Social media ROI still a black-box for most companies

February 9, 2011 § Leave a comment

According to data compiled by eMarketer, and shared late last night by Mashable, most companies struggle to measure the ROI of their social media efforts, and many have yet to even initiate programs that leverage Facebook, Twitter, blogs, YouTube, or other top social platforms.  Of those who do participate, 84% said they didn’t even bother to measure ROI back in 2009, although the level of accountability increased sharply in 2010.  But for the great majority, ROI corresponded with “soft” measures, such as site traffic, fan counts, and “favorable” impressions.  These are primarily branding metrics, which isn’t necessarily a bad thing.  As I pointed out in my last post, there’s more upside for online media in brand advertising than in direct response.  But to realize the potential, advertisers will have to overcome the unpredictability and other challenges associated with online.  For now, direct response spending beats brand 3:1 online.  So, as it relates to social media, the question is: will it be the force that unlocks the potential of brand spending online, or will measurement tools continue to evolve to the point where CMOs can justify allocating a greater portion of their customer acquisition dollars?  My opinion is that measurement tools will continue to advance, and that social media have the ability to tap into both budget types.  The divsion will depend on the nature of the product or service being offered, with socially influenced and impulse products attracting direct response (fashion, games, low-cost), and high-inolvement products (autos, health, B2B) attracting brand dollars.  Let me know what you think in your comments below.

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