Social Media ROI? Traditional Is Still More Accepted.

The return on investment for social media marketing is not an easy thing to determine. It’s not easy to measure. It’s not easy to argue. It’s not easy to prove.

I’ll pause while the Kool-Aid drinkers curse at the screen and jump to the comments to call me names before reading the rest of the post.

For more on my thoughts, please revisit this post and conversation with Katie Payne from PRSA International last year.

What is easier to determine, measure, argue and prove (or at least so we think) is the investment in traditional media. This is why we evangelists have such a hard time with the subject matter of ROI. The irony is that traditional media is impossible to accurately measure while social media is less so.

But brand managers and C-level executives won’t accept the less than two percent return rate on the average paid search or email marketing campaign because folks like Nielsen and Arbitron have been telling them for years they’ve been getting 25-30 percent return on million dollar TV buys or radio campaigns. Throw in soft dollar metrics we can advocate for social media (impressions/unique visitors, subscribers, comments, followers, friends, online sentiment and tone, net promoter score and the like) and executives laugh social media out of legitimate conversations.

Decision-makers want to know, “If I spend X amount of dollars on social media, what does it get me?” And Twitter followers doesn’t impress them. You can build a business case for building a community of engaged consumers, noting that the lifetime value of a consumer is worth more than one-off sales of your product. But to truly build a vast community of loyal customers that can impact your bottom line in “good ROI” ways takes an investment of both time and resources.

That’s right. Resources. Social media is not free. (The Kool-Aid drinkers left can now fast forward to the name-calling.)

Let’s look at the reality of the mediums at this point. (I do think this is changing, but not fast enough for us social media evangelists to win this argument.) Spend $100,000 on social media and, let’s say, you wind up with some content, engagement with your audience and online buzz and the foundation for cultivating relationships with a few thousand, even optimistically 100,000, interested fans moving forward. You see a slight up-tick in sales, but nothing that moves the needle any more than the weather does, and forecasts are strong. That’s a pretty strong ROI in my opinion.

Spend $1,000,000 on a television commercial/campaign with strong creative and targeted media placement and show a six percent increase in sales, better brand recognition and so on.

(I made up the numbers. I know national TV can’t be done for $1MM. Oh wait. The Kool-Aid peckerheads aren’t reading anymore anyway. Never mind.)

Daniel Wiggins of Bouvier Kelly asked me recently what I thought about spending money on traditional versus social media. I’m sure he’ll blog some of my answers soon. One thing I told him, though, stood out as I re-read the email:

“As much as we love social media, the audience there is opt in. Mass media isn’t. Even though the messages are force fed to consumers they still have better reach. We need to build communities of consumers through social media to the point mass media becomes less effective in driving people where we want them to go. Until then, we should use the traditional to help populate the non.”

This isn’t the state of the world and end of the story. It’s just where we are now. I’m hoping we can continue this discussion both now in the comments and six months from now at South by Southwest Interactive in Austin, Texas. The brilliant Keith Burtis has put together a panel discussion called, “Prove it! Exploring Social Media ROI for Business.” He’s asked me to be on the panel along with this impressive list of social media and business thinkers: Amber Naslund of Radian6; Sue Murphy of Jester Creative; Alan Isfan, CEO of Favequest; Jay Berkowitz, CEO of 10 Golden Rules and Justin Levy of New Marketing Labs. In order for that panel to happen, we need some help with the voting. If you’d like to see that panel happen, click here to vote for it.

These folks are going to blog about this panel, too, in the coming days. I encourage you to subscribe to their blogs, hear what they have to say on the issue and comment. Add to our collective thoughts on this so the panel can be better informed and we can all begin to inch closer to better answers when people ask us how to measure the ROI of social media.

In the meantime, leap-frog through the Kool-Aid kids below and fire off some thoughts. I’d love to hear what you think.

Related articles by Jason Falls with Zemanta

• Social Media Planning & Measurement (SlideShare.net presentation from Beth Harte)
• Why Social Media Is More Measurable Than Traditional Media (Jacob Morgan)
• Social Media ROI: What do you measure? (Ruth White-Cabbell on the Cisco blog)
• On Demonstrating ROI (Gary Vaynerchuck on Radian6Video)
• Social Media ROI (Ann Handley on Radian6Video)