Larry Brauner
As a business community, are we obsessed with return on investment? Is our preoccupation with measuring social media ROI counterproductive?

In this article I look at social media from what might be a novel perspective. I hope to convince you that social media use need not impact the bottom line over the short term, and that our belief that it ought to is impeding our progress.

I expect to provide a few other takeaways as well.

Are Marketing and PR Merging?

I was speaking with Jeffrey Cole, the marketing PR expert behind JJC Communications LLC, an agency using both social media and traditional public relations to achieve clients’ goals. Jeff authors the blog PR 101.

I asked Jeff whether he agreed with me that marketing and public relations were converging. He said he agreed, and that he believed advertising was converging with them as well.

Can You Put a Value on Reputation?

I saw a video and article posted by Chris Boyer, creator of the Hospital Online Marketing Education site on Ning and online marketing consultant at Healthgrades. Chris was discussing social media and the importance of his four R’s:

  1. Reach
  2. Relationship
  3. Reputation
  4. Return on investment

Regarding return on investment, Chris pointed out that measuring the ROI of social media was like trying to measure the ROI of a friendship.

I agreed with Chris’ assessment of social media, but let me ask you this question: What about measuring the ROI of your reputation? Could you possibly place a value on your reputation? I say no. Your reputation is invaluable.

Public Relations

Defining PR, the Public Relations Society of America states that PR “helps an organization and its publics adapt mutually to each other.”

The PRSA definition of PR implies relationship, Chris Boyer’s 2nd R of social media. Even the term itself, public relations, suggests relationship. The key word is relations. According to the Council of Public Relations Firms, public relations also:

  • “Builds and protects reputations.” Reputation is Chris’ 3rd R.
  • “Extends reach, frequency and the message of an advertising campaign.” Reach is Chris’ 1st R.

Marketing tends to revolve around cost per acquisition and ROI.  However, public relations relies on softer metrics, and since reputation is invaluable, PR almost never requires ROI justification.

Public relations and social media are a perfect pairing according to Chris’ four R’s.

Marketing

According to the American Marketing Association, “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”

The key word in this definition is offerings. Nothing is mentioned about reputation, although communicating and exchanging seem to correspond to reach and relationship.

Given marketing’s basic orientation toward advertising offerings, an activity in conflict with social media, and that it tends to revolve around cost per acquisition and return on investment, marketing and social media might be incompatible.

There are marketing-related activities that are obvious exceptions.

Customer Relationship Management

Although customer relationship management and customer service are marketing functions, they differ from marketing conceptually.

CRM and customer service focus on relationships more than offerings and are tracked using soft metrics such as time to answer call, call length, first call resolution, sales, saves, etc.

Many attempts to interact with customers on Twitter and to broadcast limited-time offers to them have been successful.

Selling

Selling, according to Wikipedia, is “persuading someone to buy one’s product or service,” i.e., to buy one’s offerings, and relationship is certainly essential for selling success. However, the key word here is persuading.

Social networking sites such as LinkedIn can support the sales process and replace much less convenient offline meetings.

Social media prospecting, if done well, can open doors which have been closed until now. Perhaps though, the persuading part of selling will go more smoothly if taken offline.

One-to-one selling using business networking sites to make connections is working for many people.

Image Advertising

As I said above, marketing almost always requires ROI justification.

There are some marketing efforts that don’t directly increase sales. Big companies can advertise their brands like Coke and Pepsi in order to maintain parity and to create economic barriers to entry into their markets.

These marketing campaigns are brand and reputation centric, and as such the public relations function could presumably conduct the very same campaigns just as effectively.

Social Media Marketing

If social media is largely a public relations tool, then what is social media marketing or social marketing?

Social marketing is web PR as practiced by marketing people who hope (pray?) that their social media outreach will eventually spill over into sales and justify their efforts.

We as marketers find it difficult to admit to ourselves and to others that we’re engaged in PR, but we are.

Do our companies really need more PR?

Marketers have long understood the importance of listening to customers. Today social media facilitates useful dialogue with and understanding of both customers and prospects.

The Long Tail of Social Media

The Long Tail of Social MediaSocial media is an investment with a very long tail. The content we create and the relationships we build can continue to bring a return far into the future. The revenue in the ROI equation is the present value of future dividends arising from our social media investment.

Social media used wisely ought to pay off. We can’t yet say exactly how-so nor how-much-so, but we’ll never find out unless we remove the impediment to progress, our obsession with social media ROI.

I found 35 social media KPIs to help measure engagement on the web and think that you’ll like it. I’m regularly researching and bookmarking new articles for you on my new Bookmarks page.

Keep the faith.. and leave me your comment. ;-)

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13 Responses to “The Social Media ROI Obsession”

  1. Dave Van de Walle on December 3rd, 2009 9:48 am

    Larry,

    Like how you go through the definitions here - it’s a pretty good snapshot (and important because nearly everyone in social media has a bias toward one or the other disciplines, but rarely all).

    This ROI thing is going to take everyone a long time to figure out — for each person who says you should measure everything, there’s probably another uber-connector with 25,000 Twitter followers who would rather spend his or her time engaging.

    Cheers,

    Dave

  2. Steve-Success Factors on December 3rd, 2009 10:57 am

    Larry, this is one deep and well researched article! I will be coming back to it for a few readings to fully digest it. Thanks for doing such a profound job of distilling current thought as to the relationship between marketing, PR, and social networking. This is going to be one of my ‘reference’ articles!

  3. Brandon Sutton on December 3rd, 2009 11:54 am

    Great post Larry - thanks for the thought that went into this. I’ve been discussing this quite a bit with colleagues lately and we’re tossing around some ideas for a community site based on this topic. I’ll ping you when I have something concrete to show you - I think you’ll be interested.

    Thanks again!

  4. Sheri on December 4th, 2009 1:30 am

    Thank you so much Larry! This one article answered the question I posted to you on yesterday. Right now I am re-thinking my approach. I will be back looking for additional insight. Peace and Blessings to you.

    Sheri

  5. Debbie Morgan on December 4th, 2009 10:32 am

    Hi Larry,

    Thanks for this great information. I always appreciate your wisdom and knowledge and your ability and willingness to share it with others.

    Deb

  6. Sandy on December 4th, 2009 4:18 pm

    Hi Larry,

    I’m pretty new to your blog. Really enjoyed your post, as I have a obsession towards marketing and looking forward to pursue my future MBA in the same concentration. This post is definitely a kickoff for me and my new career objective.

    Many thanks. Will surely follow your upcoming posts.

    Cheers !!

  7. Sriraj on December 6th, 2009 7:59 am

    As we move on, I only see an increasingly active participation in social media by the PR companies or companies themselves.

    Take Dell for example. It is regarded as the company that is making the best use of Twitter.

    Even I’m a part of it, as I used a promo code provided on twitter to buy my Adamo.

  8. Mike Darnell on December 13th, 2009 4:07 am

    Hi Larry,

    I agree with commentator Dave’s statement. For every whale claiming ROI is unmeasurable there’s one who says the opposite.

    Similar to the list you quote of 35 KPIs for social media, I recently ran into a post by David Berkowitz listing 100 Ways To Measure Social Media.

    I think however many folks are still wondering as to where and how these metrics can be obtained.

    All the best,

    Mike

  9. Larry Brauner on December 13th, 2009 10:52 am

    Thank you Mike for your comment and for the link.

    Where and how to obtain these metrics do present a challenge, but how to weight these key performance indicators to create one or more scores that management can act on may be an even bigger one.

  10. Communications Guy on December 16th, 2009 11:55 am

    Does ROI really depend on whether or not it’s short term or long term. Why would a business invest in social media for years with nothing to show for it?

  11. Larry Brauner on December 16th, 2009 12:07 pm

    Short and long term return on investments can be valued and compared using actuarial mathematics. However, this issue isn’t central to my article. The main point I wanted to make is that much of social media marketing is really public relations and ought to be held to the same or similar standards as PR.

  12. Social Media Marketing Is NOT Free on June 27th, 2010 7:35 pm

    […] corporate world recognizes the cost of social media marketing and is overwhelmed with ROI concerns. Small business owners, on the other hand, tend to remain pretty much in denial and haven’t […]

  13. Lorrie Cheers on April 25th, 2012 10:02 am

    Your post is an eye-opener. Somehow, I realized that with the availability of the social networking sites, more and more people are taking advantage and becoming engrossed with the ROI it promised.

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