The FINAL word on social media ROI is this… sometimes. Give me a few minutes of your time and I’ll gladly explain.

Right now people seem to be fretting far too much over ROI and social media. Right now the camps seem to be polarized and split into two very outspoken groups. One side chanting “Social Media has no ROI” the other side scream ” Yes it does and you’re an idiot for not thinking so.” It’s getting to be rather annoying actually.

Social Media is a tool… that’s IT. It’s a very versatile and extremely powerful tool with an immense amount of potential I believe we’re only just beginning to tap into. However, by itself it is just a tool and has no inherent value of it’s own.

A hammer laying on a table has no use or purpose until it’s swung into action and used to get results. Social Media is absolutely, positively no different than any other marketing tool out there on it’s own.

PPC (pay per click) has no monetary value (and so no ROI) on it’s own. Media buys, affiliate marketing, SEO, SEM, and blogging have absolutely no value on their own. What gives them the value, and thus the possibility of ROI being calculated is how they are used.

If you’re using a hammer to put a screw in the wall you’re not going to get amazing results and end up wasting a lot of time. Why? Because you’re using the wrong tool for the job. You’d get much better results if you used a screwdriver or a power drill.

This analogy moves right over to internet marketing and thus social media.

ROI is a financial equation, a metric and that’s it. It’s not the end all be all. It’s not the ultimate answer to a broad question (the value of social media).  At the end of the day when you write up your reports you need to have solid business metrics to back up your success or document your failures and that doesn’t just mean ROI, because honestly, it’s just one piece of this puzzle.

Recently I wrote an article about The GAP, ROI, and Awareness where I laid out the 4 basic types of marketing campaigns. Acquisition / Lead Generation, Awareness, Brand, and Loyalty. There are many sub campaigns that can fall under these, but these 4 cover the vast majority and each have their own metrics.

4 Types of campaigns and their metrics

1. Acquisition / Lead Generation  – These types of campaigns are used to gather information (like email addresses, profiles, home addresses, etc) with the goal of winding up with a list of people who are most likely to buy from you.  This type of campaign uses ROI,but only after you’ve determined what each lead is worth to you based on previous numbers.

2. Awareness – This type of campaign can be used to increase the awareness of certain products or the brand itself. Here we would be looking at Impact. ROI doesn’t work here because there are no sales being made and the goal is not financial.

3. Brand – Here the goal is to associate the company with it’s services and offerings. This type of campaign will have hooks into the sales channels, marketing materials will be laden with copy points surrounding what it is, does, or offers and will typically have a CTA (call to action). ROI is prevalent here as the goal is to lead them through your marketing and sales funnels and make a purchase.

4. Loyalty – When a company launches this type of campaign their goal is to reward their current, frequent buyers or to entice customers away from competitors with their awesome loyalty program. This can take the form of a discount card, some kind of point system, or keeping a list of your best customers and having an event in their honor. Here you’re going to be using a mixture of Impact and ROI. Impact for how it’s being received and picked up, ROI  on the program as a whole (which includes SM spend) to ensure the campaigns health.

Looking at it broken down like this you can see where both sides are coming from. Once side who seems to only think Social Media should be used for making money have the battle cry of “ROI or Die”. While the side more concerned with awareness and building brand affinity shout “You can’t put a dollar sign on a conversation”.

Before I expose you to a seemingly “new” term here’s what I have to say to both sides. You’re both right and you’re both wrong, metrics are not one size fits all. So Knock it the #$%* off and start using the metrics properly!

And now for something new

While discussing this with my good friend Rick Galan he made a great point about all of this. Why are we squabbling over certain metrics when there is something already in place that fits very well with social media, and that is KPI.

Wikipedia defines KPI as “A performance indicator or key performance indicator (KPI) is a measure of performance. Such measures are commonly used to help an organization define and evaluate how successful it is, typically in terms of making progress towards its long-term organizational goals”

By now we should all know that social media is all about the long haul. We should know that social media is just as much about building relationships & making a soft sell as it is building a solid online foundation for you to grow over time.

Let’s look at that last part of the definition again “…typically in terms of making progress towards its long-term organizational goals.”  Social media was built for that. Building your reputation and community while strengthening your brand over time.

I think we need to start a new chapter in social media, and I’m going to spend the next couple weeks creating articles that all run around this subject. Creating the KPI’s or adjusting current “accepted” ones for social media use. At some point you have to stop looking at only today and start looking towards the future.

All this debate about ROI is just going to keep going in circles until people remember that marketing has many facets as does social media. We need to stop point fingers, and start building the future of social media use in business.

What do you think the KPI’s of social media should be? I know that things will change based on goals of the business, but what basic measurements should be included in the overall KPI’s for a company?

Thank you for reading,
Josh “Shua” Peters