ROI, Not Always the Determining Metric for Social Media Success

Many businesses are still wondering whether an investment in social media really offers a worthwhile return. Is all of the blogging, tweeting and Facebooking really working? Brian Morissey's article in Adweek suggests that social media can play a huge part in indirect marketing by building a firm's reputation, instead of generating direct sales.

For all the excitement about social media, there is still a hesitation over its use by companies.  Budget-strapped CMO'S who, while eager to find new ways to reach consumers, are under more pressure to push their business efforts forward.  Trying to measure social-media still remains a challenge to companies.

While online interactions offer a plethora of data points, they don't contain a set playbook for assigning value. Marketers have grown comfortable with formulas for building brands in traditional media. With social media, what's a Facebook friend worth?

"The value of social media is that it's the richest data set that has ever existed," says Dan Neely, CEO of Networked Insights, a Wisconsin-based analytics company that uses social media to help clients make marketing decisions. "You can use this data for many things."

The two sides of the social-media measurement debate are a top concern for marketers, as many plan to ramp up their social-media budgets in 2010. According to an ExactTarget survey of 1,000 marketers, 70 percent said they plan to increase spending in social media, but less than 20 percent said they could effectively measure ROI. The chaos is because marketers using social media tend to blend "art and science" in their measurements, according to Morgan Stewart, ExactTarget's director of strategy and research.

"ROI isn't the thing that's pushing people to social media," says Stewart. "Companies using reputation as a measure of success are more likely to be shifting budget there.  This says that companies are shifting their mind-set about how to measure success".

For the first time in a decade, Pepsi did not advertise during the Super Bowl.  Where did they go?  They put their money in a social-media campaign that benefits charities.  They have undertaken one of the largest commitments to social-media that has ever been seen.  To combat this, Coke started a Facebook campaign that donates to a Boys and Girls club every time a virtual gift is sent.  Large corporations are using their marketing money towards social-media which shows where the market is shifting.

[caption id="attachment_145" align="alignnone" width="753" caption="US Interactive Marketing Forecast, 2009 To 2014"][/caption]

After years of avoiding social media, Dell Computers made a huge splash.  Their push into social-media left them with a conundrum: how could they monitor social-media efforts that were taking place all throughout the company while determining if they were worth those investments?  Dell's social-media team mapped out a well defined framework to guide those efforts. It identified a set of value drivers for the customer and for the business, looking for programs that overlapped the two sets. For consumers, Dell identified drivers like connections, recognition and advice. For its business, its drivers are things such as revenue, brand health, share of voice and customer sentiment.

This year, H&R Block changed course, abandoning one-on-one Twitter contact in favor of building a Q&A community site, which replaced a more standard blog that the company did last year. The site required H&R Block's social-media team to recruit and train 1,000 tax pros to answer questions. It looked to local managers to nominate tax preparers to participate. Early results are promising: get it right has signed up 65,000 members and answered 50,000 questions, with the big tax push still to come.

The challenge will be tracking these queries back to sales. H&R Block, after all, makes most of its money by getting people into its offices. With few internal resources, the company has needed to pare back its social programs, with less emphasis on Twitter and Facebook, for instance. H&R Block can't promise to answer tax questions posed on Facebook. Instead, they are using Twitter and Facebook mostly as broadcast vehicles, hoping customers who have come back then tell their networks they were helped.

Online social outlets are creating positive brand awareness, which translates into more word of mouth recommendations from customers.  Creating online communities like H&R Block has enhanced their one-to-one relationships with consumers.  More companies are using these methods instead of the "traditional" social media methods because, on Twitter for instance, you cannot have continuous dialogue.  Many companies realize that if people contact them online instead of by phone, they do not need to expend nearly the same amount of internal resources.

Image from of The Forrester Blog