When Will Your Social Media Strategy Show ROI? (Part 1)

Of the many executives I speak with on the topic of social media strategy, the question of when social media engagement will translate to ROI arises every time.

However, when you look at the top, most influential links on Google for “social media ROI” we find an interesting disconnect. Unsurprisingly, among the top 5 is a video from Socialnomics that is specifically about ROI.

Although it’s a beautifully produced video, it is designed primarily for an emotional impact to make a case to companies for investing in a more robust social media strategy. At the core of the argument, however, is the idea that ROI for social media is a somewhat ridiculous question to be sidestepped:

What is the ROI of your phone?

What is the ROI of your phone has become one of the mantras of social media consultants, trying to recast the conversation in terms, presumably, that CEOs can wrap their heads around. The comparison is one that I’ve found myself using from time to time, but it ultimately comes off as (at least a little bit) derisive.

Perhaps derisive is what social media needed back in 2009 when the video was produced, but the fact that it’s still in the top five most popular Google results in 2011 indicates to me that there’s a problem. Feel free to argue against it, but let’s look further at one of the other results.

One of the other top results is an article from Social Media Explorer blogger Nichole Kelly in April of this year. The article is a bitter pill to swallow as it engages in some myth bashing on the social media ROI question. Namely, social media measurement software is not set up to be able to give you an ROI stat and that ROI is going to be negative since it’s going to be a long term investment akin to marketing efforts beginning in the 70′s which took years to evolve positive brand associations and a positive cash return. Her good news is a challenge to compare social media efforts to all other marketing efforts in the organization and smile at the cost differential, which, one assumes, will be in favor of social media.

So the message here is “Smile, we can’t show you ROI but it could be worse”?! To put such an argument before all but the most progressive executives is to invite failure as well. I don’t gainsay that her article is speaking about the truth of the ROI situation as she has experienced it, but as a means of encouraging companies that have not taken the plunge into these icy online waters, it’s far from being an encouragement.

To recap, we have two big messages so far on the question of ROI. One is that, while there are examples of the big companies showing a positive ROI, you should view it as a utility (like a phone) and not even ask the (silly) question. The other is that ROI is incredibly difficult, not set up to be measured with existing social media software and will definitely not show a positive return until, it is implied, decades later.

Scant hope! In my next post, I’ll be addressing a few more of the top links and drawing some conclusions about the state of the ROI question in 2011.

When did your company bring up the question of ROI and how has the topic evolved for you this year?