ROI on Social Media??

The biggest question asked (or should be asked) in any marketing / communication plan is "What is my Return On Investment". With offline media, it is much harder to gauge your ROI. How do you tell how many people actually looked at your Ad, and even of those who looked at your Ad, who actually "got" it and finally who acted on it?

The wonderful thing about online advertising is that you:

1. Pay only for those who actually saw your ad (and not for the "privilege" to advertise in a magazine).
   
2. Know that they got it because they clicked on it.
3. Can track where people that came to your site actually came from (you have a direct correlation between your ad and your visitors) and have a direct correlation between the advertisement and the purchase.

Most marketing entities understand this concept and have utilized it quite effectively. But Social Media platforms have changed the way that we market / advertise online. The two biggest changes have been:

1. Targeting mechanism: previously you targeted potential clients based on keywords. If someone was looking for a car / insurance / MP3 player, you purchased advertising space on the appropriate keyword. With Social Media, you are more often or not targeting people based on a demographic profile (23 year old, single, male, from Moncton, NB).
2. Method of advertising: The holy grail of marketing is "face time". The longer your brand is in someone's face, the more likely they are to remember your brand and purchase it next time they are looking for such a product or service. With social media, you have (and must take advantage of) the opportunity to engage your clients / customers in ways that go beyond the traditional banner advertisements / keywords purchases, such as quizes, games, forums, etc. The more social networking tools your company utilizes the better it will be for you.

This leads us to the question:

Does utilizing social media help you make more money?

The simple answer is "Maybe" (but hang in there it gets better). You see at first look, social media tools are harder to measure (and therefore should be part of a larger advertising campaign aimed at driving people to your site(s)). Sure you can measure how many people are following you on Twitter, How many friends you have on Facebook, etc. But how do you truly decide if you made money on them when there is no direct sales.

The secret is brand image. In social media, you don't own your brand, you manage it. Why do we say that? Because we live in a time where someone with a computer and an attitude can destroy your brand overnight. Case in point: Kryptonite bike locks almost overnight saw their stock tumble, why? Someone posted a video on Youtube on how to pick their "indestructible" bike locks with a pen (Ouch!). (video available here).

Dell is another example of a brand with image problems. People were getting frustrated with Dell tech support and had nicknamed Dell tech support Dell Hell. I used to work for a large multi-national company that had a "special number" to call Dell because it was "faster" than the regular line. After 2 hours on hold, I realized that all I had was a special door to Dell Hell. Thankfully, Dell realized that and actually created a special Dell Support group that monitors social networking websites to try and find and help those stuck in "Dell Hell". (Don't believe me, right a blog post on being stuck in Dell Hell and watch what happens :-)

So Dell turned a bad thing into a good thing.

But that still doesn't answer the ROI question, does it? Yes, in a way. It answers the related question of Customer Relationship Management. Manage your clients well and maintain their business, don't manage well and lose customer. Your customer is your best vehicle for promoting your company. A happy customer will refer people to you.

But there is a more concrete way of seeing ROI. Charlene Li of Altimeter Group did a study called Deep brand engagement correlates with financial performance, which effectively says that the brands that utilized social networking sites like Twitter, Youtube, Facebook, etc actually had a positive growth, whereas the world wide recognized brands that didn't engage in social media didn't see growth and some even saw decline.

So if you are not managing the conversations surrounding your brand, who is?

Need help managing your brand conversations? Trimedia Atlantic would be glad to help.