I got involved in social media because I am a pretty social guy, involved in many different groups off line and always looking for those that best match my personal interests and desires. Social media is great for my outgoing personality type.
I started my blog sometime ago looking to explore the real ROI of social media and at the 2007 Podcamp AZ I even gave a presentation on the ROI of social media. My message during that presentation was that the ROI metrics were in flux and that we had not yet come up with readily assessable ROI metrics, but that metrics are available for the social media effort. Just not tied to an ROI model yet.
I just went looking for data to backup a statement that there were many areas of the business affected by social media, but what I found is that there is still a debate about ROI going on. Ray Schiel’s Blog cites lots of social media implementations from lots of companies, but I found it by looking at Peter Kim’s post titled ‘Slicing and Dicing A List of Social Media Marketing Examples‘ where Peter suggests in his very next post ‘Social Media Marketing’s New Clothes’ that like any other business investment, there is really only one way to calculate an ROI – that is with a financial ratio that has been out there for quite some time.
I have to agree with peter and at the same time suggest that the work Jeremiah Owyang is doing is right in line with his ongoing work providing a solid social media ROI model. But even Jeremiah states in his blog in an article titled “The Many Challenges of the Social Media Industry” that “Despite many attempts to measure “engagement” or “ROI” there still is no industry standard to measure the efforts of social media at the personal –and corporate level. While many have developed their own ability to measure on a one-off way, there’s no industry way to quickly –and easily agree pan-industry.”
With all these great minds working on the problem, does that mean that an ROI does not exist? Well, not yet… not in a simple financial ratio that can equate social participation with a dollar of revenue. The practice of social media is in my mind something more of an art than a science. The variables include talent, tenacity, sensitivity to the communities you participate in and interestingly in the sincerity you can project in those engagements.
The online community is both fickle and forgiving; fickle if you think you can some how ‘fool’ them into using your product or service and forgiving if you happen to stumble in a genuine effort to participate in the community and fail, but then get up, brush yourself off and try again. The lesson you need to learn for success in social media however is transparency. Whether you project it or not, the audience will see it – they’re sharp and more info about you, your company and your real intentions are no more than a search bar / mouse click away.
I do not think a direct ROI model can be created as a standard / direct ROI right now – we’re still too early in the adoption of the technology to make that kind of assessment, but I do think we can make other assessments that are meaningful. My next post will explore the areas of the business that social media impacts.