Stop Listening When Social Media Experts Tell You ROI Isn’t Important - Social Media Explorer
Stop Listening When Social Media Experts Tell You ROI Isn’t Important
Stop Listening When Social Media Experts Tell You ROI Isn’t Important

How can you possibly position the value of social media when you have experts telling you you’re an idiot for trying to measure ROI? Social media ROI has caused a lengthy debate amongst the social media speaker’s circuit. I was a late comer to the social media conversation as I really started getting serious about the business opportunities for social media in 2009. My interest was primarily fueled because I saw a huge potential for measurement standards and building ROI models. My interest was piqued when I had an employee tell me that you flat-out couldn’t measure social media because it was about relationship building.


In my head I heard, “I challenge you to figure out how to measure social media.” So I really started to evaluate what was happening in social media and how brands were leveraging it. I started to go to industry conferences and listen to some truly brilliant people talk about the value of social and where it fit in business. However, I was really disappointed to find a huge white space when it came to measurement. At the time, the only person I saw doing real work in measurement was K.D. Paine. She became one of my greatest influences, even though we’ve only met for a few brief minutes at the Inbound Marketing Summit in 2009. Interestingly enough, we didn’t even talk about measurement. But she was so conversational and a genuinely nice person to me in that brief conversation. In most of what I’ve read from K.D. she focuses on the PR angle for social media. I felt there was a larger conversation about measurement that transcended “departmental lines.”

Scott Stratten on Social Media ROI

On the flip side, I saw a presentation from Scott Stratten which can be summarized in this post from his blog. Scott is an incredible speaker who is able to show his brilliance alongside his comedic nature. I have a tremendous amount of respect for Scott and the messages he brings to market. However, when it comes to social media ROI I feel like he is really doing a disservice for corporate marketers.

Stratten has said, “Asking the ROI of Social Media is Like Asking What the ROI of our Phone Is” in numerous presentations. In this humorous video, he pokes fun at the executive who asks the ROI question with responses like, “What’s the ROI of the 5,000 golf balls you bought with our logo” and “What’s the ROI of this board room table that you just paid $25,000 for.” He follows it up with an argument that seems logical, “I understand we have to justify what we do with our time, I just don’t think social media should be held to a higher standard than everything else.”

If you want to argue about measuring social media we have to use comparisons that make sense. The board room table is an asset for the company; its value can be depreciated over time on a tax return and it goes on the corporate balance sheet. Social media would never be on a balance sheet and I don’t think we want to start arguing that it should be. So it’s ridiculous to compare the two and think that any executive would think it is a valid argument. The golf balls may be considered a marketing expense, but let’s be honest these comparative arguments devalue the conversation about where social media truly does add value. We’re seriously going to try to push off the ROI question by comparing social media to a bunch of meaningless corporate expenses that have no relation to social media’s value? Frankly, if you try to make these types of arguments you’re likely to lose your job. Is it funny? Yes. Is it a stupid way to approach managing a conversation with an executive? Yes.  Since the recession, other marketing activities have been held to pretty high measurement standards. I think executives simply want social media to be held to those same standards.

Don’t take ROI commentary that is intended to illicit a laugh as advice because what Scott says is really bad advice for marketers who want to have successful careers and eventually be in executive leadership. To date, I haven’t seen Scott change his perspective on ROI, but frankly he doesn’t really talk about it all that much.

As much as I respect a lot of the other points Scott makes in his presentations, I have to say that ROI and showing executives where social media delivers value to the bottom-line seems to be a pretty big blind spot.

Gary Vee on Social Media ROI

My next exposure to a social media ROI conversation was in a presentation by Gary Vaynerchuk aka Gary Vee. Gary is a dynamic powerhouse on stage. He is so compelling I truly believe he could convince us all that sending piles of poop as a thank you gift to customers is brilliant. We know it’s ridiculous, but the conviction that Gary uses to deliver his message is almost hypnotic. His stage presence is truly inspirational and I hope that one day I can achieve the caliber of his presentation style.

However, when it comes to ROI he was spewing some class-A nonsense and even as recently as June 2013, he posted a video saying the same thing.

The comedy is priceless. “When everyone always says to me, what’s the ROI of Social Media? Some of you heard this from me, I always say, What’s the ROI of your Mother?” Funny, right? Hilarious! However, I think even Gary knows this comes from a place of not understanding how Corporate America works. In a TechCrunch interview just the month before, Gary discusses how he is overcoming this blind spot. “I built a small family business to a $60 million dollar business. I’m an entrepreneur. I know how to make money at a small level. This corporate America thing was a blind spot to me as a businessman. I started Vayner[Media] to learn it.”

In Corporate America, marketers can’t make arguments like “what’s the ROI of your Mom?” and win. At best, they will get laughed out of their executive’s office, at worst, they’ll get fired. This type of statement is disrespectful to the people who hold the purse strings for social media investment. In a sense, it tries to make them feel stupid for asking. I think we all know that insulting executives isn’t going to get them excited about the potential that social media holds for their company.

Ultimately, I think Gary is gaining a better understanding of Corporate America and how much the bottom-line really matters for social media investment. First, he wrote the book The Thank You Economy. By including economy in the title it eludes to some kind of financial return for all of this social media activity. In that same TechCrunch interview, he says, “99.5 percent of the people that walk around and say they are a social media expert or guru are clowns…have no business sense…talk about getting a Twitter follower and a Facebook follow.” He continues with “we are going to live through a devastating social media bubble…these people are hiring people that are not qualified. They have no idea how to turn it into an actual sale.” Ding…ding…ding…While I won’t argue the validity of social media experts and their business experience in this post, I believe that understanding business and how to turn social media into sales is a critical component for truly getting to social media ROI.

The timing of these two videos is really interesting since the video of Gary saying, “what’s the ROI of your mother” comes a month after the TechCrunch interview. So my guess is that ROI is an internal debate that Gary is still having with himself.

The answers for social media ROI don’t have to be this hard. We don’t have to make up ridiculous arguments to try and avoid the ROI question. Rather, we need to start talking about how to add engaging in social media as a data element in a prospect and customers record within CRM or the Enterprise Data Warehouse so we can start to do some really interesting analysis. Executives don’t always need to know what the exact ROI is going to be before they make investments, they simply want to know that there is a clear path to be able to measure it after the fact. They want to know that their marketers know what core business metric they are trying to impact and that they have a system in place for being able to get the data. Sometimes, we don’t know where the true gold for social media is until we actually start measuring it in a holistic way. Measuring social media in a way that allows us to make comparisons for what happens with the audience who engages in social media and what happens with those that don’t. What’s the level of improvement when social media is involved? The key is to be able to measure social media against a control group of non-social media users.

For customers this could be an analysis of spending, retention and customer service costs. For revenue generation this could be an analysis of conversion rates, costs for customer acquisition, sales volume and the lifetime value of a customer.

Instead of trying to argue that measuring ROI is stupid, let’s start measuring it and let the numbers speak for themselves.

What kind of questions are your executives asking about social media ROI? What kind of data are they looking for? Have you been able to show social media ROI? If you are an executive what data do you want to see from social media? Add a comment so we can have a real conversation about the questions marketers are faced with so we can get to the bottom of the ROI debate. 

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About the Author

Nichole Kelly
Nichole Kelly is the CEO of Social Media Explorer|SME Digital. She is also the author of How to Measure Social Media. Her team helps companies figure out where social media fits and then helps execute the recommended strategy across the “right” mix of social media channels. Do you want to rock the awesome with your digital marketing strategy? Contact Nichole

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