Roi in Social Media: A Look at the Arguments

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Practitioner Article

ROI in social media: A look at the arguments
Received (in revised form): 16th June 2009

Tia Fisher
has worked in on and offline marketing for over ten years, and in 1997 joined the New Business Development Team at eModeration (www.emoderation.com), a leading international moderation and social media management company that lists many Fortune 500 companies among its clients.

ABSTRACT Return on Investment (ROI) has become the Holy Grail of social media. Marketers are being squeezed between admonishments to participate in the vast new online communications available to them and demands to justify the cost using conventional advertising metrics. New ‘ROI calculators’ are being created almost as fast as new social networking sites – then just as quickly being dismissed as being unworkable. In this article, Tia Fisher of eModeration takes a long view of the current state of ROI in social media, and examines the arguments for and against attempting to use any kind of metric to justify involvement in a social media program. Journal of Database Marketing & Customer Strategy Management (2009) 16, 189–195. doi:10.1057/dbm.2009.16 Keywords: ROI; social media; marketing; marketing budgets

INTRODUCTION
With the publication last month of the Internet Advertising Bureau’s (IAB) ‘Social Media Ad Metrics Definitions,’1 it seemed a good moment to have a look at some of the controversy around the measurement of ROI in social media. Examination of the IAB’s publication will follow later, but in the meantime, let’s take a look at the background into which it appeared. The ROI within social media has long been a bone of contention, and seems likely to become ever more so, with the equally lightning spread of both social media use and savage budget cuts. In a tightening economy, businesses need to make sure that they’re getting a return on their marketing investment. Are they in the right places? Doing the right things? With the right people? And how can they tell? To get

Correspondence: Tia Fisher eModeration Ltd, 24 Greville Street, Farringdon, London EC1N 8SS, UK Web: www.emoderation .com

an idea about the current raging debate, take a look at just one example post from MetricsMan, a blog about ‘The Fast Changing World of Social Media and Public Relations Research and Measurement,’ in which he states, ‘Are you are seeing the accountability bar being raised this year? In my corner of the world, the volume of conversation about social media ROI is high and accelerating. Unfortunately much of the conversation has been misinformed and misguided. It seems like every week brings another post attempting to reinvent the acronym or the meaning – ROI really means Return on Influence, or Return on Engagement is the new ROI, and on and on. There is another group of online Zen Masters who would have you believe social media ROI is old school thinking and not in tune with social media Zeitgeist.’2

© 2009 Palgrave Macmillan 1741-2439 Database Marketing & Customer Strategy Management Vol. 16, 3, 189–195 www.palgrave-journals.com/dbm/

Fisher

Quoting David Alston in MarketingProfs, ‘The discussion of ROI has focused mostly on the search for the Holy Grail of a metric, but adapting traditional metrics to fit social media would be akin to sticking a square peg in a round hole.’3 ‘Inability to measure ROI’ was named by marketers as one of the most significant barriers to the adoption of social media tactics by their organization from a poll quoted by MarketingSherpa: ‘Marketers are under constant pressure to measure everything they do. The result is often a default to tactics that are more easily and accurately measureable, regardless of their effectiveness. This is especially true in social media marketing which often requires qualitative measurement rather than quantitative metrics that are more familiar to online marketers.’4

was able to provide the following interesting statistics: • 70 per cent of consumers...
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