Why is the ROI of Social Media Marketing irrelevant
Social Media Marketing has its pros and cons. First of all it is considered by many as a true opportunity for brands to interact and have an actual two-way conversation with consumers. Engagement and conversation are two words that we hear all the time from marketers. But because it is a form of online advertising, Social Media marketing is expected to be traceable. Brands want to know what the results of their investment are, and they want concrete figures –preferably positive. 140 social strategists around the globe at enterprise class size companies indicated their top internal objectives for 2011 is to “Create ROI Measurements”. But is there an appropriate way to calculate the ROI of social media marketing?
Jeremiah Owyang suggests a model based on the objectives of each level in the hierarchy: the ROI pyramid.
This approach is already one step towards a long-term oriented model while still taking into account KPIs for each actor of the process. But this model doesn’t consider the customer lifetime value and the quality of the relationship between the brand and its fans for example. As the author Charlene Li highlighted it: What is the ROI of a conversation? During a presentation she asked all members to the audience to shake hands with the person next to them. Then she asked them what the ROI of that handshake is…
To conclude, Social Media marketing strategies can be controlled by KPIs (e.g. number of fans, followers, monthly-active users, activity…) on the short-term. But brands should not forget about the value of that conversation. Such value could eventually be estimated in the long-term by looking at the satisfaction rate for example or by measuring the number and engagement of brand advocates.
Social Media is not just about the number of fans, it is about the quality conversation you’re having with them.