September 29, 2022

Helping PR pros make smarter decisions

The ROI of Social Media

The ROI of Social Media

According to author and business consultant Charlene Li, “Social networks will be like air.” Although it was a prediction in 2008, it resurfaced in a discussion I was having where I was asked, ‘what is the ROI on breathing’? This set up the classic ROI discussion of sites like Twitter, Facebook, and LinkedIn.

ROI, or return on investment, is the age-old benchmark for how much was made from investing money. For example, a new machine that cuts production time means more products can be made at a lower cost. That can be measured. The value in social media, the conversations on Facebook walls or positive statements on Twitter are more – fuzzy — to measure.

Ms. Li is the co-author of the social media book Groundswell and founder of the digital strategy company The Altimeter Group. She states what more now believe is coming to be true: What is normal today, like going to a destination site like Facebook or LinkedIn will be viewed, perhaps by 2018, as archaic.

According to Li on her Forrester Research blog, “I believe that in the future, social networks will be like air. They will be anywhere and everywhere we need and want them to be. And also, without that social context in our connected lives, we won’t really feel like we are truly living and alive, just as without sufficient air, we won’t really be able to breathe deeply.”

Think about the explosion in smart phones and in m-commerce (mobile commerce). If you don’t see it happening, look harder: 55 percent of American adults connect to the Internet wirelessly, according to the Pew Internet Project. The first two decades of the century will be known for the emergence of portability and ultimately, what Li calls “ubiquitous social networks” that focus on profiles, relationships, activities and business models. This means universal online identities, or what I have referred to as “online personas,” based on how you behave online, and with whom you interact.

The value in the business model will be very different than the current financial models. They won’t work “because simply targeting better on profile or social graph details is still the same old media model of CPM [cost per thousand] and CPC [cost per click] pricing. What’s missing is marketing value based on how valuable I am in the context of my influence.”

Future measurements may be more aligned with an individual’s influence within their personal networks, and how their expertise and comments may influence sales. For example, I am frequently asked about web analytics, social media, innovation, smart phones and photography. My network may mean good business to companies I like. Companies that reach out to help people will have more people in my network (and likely other networks) talking positively, which will result in sales. The measurements just aren’t where they need to be yet, but they are well on their way.

So, does Return on Investment measurements take a hike?

First of all, the ROI on breathing is like turning the lights on in a business: it does get you to the next day, but doesn’t make you profitable.

Second, we are talking about trying to measure conversations. What is the value of words – positive or negative – about a company between neighbors? And what if that happens when those conversations take place on the web where tens of thousands of people can see them?

Just because you think Google is the only way to find good and bad words, trust me – the public measurement of good and bad comments is starting to change at a rapid rate. For example, sites like Yelp! allow you to share where you are and post detailed reviews.

ROI is no more of a value in measuring conversations than is trying to measure the value of a roof on your business. If you don’t have one, you are in deep trouble.

My suggestion is to forget about the ROI and hire a senior person to work with your management team, manage your online reputation and teach others how to truly interact with your customers to make them feel the love they want to feel.

This time, business IS personal.

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