18
Apr
2013

Social Media ROI

Knowledge is the best investment...

This should be a blog that would help you answer two questions: is it possible to calculate return of investment in social media and how to do it. This should be a blog about that but I have decided not to write an answer to those two specific questions because I am aware that even the best formula in the world cannot help you calculate ROI if you don’t know why you decided to join social networks in the first place. If your brand is part of the social network only because all other are, than you have a major problem. You will not be able to explain, especially to your colleagues in sales department, why do you invest money in Facebook page since “that is something that even a colleague student can do and it will not ensure better sales”. Logically, you will start to think about numbers and ways in which you could objectively justify reasons for the appearance of your brand on social networks. That brings you straight back to the beginning where you wonder why you started with this whole story. 

What fascinates me about this whole ROI on social media is not a very precise metric that enables us, unlike in traditional media, to gather many useful information. I am fascinated that all that is continuously ignored and that, instead of valuing information that we have, we continue to discuss about those that we don’t have. Clients will rarely mention the fact that they invest is social media several times less than in TV advertising. There is no other explanation but the psychological one. The fact that you are investing several thousands of KM, in order to reach a certain number of people, is reason enough to justify such investment. Who are those people that you are trying to reach through TV, what are they doing, have they ever really seen your TV commercial or bought your product is not something anyone is talking about. The only important thing is that certain number of ratings is being delivered. Gathering important information about target audience, daily conversation with them, having them as friends of your brand, all that seems to be irrelevant. Don’t get me wrong; I am not saying that is all that matters because digital communications enable us to calculate return of investment to each invested KM. I would be more than happy to calculate, for my clients, precise return of investment for each Facebook post and each application used.

However, in order to reach that stage we need to understand our goals and be aware of the fact that not all brands can have same goals. Brand that has significant brand awareness should have completely different goals that the one that is just starting with promotion. It would be easier, for the first one, to establish its position and work on its image and reputation. Such brand can start with sale-oriented actions because it can “afford it” and it is justifiable, in such cases, do discuss effect of social networks on sale. The second brand, however, should use social networks do create brand awareness. Social network marketing strategy should be focused on cost-effective ways to introduce target audience with products and services of your company.

Goals should also differ between certain industries, so Telecommunication Company will have different goals than Hair-product Company. Their target audience and their behavior on social networks determine such goals. Both groups are looking for information, but 24/7 customer support is more important for telecommunication brand. Maybe a question regarding your hair protection, that you have posted around midnight, doesn’t require an immediate reaction but any question regarding telecommunication support really does.

I am sure that the value of “like” is well known to everyone. However, you need to understand that “like” is not a measure of anything, it’s just a means to an end. And if you don’t have an idea about your “end” then you are nothing more than “like counter”.