Creative thinking that delivers results

14 May

Can social media generate an ROI?

Category: Social media

Social media is one of the hottest – if not the hottest area in marketing today. While social media can achieve a variety of things from improving customer service to generating better brand awareness, many experts suggest that it can also generate a return on investment (ROI). But is this a realistic expectation?

Digging Deeper

Indeed, this issue of social media and ROI has been one of the more fiercely debated topics in all of marketing for the past 3-5 years. This debate has only been further fueled by:

a)      The skepticism around social media as a legitimate marketing tactic.

b)      The inherent risks in giving the public complete access to your brand and business.

c)      The incessant desire by both C-suite executives and senior-level marketers to substantiate and justify all marketing expenditures, including social media based on ROI.

Can you quantify Social Media ROI?

The answer to this question will depend greatly on who you talk to! Marketing automation software companies and other digital marketing service providers will try to convince you that their tools, combined with rich digital data can help marketers and business owners ascertain revenues and profits resulting from social media activity.

At Sydcam, we have held a fairly different perspective on this topic. While it’s true there are ways to trace social media activity back to an actual sale, it’s our contention that by its very nature, social media wasn’t designed to do this. in fact, social media’s actual KPIs (key performance indicators) aren’t even focused on generating sales and revenue.

Making a valid assessment

Like any hot-button topic, this debate will rage on for quite some time. While this isn’t surprising, I think the best way to assess this issue is to focus on the key KPI for social media.

It’s quite apparent that engagement is the key objective of any social media campaign or plan. Knowing this, is it then possible to then derive sales figures from social engagement?

Hardly when attribution of engagement to sales is fraught with so many limitations it’s not even funny. In reality, engagement speaks to the qualitative aspects of marketing and communications and less to the quantitative. That’s why trying to quantify anything in social media can be highly problematic. Are five complaints truly better than two glowing reviews?

What to do

What makes social media so challenging and difficult to grasp for many is its very subjective nature. What marketers and business owners really need to focus on is evaluating social media on a qualitative level first, and then on a quantitative.

Understand what your audience is saying, who is saying it and how, and with what tone. Then try to quantify what you can. Just realize that any number you come up with could be somewhat arbitrary and therefore be taken with a large pinch of salt!

If you’d like to learn how to interpret your social media activity and understand its significance relative to your overall marketing effort, let us know. We’d be happy to go over it with you and explain how social media is impacting your business.