This is what real ROI looks like. Except if you’re in Canada. Then it would be red, blue and purple. Canadian money rocks.
Do NOT skip over this article — It might just save your reputation, your credibility and your career!
ROI (Return on Investment) seems to be THE social media marketing topic right now — How do we make money on this darn stuff? There are hundreds of articles on SM and ROI. So why am I writing yet another one? Because almost all of them have it WRONG. Furthermore, I don’t want you to get it WRONG and be misled by these ROI lies because I want you to become fabulously successful and wealthy so you can buy me things.
Let me illustrate our problem through the headlines of three articles posted in the past two days …
“Forget ROI. Measure Return on Conversation.”
“Social Media ROI measures – Influence and Mention”
“Social Media ROI: The Currency is Content.”
.. and one quote from a prominent blogger I love and respect:
“When you ask businesses why they are participating in social media, what do they say? If they say, “to make money,” then they will fail, because currency in the social web is found in both relationships and content.”
Let’s start our discussion with a point I think we can all agree on. Businesses exist to create value for their shareholders. No profit = no company, no jobs, and no social media marketing. So it is neither wrong nor undesirable for a company to make money and expect to make more of it through investments in efforts like … oh, I don’t know … social media, perhaps?
Second, you CANNOT measure ROI with any parameter other than money. ROI is a financial metric – amount of money returned for the amount of money invested. Not “page views” invested, or “conversations” invested. Greenbacks.
So, from now on, if you see any article proposing to measure ROI by any measure other than cash returned to the enterprise, I request that you write the author directly and tell them “HOOOEY!” because you are a very smart person and know that when speaking within a responsible corporate environment, management expects ROI to be expressed in terms of MONEY. Instead of “hoooey,” you may also substitute “poppycock,” a seldom-used word sure to get their attention.
Measuring true ROI for social media marketing can be very difficult, but that does not excuse anyone to tell their CEO that the ROI is coming in “number of tweets.” If you are having difficulty connecting your effort to either new revenue or cost savings, you will be far more credible telling your management, “At this time, it is beyond our ability and resources to accurately measure this in dollar terms, but we think (insert your non-financial measure here) is a reasonable indicator of our success until we get more experience and data to make the correlation to profits.”
So now you’re thinking, “Great. I no longer have an excuse to measure page rank and call it ROI. Now what am I going to do? I have a report due on Friday!”
Don’t freak out on me. I’m here for you and we’ll get through this together! Over the next few days, we’ll continue our dialogue on marketing measurement with articles on calculating true ROI, the importance of non-financial indicators and that ever-so-tricky intangible, “brand equity.” You should be fine by Friday : )
This is Part 1 in a series on social media marketing and measurement