According to a recent eConsultancy report, 41% of of more than 1,000 companies and agencies surveyed had “no return of investment figure for any of the money they had spent on social channels as of October 2011”, while only 8% could attribute ROI for all their investments in social media.
Translation: It means far too companies are spending money on social media but don’t have a clue about how well it’s being spent. Meanwhile, less than one in 10 companies were tracking ROI on social media.
If the lack of information about ROI strikes you as strange, it should. In most, if not all business activities, the bean-cutters are focused on ROI to see if the money being well spent, or whether it should be spent on something else with better returns.
But social media seems to be a “special” case so the normal rules of engagement apparently don’t apply. Since social media is so new and there is a lot of experimentation happening, not crunching the numbers to determine ROI is is okay-dokey. We can take a corporate pass on ROI for now because why measure something when we’re still trying to figure out how it works.
No ROI, No Problem? Hardly.
Here’s what I think: that’s a crock (excuse, the language).
What’s particularly ironic about the ambivalence toward ROI is how it runs counter to the importance most companies place on social media monitoring and analytics. One one hand, many companies don’t monitor ROI but they are pretty focused on monitoring what is happening within the social media landscape.
The problem with ignoring, dismissing or not paying enough attention to ROI is companies spend but don’t have any benchmarks to know whether it’s a good or bad thing. Without knowing where you’re coming from, it is hard, if not impossible, to know where you’re going. In other words, if you’re not calculating ROI, you may be wasting good money after bad.
Simply put, any company serious about social media has to measure ROI. It’s as fundamental as having a strategic and tactical plan.
eMarketer put is succinctly:
“In 2012, marketers will need to focus more sharply on hard metrics to gauge digital and social marketing ROI. They will be pushed in this direction by economic and competitive forces, and by rising expectations from internal stakeholders who are more interested in the bottom line than in creative experimentation. Up until now, marketers have been content to dabble in digital and social marketing out of curiosity or peer pressure. But as stakes get higher, these media will have to provide concrete business benefits.”
I couldn’t have said it better myself!
For more thoughts on social media ROI, Mitch Joel has a good read that concludes: “If you can’t measure it, benchmark it and iterate on it it… don’t do it… please.”