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 As Collaboration Tools

Screen Shot 2013-04-07 at 2.05.33 PMPeople from around the globe, more than ever, find social media becoming a hug impact on their lives and the way they run business.  In the business setting, social media has forever changed the way we work.  Moreover, companies have utilized social media to increase efficiency and collaboration at the work place.  The economic value is shared among employees, executives, and other stakeholders.  Great ideas are formed as a result of departments and employees being able to connect and have meaningful conversations in a timely fashion. Social media has created a new generation called Generation-C (connected, computerized, and community-oriented).  These collaboration networks allow brain-storming activities, idea sharing, problem solving not only among employees at work but also among companies and vendors, suppliers, customers, etc.  These social networks add promising values to the business world.

There are various forms of social media and collaboration tools used by companies.  The rise of Intranet 2.0 has added social media, including social networking, blogs, instant messaging, wikis, RSS, and discussion forums, into the evolutionary path of the social intranet.  Social media Intranet 2.0 has become powerful tools for business collaboration.  It is no longer just business marketing, but it acts as vehicles for employees to share knowledge and ideas.  Tools such as Google Docs and Drop Box allows much faster delivery of documents and allows multiple users to shares and edits documents at the same time.

Companies have made a large amount of investment in social collaboration software, which is predicted to grow into a $6.4 billion market in 2016, compared with $600 million last year.  Social collaboration software refers to social media type of platform, allowing Unified Communications and Collaboration (UC&C) solutions including unified messaging, videoconferencing, advanced telephony, etc.  Jacob Morgan cites in his book, “The Collaborative Organization” that business performance could increase by 36% by utilizing social collaboration software.

“Our clients indicate that employees are better informed with Jam and strongly prefer blogs and video over email. Greater employee engagement has been shown by higher scores in areas such as collaborative environment, availability of learning and leader visibility. And some clients have realized a savings up to $500,000 because of other systems and processes they’ve been able to eliminate.”

McKinsey Global Institute reports that social technologies could raise the productivity of interaction workers by 20 to 25%.  People are more productive and motivated when they are given convenient tools and some freedom and work place.  Social media platforms such as Facebook, Twitter, and LinkedIn have become valuable resources for information and connections.  Although the topic of employees SHOULD Facebook or SHOULD NOT Facebook at work remains controversial, 92% employers have been using or planning to use social media as a recruiting tool and search for talents.

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Social collaboration is also a great tool used by independent workers.  Independent Workforce rises by nearly a million workers in 2012, with worker satisfaction rate at 86%.  Interestingly, the report shows that the highest percentage of independent workforces is made up of the baby bloomers, followed by Generation X.  This proves that not only the younger generations are adapting quickly to social media as a valuable business tool.  Social tools could also motivate workers to work independently and virtually.  This provides employees a culture of freedom to work remotely and extend the social circle regardless of different age groups, demographics, locations, etc.

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There are obviously many advantages of using social media and collaboration tools to increase business productivity and efficiency.  It is often easy for us to see the advantages of something we love so much.  Besides the internal benefits that social media provides to business, are there any disadvantages of social media as collaboration tool?

  1. Conflicts in working style: While with social collaboration tools, companies are employing better division of labor, there is also possible conflicts in working style among employees.  This could create hold-ups on progressing the work.  This could also delay decision making because people have different way to approach and prioritize work.
  2. Too many leaders: The advantage of sharing ideas and inputs could bring miscommunication.  Too many people will try to take ownership of the collaborative work.  As a result, creates tension among team members.  This is where too much freedom in the workplace could make it difficult to manage.

There are also a few other challenges that companies are facing in order to fully integrate social media in practicing business.  A couple of them are:

  1. Potential costs as social network grows?
  2. Security of company’s information? Employee privacy?

Let’s explore the bag and the ugly of social media as collaboration tools in later posts.