ROI is fool's gold for social marketers
When it comes to social media, however, tracking ROI may be fool's gold. A distraction. A red herring. A trap. It's something your CMO might demand, but chasing it could be your undoing. Why? Two reasons.
First, social content spreads only when it's “set free.” A form – even a short one – is the fastest way to “cure” content of its virility. Influencers won't spread even the most share-worthy materials if their followers are required to self-identify before viewing. To them, gates (and the marketers who install them) tear the very fabric of the social Web.
Of course, without a way to capture the profile of those who consume your content, how can you calculate its impact on individual sales? Even if you could reliably link views to sales, how would you attribute (last touched, amortized, blended) the revenue for ROI purposes?
Avoid the ROI trap by looking instead at leading indicators. Ask what behavior is consistent with your best customers? (Do they view your online demos? Maybe they register for your webinars? Are there pages on your website that they visit disproportionately?) Map the lifts in desirable prospect behavior to corresponding spikes in social media activities. Successful social marketing should correlate to purchase-ready indicators.
Then stop there. The path from correlation to causation leads directly to diminishing returns.
Sure, there will be a corner case in which a prospect picks up the phone and calls sales as a result of a great piece of content. Celebrate these successes, but don't try to institutionalize that level of tracking. Otherwise, you will find yourself so busy analyzing that you don't have time to create content, inspire fans or engage detractors.
The second trap is that blind pursuit of ROI is likely to tempt you into applying a campaign model to your social media efforts. As marketing superstar Paul Dunay of Avaya cautioned, “social media is not a campaign, it's a commitment.” To reduce relationship-building to one-off promotions is to reduce a friendship to a single interaction. It just doesn't work that way.
Of course, it is certainly possible to run a social media campaign designed to accomplish a single objective. Depending on the objective, it may even be relatively easy to assign ROI to the program. But don't confuse a discrete project with a fully integrated program. Integrating social media across marketing, sales, public relations, events, support and recruiting should be your ultimate goal. Not figuring out how many sales a Facebook contest might have triggered.
When put in that context, it is not only daunting to measure the true financial impact of social marketing … it's also limiting. A more appropriate comparison would be a lighthouse. How many ships reached port safely thanks to the presence of a lighthouse? The answer, while impossible to quantify, is self-evident.
Joe Chernov is the director of Content for Eloqua, a marketing automation software provider.