The Real Problem with Social Media ROI

by Haris Krijestorac on April 24, 2011

There has been a lot of talk lately about measuring the ROI of online marketing channels, particularly social media. From what I have observed, most marketers fall into the following camps: those that think social media doesn’t require ROI justification, and those that make an attempt to quantify it in some way. Gary Vaynerchuk is a good representative of the former, and Dharmesh Shah of the latter. What I believe some people don’t understand is that these two views are not mutually exclusive. In fact, they are two sides of the same coin.

Social media can be measured about as well as any other online marketing channel. There is no reason that social media should be set apart as much as it is. There isn’t as big a debate on whether there is an ROI of SEO. There shouldn’t be one in the case of social. In that sense, Gary has the right answer to the social media ROI question.

However, the question doesn’t get to the root of the important issue. There is a fundamental problem with measuring anything in marketing that we rarely acknowledge. When you’re presenting your metrics at your marketing meetings, you aren’t actually reporting the KPIs you wish you could report. The metrics you report are just your best representation of your actual KPIs. They are an abstraction quantified through click data.

The metrics can fool us. The measured ROI of two marketing channels can show that one performs better than the other. But have you considered that maybe that one is just more measurable?

What I believe Dharmesh is getting at is that you need better representations of your KPIs. Instead of asking about the ROI of social, ask yourself how you can more intelligently look at a series of clicks to formulate actionable marketing recommendations.

The primary reason you should be getting into social media or any online marketing channel isn’t because of its ROI. It is because you understand what has happened, where things are going, and how you can leverage that situation before your competitor does.

How do you feel marketers should look at the ROI of social media?


This post originated on Marketing Information Systems, a blog by Haris Krijestorac.

To continue learning how to better align technology, people, and processes for marketing success, subscribe to this blog and follow me on twitter.

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