Has your company spent seemingly countless hours tweeting on Twitter, networking on Facebook and writing the company blog? Have you found yourself wondering if it's all a waste of time? Maybe that last Facebook fan page contest saw fewer entries than you'd hoped for, or that last Twitter-only coupon had fewer redemptions than you'd expected, but perhaps that's not all that matters.
According to the the latest report by analyst firm Forrester, many people are looking at the face-value dollars and cents of social media marketing and, put simply, they're doing it wrong. Beyond clicks and coupon redemptions there lies a case for social media marketing that shows its value is well beyond what we see on the surface.
Many marketers can draw a straight line between investments in social media marketing and financial results, but many more cannot. This doesn't mean social media marketing is ineffective; it just means that marketers have to recognize benefits beyond dollars and cents. Facebook fans, retweets, site visits, video views, positive ratings and vibrant communities are not financial assets--they aren't reflected on the balance sheet and can't be counted on an income statement--but that doesn't mean they are valueless. Instead, these are leading indicators that the brand is doing something to create value that can lead to financial results in the future.
Ray suggests that we look at ROI in terms of four perspectives - financial, digital, brand and risk management. For each, however, Ray says that we should go beyond the surface to evaluate success. Financial ROI, for example, can be measured in terms of online coupon redemption, but also in other ways. He gives the example of online retailer Petco.com. It has found that "Products with reviews have return rates that are 20% lower than those without reviews - and the return rate is 45% lower for products with more than 25 reviews - saving on shipping, restocking, and customer service costs."
Similarly, looking at risk management, Ray notes that "this perspective is not about creating positive ROI but reducing unforeseen negative ROI in the future." By estimating the likelihood and potential cost of PR issues over time, a company could also estimate how much it might save by way of using social media.
As for brand, Ray writes that "marketers don't need to reinvent brand metrics for the social media age" and that evaluating brand online is the same as it was offline. In terms of brand, it comes down to simple measurements - such as awareness, purchase intent, preference and brand association - and whether or not online efforts are helping to improve numbers in those realms.
The final perspective offered by Ray - the digital perspective - is more easily measured. Ray points to efforts by Swanson Health Products, which "improved the visibility of its product reviews to search engines" and subsequently "saw a 163% increase in search engine traffic to product pages".
In the end, the report cautions that not all social media marketing efforts will result in ROI (a term Ray implores companies to use only when speaking of directly measurable financial gain), and that we need to move beyond counting retweets and Facebook fans.
Many marketing investments are not intended to furnish immediate financial results but instead create long-term brand value. The greatest and most valuable brands weren't created in one quarter to the next but with an eye toward building lasting relationships with customers. Smart marketers are coming to recognize the way social media marketing can deliver on those same long-term values and are building programs with strategies and metrics to suit.
In short, Ray seems to be reinforcing a simple idea that many of those who are tech savvy already embrace: Social media, any way you slice it, is worth the effort and the investment.Discuss