Is The Quest For ROI Killing Social Media Marketing?

by 7 11/28/2012

Social media marketers:  we have a problem.

Business owners don’t know what to believe about social media marketing.  And, as the saying goes, a confused mind always says no.

Some of the data points from IBM’s Black Friday report are stunning.

Shoppers referred from social networking sites such as Twitter, Facebook and YouTube accounting for .34% of sales on Black Friday and .41% of sales on Cyber Monday.

And Twitter laying a goose egg.

Source:  IBM's 2012 Black Friday Sales Report

IBM’s 2012 Black Friday Sales Report

 

In sharp contrast, we have data like this from Compete showing that Twitter is an outstanding channel for driving traffic to retail websites.

 

Compete Graph

 

These findings paint two polar-opposite pictures.

The findings from IBM have been widely criticized along with the statistics from Compete, most notably by  Tom Webster here.   The accuracy of these data are important conversations to have, but only prove the point – there is a metric ton of BS proof out there about the effects of social media on sales.

Stop treating social media as direct response

Most business owners want social media marketing to be direct response.  They want to put X dollars in the top of the funnel and produce X + Y% out of the bottom of the funnel.  In fact, they would love it if everything they did could be measured in this way.

I get that.  But it’s not possible.

The fact is that we can’t accurately measure the ROI of social media.

Sure, if you have money to shell out for world-class software and the manpower you will need to use it, you will start getting some answers.   But most of us can’t come any closer to measuring the ROI of social media than we can the ROI of a television jingle.

And that’s ok.

Social media marketing isn’t a direct response marketing tactic.  You will never be able to accurately calculate the ROI of using Facebook to create deeper relationships with your existing customers.  You can’t accurately calculate the ROI of answering questions that relate to your industry on Twitter.

The progress you make toward meeting your sales goals in social media are, in many cases, too far removed from the actual sale.

It’s time to change the discussion

Infomercials are incredible.

A good infomercial is designed to take a prospect from awareness to sale in one sitting.  And can (fairly accurately) measure the results through dedicated phone numbers, website URL’s or promo codes.

Social media is not an infomercial.

If we had to compare, social media is more like a traditional television commercial.   Think the Coke polar bear commercials.  Working its magic over a long period of time, the effects hardly detectable by customers and prospects.

Sure, we have link shortener statistics and referral traffic reports we can look at.  All of these things serve to illuminate the black box of social media’s effect on sales.

But we’re headed in the wrong direction and I don’t see how we can stop.  We want that ROI number.  We want to know the exact amount of profit generated by each tweet.

But calculating the exact direct response profit per tweet, while possible, doesn’t tell the whole story.

I’m afraid that when we measure the direct response sales from social media, we won’t like what we see.

Please, let me know your thoughts.  I’m just one voice and would love to hear your expert opinion on this in the comments!

About 

Russ Henneberry is the Editorial Director at Digital Marketer. He's worked on digital marketing projects for companies like CrazyEgg, Salesforce.com and Network Solutions. You can connect with Russ on Twitter, LinkedIn, Google+ or on his blog.

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7 COMMENTS

Jared Smith

Russ, I agree. I think blogs are a lot in the same category. You can drive sales through blogs and social, but it’s not the point. The “real world” example of a blog is speaking at a conference. Yes, if you are compelling enough, you may be approached for work, but that’s not why you share and teach.

When the internet was younger (10 years ago) it was revolutionary to have a full circle sales cycle that could be measured to the nth degree. Since then it has evolved beyond an information and sales platform into a social world with many alternative ways to get your message out.

I think the most important thing for any organization is to decide what they want to persue, white-papers, blogs, case-studies, newsletters, FB, twitter, youtube, etc. etc. and define what they hope to accomplish with each. The only way to get clear numbers is to know what you’re measuring.

November 29, 2012 Reply

    Russ Henneberry

    Great point Jared. The Internet has indeed become a much more dynamic and social place.

    November 29, 2012 Reply

Will Hanke

Russ, “social media” in and of itself is such a broad term and nearly impossible to track tweet by tweet. For most businesses it should just be one cog on the marketing gear that, when assembled together with speaking, blogging, etc just works to raise the bottom line. Trying to track down which tweet turned into a $100 sale is insane.

November 29, 2012 Reply

J.C. Kendall

FINALLY! I have been preaching this for a year now. There is NO SUCH THING AS SOCIAL MEDIA ROI. Are you my adopted brother? I’ve felt SO alone! LOL. Thank you!!!!!!!!!

November 29, 2012 Reply

Douglas Thomas

We did a quick poll to see what media drove sales over the “Black Weekend” of Black Friday, Small Business Saturday, and Cyber Monday: http://www.searchinfluence.com/2012/11/black-friday-cyber-monday-sales-data/.

Our focus was on post-impression conversions, an impossible metric to accurately check by a third-party, but one that can be parsed out with some effort by the 1st-party company itself with multiple regressions. (Increased spend of x campaign, y campaign, and decreased z campaign; revenue increased by AA%). To say that it’s impossible to calculate ROI is a bit untrue; but the relative difficulty may overshadow any possibilities.

The post-impression revenue idea is certainly in line with your analogy of TV ads; but ROI can be calculated there, as well, otherwise folks wouldn’t have been able to convince the board of the value in the 50s and 60s.

November 29, 2012 Reply

Tyler

Interesting post Russ. It is surprising to see absolutely no referral traffic from Twitter. I do want to point out that the way Compete presented their data is pretty misleading. As graph expert Naomi Robbins frequently reminds readers of her Forbes articles, “every bar graph needs a zero on its scale.” If you make that change to the Compete graph, the second bar is only 9 pixels higher than the first, as opposed to the 96 pixel difference in Compete’s version.

November 30, 2012 Reply


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