Social Marketing: Chasing The Illusive ROI

Determining Return on Investment (ROI) is a staple in financial analysis but is a challenge every social marketer has to contend with.  In fact, the top challenge for social marketers is measuring ROI. 

Linking social marketing spending to business results has been somewhat illusive, and has become an area of focus for marketers and social platform operators. The more money marketers spend on social media, the more they expect to know how that money converts into revenue

Facebook sees the solving of this ROI dilemma as a huge opportunity to gain marketers' ad spending dollars at the expense of both TV and Google.  To this end, Facebook recently announced a shift in emphasis away from proxy metrics, such as video views and brand lift and towards sales metrics - with the goal of linking ad viewing to sales results. 

The problem is in many ways the doing of the marketers themselves as they are addicted to proxy metrics, such as: likes, comments, shares and retweets. Engagement metrics are still the most used measures to guage  a social campaign's success. When what should be used are conversion and revenue metrics, such as: website traffic, conversions, and revenue.

The hierarchy of social platforms in terms of ad dollars spent are Facebook, followed by Instagram, Twitter, YouTube, LinkedIn, and Pinterest.  Facebook and Instagram (owned by Facebook) are largely 'pay-to-play' platforms whereas the other platforms are more organically oriented - although this is changing as can be witnessed by LinkedIn's new 'Premium' offering.

Tracking the impact of advertising on social media sites is adequate but not inclusive. The illusive ROI remains unsolved but the problem is being addressed and to really spur-on more ad dollars the social platforms know they need to provide these measures.

Jim Lavorato
Fund-House Ventures