually applied to traditional marketing initiatives, the key for today’s brands and marketers is to first move their organization along from the Passive category of social media monitoring to Participatory, and finally, Actively engaged in social media.

So many brands are far too passive in their current level of engagement, while the few keen competitors are jumping in and learning how to leverage these opportunities.

John Crossman
John Crossman
10 years 10 months ago

More companies should be leveraging social media. That said, I agree that there needs to be a return. I am always cautious of marketing programs that claim to create “buzz” and don’t have some defined metric of return. I am not an expert in this area but “hits” should correlate to sales.


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