By 
I get a laugh when I read online conversations about people spending hours tweeting and chatting about how to measure “social media influence” as well as the “return on investment” (ROI) from social media. It’s almost as if these people are either 1) having a hard time convincing their clients of why they need to pay for their social marketing services and/or 2) they themselves are trying to figure out a way to “dupe” the system and be seen as more “influential” in the social arena, thinking that there are potential benefits in doing so. I’ve already covered my views of social media influence metrics such as Klout and PeerIndex in previous blog posts, but today I want to tackle the concept of “social media ROI.”
When I talk about social ROI during my social media workshops as well as in a chapter of my upcoming LinkedIn marketing book, I do it in a very holistic way: Did your strategy and tactics meet your planned objectives using the time and resources you had projected? That’s because social media can be utilized inside a company for so many different things, not just marketing, but areas that are normally considered “cost centers” like human resources, legal, IT, and public relations. Have you ever calculated the return on investment of your HR division? This isn’t to say that the topic shouldn’t be discussed, and there are also some great books out on the subject (I recommended Olivier Blanchard’s Social Media ROI in the appendix of my own upcoming book).
So here’s my take on the concept of social return on investment: Social media, like your website and internal IT technology, becomes part of your company’s infrastructure over time. It’s not a question of having a robust social presence just like you need a robust website: You simply must have them. For professionals, I call it your “Social Infrastructure,” which is why we feel compelled to be on sites such as LinkedIn and Twitter to network and keep up with the latest news recommended by our social circles. We see benefits from doing so.
The same is true for corporations. Fewer and fewer of them are asking about ROI but proceeding forward in their investments and trying to get better and better results. They understand that social media must be measured, metrics created, and objectives met. But it’s not about social media ROI: It’s about Business ROI. Did your social media efforts, at the end of the day, affect the entire corporate bottom line, and how did it positively or negatively contribute to it.
That’s why many can’t understand social media ROI: Because they don’t have experience with being responsible for the ROI of a business. It’s also the reason why there can never be a universal tool to measure this just like there can never be a universal social influencer measurement tool – there are simply too many variables and varying objectives. Not to say that tools can’t be created to create metrics that we can use as part of our holistic analysis of business return of investment, but I digress…
Social media in itself is not a strategy – it is a tool, a tool that is integrated into the things that your company has always done. If you think your company can sell an inferior or bad product through the power of the likes of Facebook, Twitter, and LinkedIn, think again: It will actually work against you by amplifying the negative aspects of your company.
So let’s stop talking about social ROI and start talking about how to utilize social to help increase Business ROI.
What’s your take?
Ania Amador
“Social media in itself is not a strategy – it is a tool, a tool that is integrated into the things that your company has always done. If you think your company can sell an inferior or bad product through the power of the likes of Facebook, Twitter, and LinkedIn, think again: It will actually work against you by amplifying the negative aspects of your company.”
I couldn’t agree more. Like any tool, it boils down to how you use it. If the value of your product or service is not there, social media will only highlight those weaknesses. It is used to uncover the truth, not create a one.
Ania Amador
“Social media in itself is not a strategy – it is a tool, a tool that is integrated into the things that your company has always done. If you think your company can sell an inferior or bad product through the power of the likes of Facebook, Twitter, and LinkedIn, think again: It will actually work against you by amplifying the negative aspects of your company.”
I couldn’t agree more. Like any tool, it boils down to how you use it. If the value of your product or service is not there, social media will only highlight those weaknesses. It is used to uncover the truth, not create a one.
Ania Amador
“Social media in itself is not a strategy – it is a tool, a tool that is integrated into the things that your company has always done. If you think your company can sell an inferior or bad product through the power of the likes of Facebook, Twitter, and LinkedIn, think again: It will actually work against you by amplifying the negative aspects of your company.”
I couldn’t agree more. Like any tool, it boils down to how you use it. If the value of your product or service is not there, social media will only highlight those weaknesses. It is used to uncover the truth, not create a one.
nealschaffer
Thanks for the comment Ania!
Ania Amador
“Social media in itself is not a strategy – it is a tool, a tool that is integrated into the things that your company has always done. If you think your company can sell an inferior or bad product through the power of the likes of Facebook, Twitter, and LinkedIn, think again: It will actually work against you by amplifying the negative aspects of your company.”
I couldn’t agree more. Like any tool, it boils down to how you use it. If the value of your product or service is not there, social media will only highlight those weaknesses. It is used to uncover the truth, not create a one.
Roy A. Ackerman, Ph.D., E.A.
I read the title (via a twitter lead)- which got my blood boiling. Then, I read your article and realized you had exactly the same opinion as I. It IS critical to monitor the results of social media, but as part of the return on investment for the business. However, as we do for most of our clients, we do try to segment out various components to see what weight (i.e., funding) we should apply for the investment in the future.
Thanks for allaying my fears of the title.
nealschaffer
Thanks Roy, and sorry to have scared you there
I wanted to pick a provocative title, and it looks like I reached my objective! Totally agree with your approach and I think, regardless of the title of my blog post, we are in agreement!
Hiroki Murakami
As a freelancer the first thing I always tell my clients is that “you just made a mistake, you hired a college kid to do your social media.” It’s important to understand that a community manager or SMM manager needs to be sitting at the meeting tables and working with decision makers in the company or business.
At the same time social media marketers are not operators or technicians in the same way that social media is not simply a tool. Social media marketers are themselves businessmen and marketers with a unique insight, understanding, and experience with social media.
In summary, social media is neither in itself a strategy or a business tool. It’s a matter of finding a balance somewhere between the two.
Hiroki Murakami
As a freelancer the first thing I always tell my clients is that “you just made a mistake, you hired a college kid to do your social media.” It’s important to understand that a community manager or SMM manager needs to be sitting at the meeting tables and working with decision makers in the company or business.
At the same time social media marketers are not operators or technicians in the same way that social media is not simply a tool. Social media marketers are themselves businessmen and marketers with a unique insight, understanding, and experience with social media.
In summary, social media is neither in itself a strategy or a business tool. It’s a matter of finding a balance somewhere between the two.
nealschaffer
Well said HIroki – couldn’t agree with you more.
Mel Aclaro
When I saw the title of this article, I thought I would disagree with its content. (Obviously, it was a great headline since it compelled a click-through.) :)
I do agree. ROI (that is, the “Return On *Investment*” variant as opposed to “…Influence” or “…Incompetence,” and other similar coinage) isn’t unique to social media. In fact, it’s a Business ROI for which social media is just one tactical *tool* to meet strategies and, ultimately, business objectives. I think that’s why some businesses have a hard time defining ROI… many of us don’t begin with an adequate definition of the desired business *objectives* for a social media program. Worse: I think many of us confuse “tactics” and “strategies.” (Often using the word “strategy” when what they’re really talking about is a “tactic.”)I’ve spoken and posted before about this subject as not being new for social media. In fact, businesses and those in the Learning industry have grappled with this subject for over 40 years. Models in fact exist that help organizations measure the value of a program. (Be it a training program, a new technology project, a marketing campaign or a social media program.) I hope this doesn’t come across as link baiting: But, in the interest of contributing to his dialog, below is a link to Part 2 of a 3-part screencast series I wrote on this topic recently… http://www.melaclaro.com/2011/06/22/social-media-roi-not-return-on-influence/ (For those interested, I recommend scrubbing forward to about 3:30 in the video, and then go from there.) And, if interested, Part 3 in the series should also be relevant. Part 3 drills further into the components of ROI. (What’s referred to as “Level 4″ in the earlier parts.)Thanks to you and the other commenters for your contributions to this topic.
Jure KLEPIC
BRAVO, was about the time Neal to speak out, that Social Media ROI doesn’t exist. I agree with you “online influence” can’t not be measured with Klout, PeerIndex or Tweetlevel. For me is a joke and sad seeing self-proclaimed professionals publishing their Klout score around the web, resumes, LI profiles and god know where else. I am just waiting to get first business card from someone with his Klout score on it. Well that will be an expense considering that Klout scores are changed every day
I agree with you Social Media is an excellent tool which help to improve Business ROI and bottom line on P&L if used and planned correctly. But their is no such a formula that would successfully calculate Social Media ROI alone.
The majority of small business still needs to understand that just because they create a Twitter account and FB page and put few adds on it doesn’t mean that their business will grow to success. Is much more then just few ads, a fan page and a twitter account. They need to learn to how to listen, respond and engage in social media. Once learned they will see improvements in bottom line.
The one measurement that i am missing in Klout and Peerindex is Trust measurement! Let them measure Trust level as this is winning point when it comes to selling or buying product / service.
nealschaffer
Thanks for your comment and support Jure. LOVE the idea of “Trust Measurement” – sounds like a great business tool waiting to be developed!
Jure KLEPIC
BRAVO, was about the time Neal to speak out, that Social Media ROI doesn’t exist. I agree with you “online influence” can’t not be measured with Klout, PeerIndex or Tweetlevel. For me is a joke and sad seeing self-proclaimed professionals publishing their Klout score around the web, resumes, LI profiles and god know where else. I am just waiting to get first business card from someone with his Klout score on it. Well that will be an expense considering that Klout scores are changed every day
I agree with you Social Media is an excellent tool which help to improve Business ROI and bottom line on P&L if used and planned correctly. But their is no such a formula that would successfully calculate Social Media ROI alone.
The majority of small business still needs to understand that just because they create a Twitter account and FB page and put few adds on it doesn’t mean that their business will grow to success. Is much more then just few ads, a fan page and a twitter account. They need to learn to how to listen, respond and engage in social media. Once learned they will see improvements in bottom line.
The one measurement that i am missing in Klout and Peerindex is Trust measurement! Let them measure Trust level as this is winning point when it comes to selling or buying product / service.
nealschaffer
Thanks for your contribution Mel – and glad to see that we are in agreement on this topic!
essay writers
very interesting and unusual post! thanks for the post!
Karl Sly
I literally stumbled upon your blog. Cool find. You’re right, as a business you need to be bottom line driven. Choosing a vehicle should be your secondary concern.
nealschaffer
Thanks for the confirmation Karl! Couldn’t agree with you more.
nealschaffer
Thanks for the confirmation Karl! Couldn’t agree with you more.
nealschaffer
Thanks for the confirmation Karl! Couldn’t agree with you more.
Nickv
Your title is catchy. The fact is that ALL “active” marketing efforts are judged by the bottom line, or Business ROI. Just because something is difficult to measure does not mean it’s not having a positive impact on your bottom line. Is it easy to measure a print or radio ad? No. Does that mean they have no ROI? As with all business efforts if you going to do it you better have a way to measure it. If you measure it, it has an ROI. Call it a business ROI if you’d like but it’s still an ROI. That said, I agree that approaching Social Media with the intent on generating a “positive” ROI all on its own is a tough sell.
nealschaffer
Appreciate the comment, Nick, and I wholeheartedly agree with you. I simply wanted to bring the debate back into a business one, not one that concentrates on social media as if it is in its own isolated silo.
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nealschaffer
Thanks for the comment Adam – if you haven’t, that is an awesome topic for a blog post that you should write!
Tom McClintock
You raise good points and I agree you’ll never be able to distill social’s return to a few neat and clean numbers, but business today suffers from a lack of quantitative analysis — not a surplus. Not all social media analysts who are trying to find new ways to quantify the impact of Facebook, LinkedIn, etc. are not just charlatans trying to “dupe” the system. Many are pioneering new ground that is still largely unexplored, just as commodities trading was in the 1960s. Metrics get better all the time (consider Facebook’s new dashboard). This is a worthy investigation.
nealschaffer
I agree Tom – we need more metrics, and if your social media team or agency isn’t providing any that make sense, look elsewhere. Yes, metrics will get better, but it comes down to a holistic understanding as to how social ties into your business – then the metrics become easier to understand.
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