Basics Of Social Media ROI

Olivier Blanchard: Basics Of Social Media ROI

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During a #socialmedia chat today on Twitter, it became obvious that a major challenge for the use of social media in business is proving the case that it works. After all, in this economy, resources are limited. The question of ROI comes into play whenever resources must be allocated. A new set of technologies that provides a combination of PR and CRM into one channel clearly should not be ignored. But how does management decide to integrate it into a company's marketing plan? And how to decide if it is working?

From a college course in experimental design comes one important principle: Correlation does not imply causation. Because the tools to measure the success of social media are still being developed, it is difficult to prove a causal relationship. Until tools for social media metrics are more sophisticated and more seamlessly integrated into a company's marketing campaigns and reporting, correlation will be relied upon rather than causation to make the case and to adjust corporate strategy for social media. As slides 35-47 and 49-58 point out, creating a timeline and searching for patterns is, for now, the best way to determine whether the corporate SM strategy is working.

The larger question of how to translate followers and blog subscribers to actual sales is complicated by one confounding variable: What effect does social media have on branding? It is difficult to measure the benefits of customer service, transparency, information, and general "likability" that can be accomplished via Twitter or Blogger. How does the average small business track social media's effect on a brand when it is expensive to create polls and surveys? It is here that the large companies have a leg-up in gauging the effect of their social media strategy on their brand.