Two quick thoughts on Social Media and ROI

There’s an awful lot of criticism bandied around toward Social Media around ROI, but is it fair?  I’ll admit I’ve often wondered about the monetary value of SM.  Everything businesses do needs to be geared towards making a sale.  If it’s not happening then it’s pointless.

But, we’ve stopped asking those questions of TV.  Why?  Is the value of a TV viewer any better known than a Social Media ‘follower’?  I think not.

This has led me to two thoughts:

  1. ROI isn’t only a Social Media issue.  It’s an advertising one.  Very rare (it exists but it is rare in the grand scheme of things) is the activity where you can say ‘This tactic got me this many sales and this much profit’.  This is true of radio, TV, Social media, (most) DMs and eDMs.
  2. ROI calculations are a fallacy. The human race is too complex to be influenced by only one piece of communication. And often seeing it is one step removed from buying it, meaning that you may be affected by other messages, by their mood when they see it, by great sales service, etc. In which case, where do you attribute that sale? Customer Service investment, advertising investment?

We’ve become so focused on ROI that we’ve made it too important yet superfluous. Any activity now needs an ROI justification, yet because sometimes sales cannot be attributed to it we measure fans, response, intention to buy.  Intention to buy will not keep a company in business. 

My hypothesis as to why this has happened is that sales are easy to track – they are there in black and white. Most C-level people will have a sales background (a legacy of the boom years of 80s and 90s) so they like numbers.  Marketing depts therefore have to justify their activity with hard numbers and ROI became the norm.

Now, I think companies need to know if their activity is moving the needle over to the right or not so some form of effectiveness tracking is needed for businesses.  But companies need to measure marketing/advertising as a set of complimentary activities rather than individual tactics. 

We need to measure its effect as a whole rather than silos.  

What do you think?

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