A recent eMarketer study highlighted that an ROI driven social media strategy was needed before businesses can actually start to invest in and reap the rewards. It was pointed, based on the 2 facts below, that social media users are not seeing the profits as anticipated and that there was a lack of data to support investments:
* Only 35% are reported to have profited from social media through increased leads – these are also the ones who would invest in a social strategy and have staff dedicated to analyzing social media efforts.
* The biggest hurdle to social media strategy is the lack of data to measure the ROI and a subsequent executive buy-in for greater investments – nearly 60% cited these as primary reasons for implementing social media strategy.
* Only 35% are reported to have profited from social media through increased leads – these are also the ones who would invest in a social strategy and have staff dedicated to analyzing social media efforts.
* The biggest hurdle to social media strategy is the lack of data to measure the ROI and a subsequent executive buy-in for greater investments – nearly 60% cited these as primary reasons for implementing social media strategy.
These are telling facts!
I maintained in this blog that measuring social media can be challenging purely in terms of an ROI model (net of revenue and cost), simply because the scale is not there for a typical business (in my experience). Instead, we need to utilize social media as a means to other insights (users and product) that may contribute to improving ROI through more traditional media – ones where we can easily setup a model to quantify revenue and cost for a net return (my earlier post on this topic: http://www.analyticsheaven.com/2010/03/measuring-social-media-user-vs-product.html).
I believe the social media efforts need to be looked at as pure investment into the future. The immediate benefits can be had from sampling and testing approach I proposed in the above post. Let’s look at social media data to learn more about our products, consumers and competitors, so we can make better decisions about our current marketing efforts. Hint - the consumers may tweet about a certain product feature they don’t like; certain types/demographics of consumers may be more interested in the brand/product; there may be a buzz about the competitive offerings that may need more attention; and so on.
Building the intelligence model from social media may be a simpler way to look at the ROI than trying to build an ROI model which, as the report highlighted, may not be easily done due to lack of data and appropriate mathematical model.
Other insights, ideas ... please share!
Other insights, ideas ... please share!
6 comments:
The eMarketer report is right that the biggest hurdle now is the lack of data to measure the returns on Social Media. To get the data, companies have to invest first in CRM extensions and other systems that integrate social media data to their enterprise systems.
Companies are not so sure if they should do that immediately. I won't be surprised if enterprise application providers such as SAP, Oracle start building social media into their landscape. Then we might see some traction in measuring RoI.
Very true, except that the return is so small that a lot of organizations are reluctant to invest in an enterprise solution. Unless, of course, Oracle, et.al. come up with a solution that is scalable and cost-effective!
I agree as well. I have the hardest time keeping track of all of our social media progress because there are so many different avenues of buzz & different ways to weigh what is profitable and what is not. A lot of our sales may come in through social media but they are not always trackable and I am constantly trying to keep tabs on which have come from our social efforts. I wish there was a direct method to show all interactions and how they do or dont turn into dollar signs! My excel sheet is just not big enough or advanced enough to follow all my bitly's & interactions across the many social media platforms when it can be measured in so many ways.
I think we are some iterations away from a coherent, organized and process driven social strategy ... nevertheless, I have been looking at ways to build models that can feed into larger performance tracking and measurement models, such that the information can be used to gain deeper insights about the marketplace. In the meantime, looking at one's largest social segments may help filter the information to a more usable format!
There is an area of social media that has delivered solid business ROI for years. It is called social commerce.
You can read case studies of with hard data here http://www.bazaarvoice.com/resources-sn/case-studies-sn
For other aspects of social media, the problem is the approach. Social media is not a thing that produces ROI. Social Media is a set of tools that can be used to support a business objective and contribute to a goal.
For example, fans are followers are not that different from email newsletter subscribers. It's a permission-based channel to interact with customers. Fans have no ROI. Followers have no ROI. An integrated marketing campaign that leverages fans and followers doe shave ROI.
Typically "social shopping" is not what marketers are concerned with when they are talking about social ROI - it is the fan page of your company, tweets about your product/service, etc. that are a harder sell as value generators. But, yes, commerce is one area of social applications that can be better defined with an ROI.
Also, the knowledge from social media activities of your fans and followers when used to improve product/service/marketing, etc., efforts may be the best way to derive value - this is what I have proposed through this and an earlier post.
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