Social Media ROI

Is there such a thing as social media ROI?

The answer is NO!

Here’s why, a sound and convincing reason given by Neil Schaffer, one of the top social media strategist, voted by Forbes, in his article There’s No Such Thing As Social Media ROI – It’s Called Business ROI.

Social media, like your website and internal IT technology, becomes part of your company’s infrastructure over time.  It’s not a question of having a robust social presence just like you need a robust website: You simply must have them.  For professionals, I call it your “Social Infrastructure,” which is why we feel compelled to be on sites such as LinkedIn and Twitter to network and keep up with the latest news recommended by our social circles.  We see benefits from doing so.

As social media grows rapidly and in my previous posts I hope that I have convinced you enough the fact that social media is so important in business because it impacts many different business aspects including HR (hiring and employee productivity), IT and operations (collaboration tool and product development), and PR (external communications).  Companies are hiring more and more marketing and communications specialists with titles that include “Social Media”, but where do they place them?  It probably doesn’t make sense to have one Social Media Analyst/Specialist in every department because social media helps every department in business.  But how do you measure or quantify how much it helps.  It’s like measuring trust – hence social media ROI doesn’t exist.  It seems kinda silly to think of Social Media as a strategy that we have to spend a separate portion of budget for.  If so, then should we also have Social Media HR Analyst, Social Media Operations Analyst, and so on?

Rather, social media is a tool that could be widely used across departments in any business.  It improves the way each business function works rather replacing the traditional tools.  Be careful when you touch upon this point because as I mentioned before how traditional marketing budget is dropping much lower than digital marketing budget.  Come to think about it, digital marketing is not a replacement for everything you learn in your MBA marketing classes.  It’s an separate line item in your budget for a reason.  The reason is that it’s an add-on item, and as it increases, your traditional marketing budget decreases.  This shows a balance in your overall budget.  Also, it shows that your company is doing the right thing, which is to keep up with what’s trendy and what direction business is heading towards.  In other words, social media should be tied with your business goals.  The approach to optimize social media ROI or number of likes are not going to do your company any good.

So the answer to the question Is there such a thing as social media ROI is still NO!  Business gets this wrong easily because it doesn’t make sense to measure social media ROI.  If you search for Social Media ROI on Google right now, your search result will be flooded with articles on 14 simple formulas to measure social media benefits, or on methods to track your social media efforts, or on debates on whether 10% is enough for social media marketing budget.  Besides, 88% of 750 surveyed marketing professionals didn’t feel they could accurately measure the effectiveness of their social media campaigns.  Fifty-two percent said that dealing with social media ROI was their biggest frustration.  The right way to do is to measure your business ROI, track social media efforts and analyze how it impacts your business.  Eventually if planned and used correctly, you will see the impact of social media has on increase bottom line and sales revenue.  I am not convinced that there is a formula to measure social media ROI.

Should we neglect tracking social media?

The answer is again, NO!

In order to know if your investment in social media is worthwhile, you better keep track of what works and what doesn’t work in your social media tactics, using big data,to follow the trend of social media and the big data explosion.  You should be keeping track of your social media efforts because simply you must have it in your “Social Infrastructure”.  The impact of social media on business has already been discussed.  It’s not necessary to stress any more how much it could help or hurt your business.  Social media gets real!

For example, there are companies that specialize in tracking social media, stressing the fact that picking the right data is very important in evaluating your social media efforts.

Should we still hire a Social Media Specialist?

Now we have to turn the answer to YES.

A person who understands all these points mentioned in this post should be granted this title because he or she is skilled of running social media campaign to make it a tool to support any business goals.  A social media team is necessary, as long as the they understand their roles and objectives, as well as the functions and tools in social media presence.  The social media team should be involved everywhere in your organization.  The qualified candidates are also experienced in business, communications, and most importantly, marketing and data analytics.  Gian Oliveri, a senior consultant with executive staffing firm, in giving a guideline How to Hire a Social Media Specialist has stated:

“Anyone can build a Facebook page, but it doesn’t mean it’s successful. These people go deeper and rely on analytics to run good campaigns, tying it all back to ROI,” says Gina Oliveri, senior consultant with executive staffing firm Bowdoin Group.

Lastly, data analytics skills are becoming more necessary. “[Social media specialists] need to know not only how to run campaigns and ads, they need to know how it all ties back to ROI and how the business can generate revenue from it,” Oliveri says. “You need to be a number-cruncher at some level—put on headphones and look at the data, then come back with intelligent insight so the business knows what to do next.”

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Social Media – The Bad & The Ugly

Social media’s trend is no doubt only going upwards in our business environment nowadays.  However it is important to keep in mind that it is a very effective tool that could turn into a disaster if used without care.  There are many companies that have failed because of the lack of sophistication and understanding of the bad and the ugly of social media.  There are also cases that social media do more harm than good to the company.

Brand disasters caused by viral network

Facebook effect was the reason Subway got sued for their less-than-12-inch foot-long sub.  In 2012, there is a list of biggest brand disasters from well-known companies such as Fedex, McDonald’s, D&G going around the internet.  These brand disasters are caused by social media and how powerfully it could influence the network.  This is when social media creates an ugly network effect; and companies reputation could get damaged a second after somebody spreads the ugly information only.

On December 19th, 2011, a FedEx customer caught a FedEx employee on camera throwing a brand-new and expensive TV over the gate, instead of ringing the bell to find out if anybody is home.  The number of views grows exponentially.

Screen Shot 2013-05-02 at 11.34.48 AMWith the extremely fast growth of social media’s influence, FedEx, maybe 3 days too late, handled the situation with the following response:

How effective is this solution?  If right now while I am writing this post, May 2nd, 2012, the total number of views is almost 9 million.  And the most recent comment posted on this video is 2 months ago.  Apparently, only crisis such as this incident could damage a company’s brand significantly and for a long time.  On the internet and through social media, almost nothing is private and retrievable.

Online demand generation and wrongful information could impact sales and bottom line

How companies use social media as a marketing tool determines their reach and target audience.  External marketplace has evolved much faster than what businesses can integrate social media into their models.  The challenge here is how to generate demand using social media, while keeping up with the rapid changes social media causes in consumer perception, hence, demand generation.

The challenge here is to determine how far we should rely on social media.  Gen Y is the early adopters and tech-savvy folks that drive heavy traffic on social media sites.  Teen spending has been increasing since Spring 2012, and they prefer to shop in-store rather than online.  The importance of social media on their shopping habit is also decreasing.  This puzzles business because while moving a lot of their marketing forces only, how are businesses going to deal with such phenomenon?  Finding the balance and finding how far to take social media are challenging marketers.

The ugly of getting demand generation wrong could be wasted resources.  Though social media is a cheap way to market, it could make company become disoriented in their marketing segmentation strategy.  For example, Pizza Hut pushes their products beyond public interest, resulting in negative publicity.  In the end, companies are not able to accomplish anything from using the tool.  Rather, social media efforts backfire, resulting in decreased sales and bottom line.

Companies that are not understanding how their customers use social media could easily fail in their social media marketing campaign.  For example, if the company keeps pushing promotions and discounts to the wrong target audience, which results in negative impacts on consumer’s likelihood to purchase from the company.  According to J.D. Power and Associates Reports: Poor Social Media Practices can Negatively Impact a Businesses’ Bottom Line and Brand Image, among highly-satisfied consumers (satisfaction scores of 951 and higher on a 1,000-point scale), 87 percent indicate that the online social interaction with the company “positively impacted” their likelihood to purchase from that company. Conversely, among consumers who are less satisfied (scores less than 500), one in 10 consumers indicate that the interaction “negatively impacted” their likelihood to purchase from the company.

The battle for attention driven by social media is a great challenge for business and it could negatively impact on businesses.  To follow up with my previous post on social media and emergency management, here is an article to stress the flip side of the story: Four Ways The Media Failed In Covering The Boston Bombings, And One Reason Why.  Moreover, these four ways apply to anybody or any business that uses social media.  The growth of social media is comparable to a contagious virus.  The question is: social media is a race, who will be able to keep up?  It probably depends on how we can avoid the bad virus and keep the good one.

P.S. I assume that you all are looking for jobs as MBA students (I hope?!?!)  Then you should read this article on How Social Media Can Help (Or Hurt) You In Your Job Search.  It’s almost a MUST to use social media for your search, just try to avoid things getting ugly.

21st Century Marketing – It’s No Longer Traditional

I urge you to take a moment to think about the times when there was no internet, no cell phones, no Facebook, no social networks, and no media tools.  My 20-something year old friends and I would probably have a panic attack because our lives would be too hard to handle.  It wouldn’t be the case for my 40-year-old uncle Joe who recently got promoted to be the Marketing Director at my grandpa’s family business, Black & Sons?  Sounds like some exciting news, but poor my uncle Joe Black – he is still struggling with getting new businesses and keeping up with things changing constantly on the internet?  In other words, is it true that Businesses still don’t ‘get’ social media – and it’s 40-year-old marketing directors that are to blame?

What does it mean to say that Uncle Joe doesn’t understand social media marketing?  It means he hasn’t converted from traditional marketing to social media marketing.  Marketing before the existence of social media involved billboards, word-of-mouth, lots of relationships and connections, and TV campaigns.  Social media marketing has reversed the model as the new marketing strategy.  The way business collect data and information nowadays is moving towards a much research-heavy and data-driven direction.  Effective marketing is a about lots of big data and analytics, which require solid analytical and quantitative skills from marketing managers – which perhaps my Uncle Joe is missing.


Social media marketing as the new marketing is proven to be incredibly effective and appealing to the public.  Companies that know how to use social media within boundaries have succeeded significantly in increasing the company’s popularity and sales.  For example, Mashable listed 5 companies with inbound marketing that works and 5 Brands that understand marketing on Instagram.

The growth and cost-effectiveness of social media marketing have been proven by company’s increase in bottom lines.  Social media marketing can also be used as a sales tool in both B2B and B2C markets. 45% of B2C markets and 86% of B2B find new businesses using social media.  Duke Fuqua School of Business‘s statistic suggest that both B2C and B2B marketers will increase significant spending on social marketing, from 8.4% to 11.5%, and to 21.6% by 2018.  In the mean time, traditional marketing is dropping below the ground level.

Social media is also used to tell stories, which makes social media such as TED and Youtube powerful tools for non-profit businesses.  Stories that are told for a cause are no doubt inspiring and influencing to a wide range of audience all over the world.  70% of Youtube traffic comes form outside of the US, among 43 countries and in 60 languages.

Social Media seems like the one and only way to reach the global market.  There is almost no brainer that we better get good at it.  To offer some help for my Uncle Joe, and a lot of us who may find it helpful, I am posting McKinsey’s article on Six Social-media Skills Every Leader Needs.