August 31, 2015

Is Your Social Media Marketing Generating A High ROI? Does It Matter?

The CMO Survey— a collaborative effort between the Duke University Fuqua School of Business, The American Marketing Association and McKinsey & Company— just revealed some interesting facts last week concerning social media marketing.

According to Christine Moorman, a Sr. Professor of Business Administration at Duke, who created the survey, "The integration of social media and marketing strategies is finally showing a slight lift after years of stagnation, but companies are still struggling to objectively assess the value they are getting from their social media investments."

The survey shows that businesses currently spend 10.7 percent of their marketing budgets on social media marketing. This figure is expected to increase to 23.8 percent by 2020. Yet the challenge for most companies is still assessing if their investment has a return since only 15 percent of marketers were able to establish quantitative results when it comes to spending on social media.

These figures beg the question: How can companies objectively allocate funds to social media marketing campaigns if they can’t determine  ROI?

In his book “Jab, Jab, Jab, Right Hook: How to Tell Your Story in a Noisy Social World,” Gary Vaynerchuk jokingly counters that question with, "What is the ROI of your mother?" In other words, he plays down the importance of asking how much of a financial impact social media marketing has by equating it with the ROI of a billboard.

Not to say all marketing is a crapshoot, but sometimes determining the exact ROI is less important than determining the overall social impact of a marketing campaign. Brand awareness and profits don’t necessarily go hand in hand. For example, certain brands have carved a niche for themselves in our popular consciousness that may be parallel to profits but may not always intersect.

Xerox, for instance, as a brand name has become a synonym for photocopy. The company, founded in 1906, unveiled its first modern copier— the Copyflo— in 1955, and it’s unquestionable that the brand has thrived tremendously since then. But beyond its financial success, it has coined a popular term that no other brand has been able to replicate. This does not inherently mean that businesses will automatically buy a Xerox copier over a Cannon copier, but it does mean that the social impact of Xerox is unequaled.

So in terms of the issue of social media impact versus profit, the question becomes not how should we optimize our ROI on social media but how should we maximize our long-term brand awareness. There are innumerable brands that have made a great initial splash, never to be heard from again. Remember Circuit City, Borders, Sharper Image or Blockbuster? Of course, you do, but somewhere along the line regardless of visibility or marketing strategies they disappeared. Even though most of these predate social media, the lesson is that no level of investment can sustain a brand that falls from public favor and awareness.

The great (and democratic) advantage of social media is that it requires a small investment in comparison to other forms of advertising. Which leaves us with a valuable lesson: Invest in creativity and connectivity, rather than focusing on immediate ROI. A memorable campaign may not be exactly measurable in terms of profit but if it can make an impact on the social consciousness, then half the battle is won. 


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