Marketing April 22, 2014 Last updated September 18th, 2018 566 Reads share

Does The Best ROI Come From Social Media?

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Marketers who attempt to calculate the ROI of their social media efforts tend to come away either confused or disappointed. On one hand, it’s very difficult to directly

 

Social Media Isn’t Advertising

The answer lies in the nature of working with social media. Compared with traditional or online advertising — where you pay to put a message in front of so and so many people — social media is a very different beast. Rather, social media should be seen through the same lens as public relations efforts used to be seen.

Social media excels at getting other people talking about your company, and talking with your company. It is a good vehicle for shifting consumers’ perceptions of what your brand stands for. And it is an excellent way to handle customer service and reputation management, as it allows your staff to respond quickly and ‘put out the fire’ before it grows from a small flame to a giant conflagration.

Social media generally does not reach consumers when they are looking to spend money. Social media reaches consumers when they are bored and looking for distractions. Therefore, attempting to generate conversions from social media produces inherently poorer results than traditional advertising, which seeks to find ‘buyers’ instead of ‘talkers.’

Tracking Social Media’s Bottom-Line Impact is Nearly Impossible

It is not too difficult to keep track of metrics like followers, likes, retweets, etc. These allow you to measure abstract concepts like ‘engagement’ or ‘reach,’ which are excellent metrics when you are looking to create a loyal following or change the perception of your brand.

However, let us consider the problem of the marketer who wishes to put a bottom-line value on these numbers. How does one value a ‘like’?

A consumer really loves a particular product, and happens to be a fan of one particular company, so he goes to that company’s page and gives them a ‘like.’

On the other hand, that consumer’s friend has little interest in those products or that company, so despite seeing his friend’s interest — he does not give the page a ‘like.’

At the end of the year, the consumer has spend hundreds of dollars with that company, whereas his friend has not. Yet this has very little to do with the Facebook ‘like’ — and everything to do with real world likes!

This is the crux of the social media metrology muddle. Does a follower or fan spend more just because they already love the company, or because they were engaged online?

For that matter, how do you avoid double-counting? What happens when a fan on Facebook buys via an organic click on Google? Are you going to attribute the sale to SEO and to Facebook?

What Works Instead

Rather than using social media for directly acquiring customers, this is why those ‘in the know’ tend to focus on its applications to more abstract branding and customer service tasks. In those domains, measuring results is fairly straightforward, even if it’s difficult to quantify the precise impact on the bottom line.

When it comes to acquiring new customers, it’s much more effective to use traditional advertising and promotional methods. Even if it seems old-fashioned, giving away non woven bags at an event or in the store is an excellent way to turn potential female clients into walking billboards (and future repeat customers). ROI here is clear and provable — the business can watch sales in a given area and see if the promotion worked or flopped.

Conclusion

Businesses who expect to see high ROI from social media are likely to be disappointed. Social media is not well suited to advertising, as people there are not ready to buy. Rather, social media is an extremely effective for branding campaigns and customer service efforts.

To bring in new customers, businesses are better off using traditional promotions in concert with social media.

Images: ”Business concept: pixelated words ROI on digital background, 3d render  / Shutterstock.com

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Alex Chester

Alex Chester

Alex Pejak is an economist currently working on a few projects in Australia. She is passionate about market research and project management. She is also interested in topics related to business IT and career development.

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