The ROI Of Social Media

May 5, 2008 on 6:39 am | In Blogs, Buzz, Guest Blogger, LinkedIn, Media, Online, Social Media, Twitter | 16 Comments
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This is the first in our guest blogger series. Today’s post comes from DJ Francis, Online Marketer.

Marketers know that social media is impacting their business, but no one knows exactly how much. In what ways is social media changing business, how is this new medium different, and can we measure it? Should we even try? In short, what is the worth of social media?

  • Listening: Social media offers infinite market research, branding, and listening opportunities. I dare you to search for “[Your brand] sucks” and see what you find. Listening – a simple yet often over-looked aspect of human life – may be the Web 2.0 killer app and smart companies are catching on.

TNS/Cymfony found that “Revolutionaries” – companies that focused on listening rather than selling – “have a more sophisticated approach to creating strong relationships with consumers and as a result are gaining a competitive edge,” said Chief Strategy and Marketing Officer Jim Nail. (Bill Green at MakeTheLogoBigger has some more great insights.)

  • Responding: Social media gives marketers the chance to give quick feedback and break down unnecessary walls. Businesses are using twitter to quickly solve customer’s problems or connect straight to the CEO (try @Zappos or @ComcastCares). I have also had success reaching VIPs through LinkedIn questions – it is amazing the number of higher-ups who gladly answer queries on the site.

So how does this change business?

First, it means that business success will increasingly be more merit-based rather than on spin or sheer advertising dollars. But marketers will also need to be ready to change their strategy to adapt to this new medium. This involves less top-down thinking and a different consideration of what makes a site profitable.

When I heard AOL had bought Bebo I cringed just thinking about the energetic startup in the clutches of a Web 1.0 holdover. From The Economist: “The non sequitur is to assume that the new service will be a revenue-generating business in its own right.” But the service could be amazingly valuable if marketers used it as a listening mechanism.

Second, expect customer behavior to change as social media changes from a destination to a platform. Marc Andreessen, one of the creators of Netscape and all-around Web wunderkind, said it best in an interview with ZDNet on April 25, 2008:

“It’s been this cliché in the industry that email is used by old people like you and me, and then instant messaging is used by kids. Well, it turns out instant messaging was used by kids 5 years ago…It turns out that kids – real kids – today are communicating primarily through social networks.”

Has your business changed its strategy because of this? ‘Nuff said.

The Gist

In most instances, when marketers talk about measurement or ROI of social media, they are trying to fit a square peg into a round hole. You can’t apply a Web 1.0 gestalt in a world where the audience cannot only respond, but can also generate more content than any single company.

Instead of measuring how well we are pushing our message onto potential customers, we should instead gauge our success on the number of conversations listened to, problems resolved, and useful suggestions received from the community of customers we already have.

One day, we may be able to get quantitative metrics on social media (the folks at Forrester Research are on the right path). While we have to settle for qualitative data right now, I believe that this will prove the best type of information in the end.

Ian Schafer, CEO of Deep Focus, said in AdWeek that “The other risk is that in the zeal to track, marketers and agencies will lose sight of the need to trust that getting closer to customers is a worthy goal in and of itself.”

Marketers seem obsessed with assigning value to interactions on social media sites. But real success comes when you value the interaction itself.

Harry Hoover

Harry Hoover is a partner in My Creative Team, the agency that makes Fortune 1000 clients look good. His communications career spans 35 years and runs the gamut from print and broadcast journalism, government and corporate communications to advertising and public relations agencies.

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  • http://www.mediaphilosopher.com Marcel LeBrun

    I like your emphasis on measuring success by how well a brand is listening online, resolving problems, receiving suggestions, etc., instead of how well they are pushing their messages.

    I recently wrote about online listening pointing out that there is a significant opportunity for a brand to listen and engage at a customer’s point of need where you are being helpful rather than interrupting them with your messages.

    Great post.

  • http://www.my-creativeteam.com Harry Hoover

    Marcel, thanks for dropping by and commenting. What’s the link to the post on listening you mentioned? We’ll add it to the conversation at THINKing.

  • http://www.ecairn.com laurent

    Good analysis on what needs to be changed. If you want to be listened by your customers, listen to them first ;-) . Communication starts with that. Practically speaking, it’s so much easier today to push sanitized messages that aren’t read anymore than to immerse oneself in this new zillions media niches to identify those that are relevant, listen to them, engage when/where its appropriate.

  • http://www.my-creativeteam.com Harry Hoover

    Laurent, as grandma used to say, you have twice as many ears as mouths for a reason.

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  • http://www.ecairn.com laurent

    Harry

    I will remember the ear/mouth analogy.
    I was also also told to rotate my tongue in my mouth 7 times before I speak.

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  • Carmen Bracamonte

    The ROI of Social Media is tangible but it will never be achievable if we don’t find ways to get through the clutter and provide quality content in such extraordinary fashion that truly generates the WOW factor.

  • http://www.my-creativeteam.com Harry Hoover

    So true, Carmen. Content for social media is just like any other content…it must be relevant, original and impactful.

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  • http://www.toweringambitions.com/ Wealth and Success

    Your post makes one think! Great article. Thanks for allowing me to comment!

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  • http://www.rowdy.com Rusty

    These tools really do nothing more than facilitate in digital format the same conversations we used to have in person or over the phone (I guess we still might be having them that way, too). So, the same measurements apply. Is dialog two-way? Is it clear? Does it have chemistry? Connecting is connecting. The challenge is, it’s easy to manage 150 friendships, but not 150,000.

    If your community is rocking like a good cocktail party, then, and only then, is it time to consider monetizing it. But before you do, remember the last party you were at that really rocked and imagine what it would be like to have the host interrupt the conversation so that State Farm can give a short talk on car insurance…!

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