When Will Your Social Media Strategy Show ROI? (Part 2)

Can a cogent argument for positive social media ROI ever be put in front of a company’s executives?

In Part 1 of this series on social media ROI, I looked at two of the top Google results and outlined their arguments in brief.

From an executive perspective, neither argument seemed to be particularly effective to me in their efforts to recast thinking about whether social media efforts can generate a positive return on investment.

To switch things up (and to show that I’m not entirely Google-centric), I turned to Bing using the same search parameter: “social media roi.” I took this simple keyword approach because it’s very likely the same thing that any human being is likely to type in on the topic and should show the most popular thinking about the question.

One of the top Bing results, an article by Jacquie McCarnan titled “Social Media ROI for Idiots,” takes a more formulaic, business school approach to the ROI question. In her article, she argues that the formula for determining ROI has been set for a long time:

Traditional ROI is calculated: ROI = (revenue – investment) / Investment * 100.

When it comes to social media calculations of ROI, she states that the formula can be switched up, depending upon what you’re looking at, replacing “revenue” with other measurements like “targeted engagement,” “employee retention,” “customer retention,” or even “social good.” These metrics require qualification, of course, but they do offer a view that more directly addresses the question.

This was a thought provoking article that, to me, only sidesteps one direct question I regularly see from executives and this is whether social media can move the bottom line by leading to direct sales. McCarnan concludes:

If you still don’t get it maybe social media isn’t for you. If the company you work for doesn’t see the value in engaging employees and customers, developing new sales opportunities, reaching target markets and doing some social good then perhaps they should stick with traditional media like TV.

To me, this conclusion of throwing up one’s hands and walking away from the unreasonable executive suite seems premature. Yes, it’s frustrating that so many top executives don’t “get” social media. Yes, they should be focused on things other than the bottom line for the business. Yes, other areas of marketing do not have to address the same level of scrutiny being leveled at social media efforts.

But it’s the question that executives are asking.

As social media consultants, we have a responsibility to educate responsible and not just sidestep an uncomfortable question. If a bottom line sale is what the executive is looking for, it is not for us to whine, snark or walk away in disgust (by the way, I am not accusing McCarnan of this, but pointing to a more generic trend in social media consulting). We need to instead be asking questions about what level of bottom line success is the goal, whether that’s the only goal, and how we can mutually set a reasonable time frame to not only get within a reasonable distance of predicting a ROI for the company in question but also discover what other unexpected value might be realized from ongoing social media engagement.

In my experience, most executives are intensely interested with what advantages might be accrued from using social media marketing as part of their overall business strategy. They are simply skeptical of the hype and are looking for unvarnished advice about what might work, how soon a result might occur, and what they can reasonable expect from the comparatively modest investments involved with a social media strategy.

Now, before the audience of social media marketers begins to howl that showing a bottom line return from social media is not fairly attributable or can’t be done or shouldn’t even be a question, consider for a moment that we are fortunate to have the close attention of that executive suite. As opposed to the state of things even two years ago, companies that never before even considered looking at social media with anything but a sneer are now at the table, their executive teams feeling like they have missed the boat or feel that they are now at a point where they absolutely must do something if only because their competitors are already there.

I believe we should take full advantage of our seat at the table and advance the conversation beyond evasions and dismissals.