Mario Sundar

LinkedIn's 2nd PR hire. These are my thoughts on products, public relations, and startups.

Companies still don’t get social media ROI, but do it anyway

Most companies these days do social media today (In a recent survey, nearly 72% of marketers say they use social media – see survey below). Now, don’t get me wrong, I know the tangible benefits that social media brings to a company, but not having clear goals before engaging in social media nor having an accurate way to measure it is probably one of the main reasons for companies to abandon social media when they find “it’s not working”!

Companies don’t know how to measure social media ROI

But, I digress… What got me thinking was a recent survey conducted by KingFish media, by interviewing “457 respondents primarily split between corporate management and marketing/sales management”. There were quite a few interesting facts that the survey unearthed, but nearly half of them (43% of marketers – see graph below) haven’t measured ROI being the most concerning.

I couldn’t agree more with social media marketer, Olivier Blanchard, who said in a recent post:

The chatter around social-media ROI is as strong as ever for two reasons: The first is simply because ROI [points to] one of the most important questions an organization can ask before green-lighting a social-media program: I could spend this budget somewhere else — Why should I spend it on social media? Before any other questions can be asked, you have to start with “why.

But is this what companies are doing? More after the jump.

Companies don't measure social media ROI (Source: KingFish Media)

So, what are companies using social media for?

As expected, companies and marketers use social media (loosely defined) for two things: Sales (get leads and manage accounts) and Branding (everything else falls under this bucket). I was surprised that PR wasn’t explicitly mentioned under qualitative metrics though both PR and customer service objectives were mentioned under the quantitative metrics (see #21) section.

Companies use social media for sales and branding (qualitative)

But what do they measure…?

Sales (easily the most straight forward goal) has 3 metrics around it being tracked (leads generated, new customer conversions, and increase in average order size) while most of the remaining metrics tracked are around branding. Some of the metrics are around PR (mainstream media mentions), SEO (search engine rank changes), customer service (customer reviews posted). All three of which are valid social media goals , as I’d pointed out years ago – here).

But companies measure nebulous branding for the most part (quantitative)

And, looks like the scariest part is that most companies aren’t even getting to the ROI part until months after instituting a social media program:

Others don’t get around to asking about ROI until 6 to 18 months after a program has begun and budgets need to be reviewed. Trust me, when 10% of your group’s budget is being cut, you start asking hard questions. Social-media programs not clearly in support of specific business objectives had better come up with a good answer when the budget hatchet starts to come down. (via Olivier’s interview on Smartblog on Social Media)

Now, this is definitely NOT a place for your company to be in. The good news is that over 50% of companies (per the survey mentioned above) have clearly defined metrics and ROI. There are also gold-standard companies that are pioneering social media in terms of what it can do for your company and measuring it aggressively. Stay tuned for clear examples on how companies are using social media within the organization on this blog.

If you like similar content you should subscribe to my blog or follow me on Twitter!

Your company must be using social media (looks like most companies are). What does your company primarily use it for?

Filed under: Social Media ROI

9 Responses

  1. Mugil says:

    Informative.
    But how can we measure Social Media ROI for Startups where we do not devise a specific mechanism to measure?

    Regards,
    Mugil.

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  2. Nic Wirtz says:

    Absolutely fascinating study. I guess we’re at the stage where social media is being accepted, slowly, but actually measuring it is still being worked out.

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  3. [...] Companies still don’t get social media ROI, but do it anyway August 19, 2010 — John Moore Great post with great information. If you have time make sure to give this a read.  Most companies these days do social media today (In a recent survey, nearly 72% of marketers say they use social media – see survey below). Now, don’t get me wrong, I know the tangible benefits that social media brings to a company, but not having clear goals before engaging in social media nor having an accurate way to measure it is probably one of the main reasons for companies to abandon social media when they find “it’s not working”! Companie … Read More [...]

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  4. Kelly Clay says:

    This really blows my mind. In a similar concept, many of my clients don’t even know why they are blogging – or they forget, and then say “oh, we don’t see the point.” When I ask what their goal is (so, in summary, “why are you using social media – what are you hoping to get out of it?”) – there is a huge pause. If they don’t eventually say something about getting more clients, it’s just “I don’t know, I don’t have a website, so…”

    Unfortunately, until more companies devote resources to an actual social media strategist or agency who can identify these goals (or realize they need to listen to the one they have hired) they will think it’s “not working” and revert back to antiquated forms of marketing that will also not work. Unfortunately, there is only so much the social media team can do.

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    • Mario Sundar says:

      Well said, Kelly.

      A little concerning that companies would get into blogging or Twitter due to the hype cycle and not see how this integrates into their existing strategies. I do think there is an ever increasing need to have a dedicated resource to help with strategy and tactics around social media.

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  5. Mario Sundar says:

    @Mugil,

    I’d recommend you take a read through the ROI of Corporate Blogging post I wrote a while back.

    http://www.mpdailyfix.com/corporate-blogging-roi-now-were-talking/

    For e.g. Increased sales efficiency would be a starter. How about you tie your newsletter to the blog? This way you can SEO optimize the content you exclusively shared only with x # of your prospects and leads. Now anyone in the public space who reads the content and stumbles upon it (via Search) is a prospective customer?

    Hope that helps. Also, check out my blog posts in the ROI category – http://mariosundar.com/category/social-media-roi/

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  6. Mario Sundar says:

    @Nic,

    There are measurement systems available, but as you said, it’s still evolving.

    My $0.02 would be for companies and SMBs to test it within their existing marketing goals and quantify metrics accordingly.

    There is value and businesses should be engaging in social media ONLY with a plan to measure it in a smart manner.

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  7. [...] – both large corporations and small businesses – either don’t get social media or don’t get how to measure social media ROI. But as I’d mentioned earlier today, the new world of work is global in nature. How do [...]

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  8. [...] Companies still don’t get social media ROI, but do it anyway – Mario Sundar – Aug ’10 [...]

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