The ROI of social media (and digital marketing in general) is a topic we’ve been tossing around SMG a ton lately, as has the media in a number of recent articles. I’m going to keep this post focussed narrowly on the ROI debate around social media and interactive campaigns, rather than enterprise use of social media.

During a conversation with Collin last week, he pointed out that in his experience, clients expect hard numbers on digital campaigns generally because measurement is possible, not because it necessarily means anything (correct me if I’m wrong on that, @radicaltrust). Put otherwise, we measure traffic simply because we can.

The simple fact that a .5% click-through rate (which is a decent showing) on a 50CPM ad buy (that is, it costs you $50 for every 1000 people who saw your ad) is considered a success is proof enough that these measurements are largely meaningless. Have a look at the math – if a client spent $75,000 on a digital ad campaign that got 1,500,000 impressions, with a click-through rate of .5%, they just paid $10 per “lead” – if you can call them that, since I’m not sure clicking on a banner add qualifies you as a “lead” any more than being in the same room with me qualifies you as my “friend”.

This desire to measure based on completely inadequate tools is spreading into the social media space as well. As far as I’m concerned, this is out of pure laziness – there are so many other, better metrics available to us when we start actually talking to people. The problem is that they require some form of human assessment, which makes them expensive and also something that requires thought. In this article from Adweek, Gordon Paddison, an executive at New Line Cinema, described a user-generated marketing campaign for the film Wedding Crashers, noting that

Despite the millions of participants who uploaded photos of themselves to “appear” in New Line’s “Crash the Trailer” program for Wedding Crashers, no one could “quantify that engagement level. No one knew or could determine the metrics for that level of brand affinity and personal engagement with the brand. So you can’t go to the CEO and say x equals y. That poses a problem on a consistent basis.”

Which strikes me as absolutely insane.

Before I make my next point, I want to state clearly and emphatically that I believe if you cannot measure it, you cannot manage it. In all of our programs, we gather ridiculous amounts of data that we crunch and graph and compare to come up with meaningful metrics. However, I also believe that dollars are not necessarily the currency that social media marketing programs should be measured in, especially in these early days. Tying something as ephemeral as friendship or relationship or engagement to something as complex and relatively rigid as a currency or sales target seems incredibly simplistic. It’s like saying to your friends, “Tell me how much you like me – in dollars,” rather than determining how much they like you by a more accurate measure – whether they show up when you need to paint your living room.

Now – I know that everything devolves into one simple thing: whether or not you get asses into movie theatres or motorcycles on the road or sandwiches bought and eaten. The act of purchase is critical to our entire universe, our reason for being. But (as anyone knows who has seen a diagram of the fabled purchase funnel) the act of purchase is not simply that one instant. It’s the proverbial iceberg – 10% visible (at the cash register) 90% under water (the rest of the consumer’s life).

So how can we help clients better understand that there are a myriad of opportunities to get messages to consumers and foster engagement with their products and brands, and that measurement of these interactions is in its infancy, but that there is inherent value in connecting with consumers? It’s common sense, but unlike clickthroughs or other superficial traffic stats, it’s damn hard to show on an Excel spreadsheet.


  1. This is an excellent post, Maggie.

    Appropriate measurement is a challenge we are all faced with when we propose anything in the Social Media realm to a client.

    A couple of points to make:

    – We need to recognize that clients need to justify their spends and also their jobs. So a brand manager who can turn to their boss and say “We were at X last month, but thanks to our social media campaign, we are at X+15%. Give me a raise.”

    – I too agree that measurability = management, but doesn’t “managing a social media campaign” sound almost contradictory? I don’t mean to suggest that clients should just throw hope to the wind, but sometimes the act of measuring changes what it is you are measuring. When tying a social media campaign’s success to a specific measurable action (i.e. purchase, sign-up, test-drive, etc.) you may be seriously underestimating the real impact or even negatively affecting the outcome.

    My personal philosophy of measurement is:
    – Don’t bother testing something you are going to do anyway
    – Don’t bother measuring it unless it is going to inform a specific decision in the future.

    (that said I still check my blog and podcast stats out of ravenous curiosity 😉

    Personally, I think Robert Scoble’s blog did more to improve Microsoft’s reputation away from the “Evil Empire” than anything else Microsoft has done, but I can’t back that up with numbers…

  2. This social media thing is “hot stuff” to so many brands, enterprise or not, because it’s still seen as somewhat of a “black art”. But that’s just not the truth either, and you show that here.

    As social media strategists we have definitely measured traffic (or pre-2007 metrics) in the past because we could. But those days are pretty much over, and portraying it to brands as 1995-style ROI is erroneous and a false manipulation of the numbers. The good folks in our line of work know this. But we can show ROP in a way that will still allow our clients to demonstrate it upstairs.

    AND there is a way you can solve this “engagement does not equal dollars” problem, but it’s still in embryo. You can allow people to connect brands to their social graph, and “friend” them or “unfriend” them. For example, I would have “friended” Busch Lite back in ’95 when I was a freshman at UW-Madison. And then I would “unfriend” it (or place it very low on my list of friends) around ’99, when my beer-brand consumption habits took a step up to the slightly better-tasting Leffe, a Belgian brew. It’s only a matter of months before these brands are tied in to the social graph.

    This spectrum of opportunities that you allude to in your last paragraph – well, that’s ROP. Brands need to be taught to understand that the process (the engagement) is that big-assed iceberg.

    Although Paddison’s article wasn’t able to flesh out the missing engagement link (alluded to in this Exclamation post), he at least cast a litte light on the problem that you’ve just shone the spotlight on.

  3. Hi Maggie:

    This is a BIG question – and we have done some work to correlating online buzz to product sales.
    MotiveQuest has developed a metric (Online Promoter Score) that measures the propensity of participants in online conversations to argue for/recommend a particular brand or product and then observed correlation between Online Promoter Score and sales.,2,1,1

    Take a look.

    Tom O’B

  4. As seen on Gigya, Sharethis and other social media promotion tool, the metrics become a part of the social media marketing (SMM).
    Now, a relevant and difficult issue is to consider all these new data in the Analytics dashboard and find the good values to focus on and to underline on futures marketing campaigns.
    The social media ROI starts with a new marketing culture, a new caring of the content spread and a new consideration from marketing results !

  5. The Social Media Academy developed a way to calculate ROI on social media.
    We are now all interested in a broad response and feedback. Let us know what you think. Thanks a lot.

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