By Mark Farmer, ACA

Posted February 27th, 2009

How do you solve a problem like measuring the ROI of Social Media?

As the Toronto revival of The Sound of Music fills the Princess of Wales theatre, a short subway ride from the ACA’s offices, I’m reminded of another problem our industry has to solve. Unfortunately, there are no dancing nuns to help us out with this one.
 

How do you hold a moonbeam in your hand?

Attending social media conferences, I see two groups that are going to need a lot of help to come together: hard-core enthusiasts that aren’t terribly concerned by ROI, and the businesses who want to leverage social media, and who are desperately looking for a way to measure the benefits of any potential investment.

Unless these two constituencies can find some common ground, there ain’t much long-term hope for social media in the business world.

The argument on one side goes roughly like this: measuring social media ROI is at least hard, and at worst practically impossible. Social media isn’t advertising – it’s a conversation. It’s not about click-throughs or conversion rates: it’s about building community. The business side of it (when it’s discussed) enters the equation through brand-building and customer outreach. That’s the payoff, and even though it’s hard to measure, it’s critically important to brands in the 21st century, and is increasingly the way consumers will interact with those brands. Savvy marketers will understand this and get on board – everyone else will be left in the dust.

The other side says that business isn’t about to put money into something without any idea of whether it’s doing any good. Whether it’s something as sophisticated as a dashboard or as simple as a sales track, there needs to be some kind of return on the money being poured into these media. Advertisers and marketers have been through enough hype with the last dot-com messiah complex that famously imploded in 2001 and led to the ruin of many a company that had put too many eggs in that basket. The only way a company should write social media whizzbangers a blank check is if they want to pour money down the drain.

How do you catch a cloud and pin it down?

As usual, the best approach lies somewhere in-between.

There are no lack of tools for measuring the success of social media (Radian6, BuzzMetrics, Google Analytics and TruCast, to name a few). The idea that you can’t measure ROI is simply wrong, even if the ways to measure it (e.g., chatter vs. campaign-based sales bumps) and execute it (e.g. blogger outreach vs. ad buys) are different. You most definitely can have your social media cake and eat it. The approach may be more of a dashboard than ROI, but it’s there. It’s even possible to make big bucks off social media: witness the Fiskars case study from last month’s newsletter.

Savvy marketers will appreciate that brand-building isn’t a straight-up dollars-and-cents exercise. Savvy social media agencies will understand that business doesn’t do anything just because it’s cool or new. Smart people from these two groups will get together over the next five years and re-define marketing communications.

- Mark Farmer
- Communications Specialist

Mark is responsible for the ACA’s electronic communications and bringing the world of Web 2.0 to its membership. He is the founder and ‘chief webhead’ at webness.biz, and has worked in the fields of corporate communications, web design and social media since 1995. Mark currently sits on the advisory committee for multimedia programs at Humber College, and is a member of the Society for New Communications Research.