The Problem Of ROI As A Sole Basis For Social Media Campaign Decisions



If an action is not right for all situations, then it is not right for any specific situation.
-Immanuel Kant


ROI is a popular mandate when deciding whether to enter into the enterprise venue of Social Media in these times. ROI (Return On Investment) is a cost/benefit analysis. It requires that all costs and benefits be stated in perceptible currency. As such, it is generally much easier to quantify costs than it is benefits, thus biasing ROI measurements by giving undue weight to costs. Social Media campaign beneficence is most often a qualitative computation, difficult to assess in monetary denomination.

Further, ROI tends to focus on predicted benefits. Social Media is predisposed to return egg in one’s beer that is typically unseen. Many SM initiatives have conveyed enhancements that were not visualized at the outset of their implementation. Consider the magnitude of growth experienced by Facebook, and the marketing advantages that have been attendant. Such prosperity could hardly have been forecasted in the first couple of years of its existence, though nevertheless it has become a mainstay as an advertising channel; having a fan page is now comme il faut, with an associated design industry that is both flourishing and lucrative. This is but one example among many others.

Establishing a commercial presence within the online community brings blessings that are difficult to benchmark in monetary nomenclature. How valuable is communication with clientele, the ability to broadcast timely updates, and feedback from the targeted market? What fiscal assessment can be assigned to these parameters? The very nature of ROI demands that these advantages be described in financial terms.

Certainly returns on investment considerations have a place in determining SM dynamics, but they should not be the single deciding factor. ROI tends to emphasize short-run benefits over long-run benefits. While the mathematics of ROI calculations do account for both correctly, short-term prosperity is easy to visualize, and therefore has a tendency to be included in the ROI estimations. Long-term benefits are harder to imagine and more difficult to evaluate, and are likely to be accommodated less often and less accurately in the ROI appraisal. This in turn can lead managers who rely solely on ROI measures to make incorrect decisions on Social Media engagement.

It therefore becomes incumbent upon those that make final adjudications concerning the implementation of Social Media ventures to look beyond ROI as a singular application, and consider the broader implications of what largesse can be secured when authorizing the creation and augmentation of an occupancy within the communal Internet commonwealth.

Advertisements

About Grannelle

eMarketing Scholar
This entry was posted in e-Commerce, Opinion, Social Media and tagged , , , , , . Bookmark the permalink.

8 Responses to The Problem Of ROI As A Sole Basis For Social Media Campaign Decisions

  1. Mike10613 says:

    Hi Gregory,

    You describe your blog as ‘evangelism’ and you could employ that even more to make it more effective. The original evangelism was done by Jesus and he used parables; stories to illustrate his point. If you write the same thing as everyone else it’s boring; but he was different and they still talk about it 2,000 years later. What is comparable to social media? The newspaper with it’s news, features, sport, fashion, editors, journalists, colour adverts, photographs, libraries of information being ‘curated’, full page adverts, classified adverts, monochrome adverts, colour adverts, page three models (topless and female in the UK), back page for sport and so on. Maybe you could illustrate your ideas by comparing it to a glossy magazine? What made Vogue a successful magazine and what is the internet equivalent and how does social networks interact? I’m researching love versus money in marriage for a story for a major publisher. I have no chance of getting it published unless it it it it it is very different. It must inform, entertain and amuse and at all costs not be boring. I have to have young junior editors passing it around the office and then it has to go to a senior editor… I expect the rejection email; but shoot for the regular feature! I like repeat business…

    Like

    • Grannelle says:

      Many thanks, Mike! I suppose my use of the word evangelism comes from a latter day use, i.e. spreading the word. As far as comparing it to a magazine, perhaps Mad?

      Like

  2. Gregory, I like your post and couldn’t agree more. If done correctly our efforts on social media are creating engagement and cultivating relationships. How can you determine the ROI of a conversation. Now if we are truly creating ‘campaigns’ for social media, such as Facebook Ads, then perhaps there are tools in maturation that will work. But for simple customer relationships, I try to steer clear and educate our clients that there are no ‘true’ social media campaigns, rather attainable goals and guidelines as to how we can reach them together. ROI (or expectations/belief that there is none) is a big source of fear in getting the local businesses in my area to get their social media game faces on. Thanks so much for posting this!

    Like

    • Grannelle says:

      Many thanks, Chuck. As you state, “creating engagement” is key, the very underpinnings of Social Media. Your comment is highly appreciated.

      Like

  3. Mike10613 says:

    Calculating ROI is a little like calculating compound interest; you get interest on the interest. It’s cumulative in nature. You use social media to create a little interest and then social media itself takes over and the word spreads; interest breeds interest.

    I wrote that well; I should be a writer! 🙂

    Like

  4. Funny, great minds must think alike. I published a post on this topic recently: http://hausmanmarketresearch.org/why-its-stupid-to-measure-roi/#axzz1KC8vOPqv. I came out a little stronger against ROI in social media, but we’re definitely on the same page.

    Keep up the good work.

    Like

    • Grannelle says:

      Many thanks, Angela! I read your article after I wrote this, and sent out a tweet about what you had to say. Thought your ideas were on point.

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s