Social Media ROI (Avoidance) History

Brian Solis details the slow, reluctant and painful movement of the social media movement towards justifying its existence economically. First came denial, then avoidance:

Adaptations included:

Return on Engagement: The duration of time spent either in conversation or interacting with social objects, and in turn, what transpired that’s worthy of measurement.

Return on Participation: The metric tied to measuring and valuing the time spent participating in social media through conversations or the creation of social objects.

Return on Involvement: Similar to participation, marketers explored touchpoints for documenting states of interaction and tied metrics and potential return of each.

Return on Attention: In the attention economy, we assess the means to seize attention, hold it, and measure the response.

Return on Trust: A variant on measuring customer loyalty and the likelihood for referrals, a trust barometer establishes the state of trust earned in social media engagement and the prospect of generating advocacy and how it impacts future business.

But, as the chart by eMarketing above shows, even getting Social Media Gurus to measure anything is hard. Which is not surprising, as when they do:

MarketingProfs recently published a study by Bazaarvoice and the CMO Club that revealed the true expectation of chief marketing officers.....

.....However, the study found that the exact implications of social media still evade CMOs.

- 53% are unsure about their return on Twitter

- 50% are unable to assess the value of LinkedIn or industry blogs

Most importantly, about 15% believe there is no ROI associated with Twitter, and just over 10% cannot glean ROI from LinkedIn or Facebook.

In fact, good old fashioned management technology is intruding further into the SocMed world

2010 is the year that social media graduates from experimentation to strategic implementation, with direct ties to specific measurable performance indicators.

In 2010, CMOs will seek to establish a connection between social media and business goals. The study documents the adoption of three metrics:

- 333% surge in tracking revenue

- 174% escalation in monitoring conversion

- 150% increase in measuring average order value

....333% rise in following the money! And - guess what - even FreeConomics is coming under scrutiny now:

Even though much of social media is free, we do know the cost of engagement as it relates to employees, time, equipment, and opportunity cost (what they’re not focusing on or accomplishing while engaging in social media). Tying those costs to the results will reveal a formula for assessing the “I” as investment.

When we truly grasp the ability to define action and measure it, we can expand the impact of new media beyond the profit and loss. We can adapt business processes, inspire ingenuity, and more effectively compete for the future.

All good stuff, and a good summary, but the sad thing is its really a history of an industry being dragged kicking and screaming to justify itself economically. Thing is though, its 2010 and the industry has p*ssed off so many people outside of the pure Social Media Believer community with its inability to demonstrate value so far (apart from giveaway free consumer services that sell to dumb money, that is). Needs to really come up to the plate in the next 2-3 years to continue.

(Even the current darling Facebook's business model of scraping user data for on-sell is in our view unsustainable)

Can it do this? My own view is that raw economics will kill off the bits that don't work over the next few years, enterprises will pick up the bits that they think work, and it will probably metamorphose into something else that is absorbed into the infrastructure - probably with a different name.

(Update - yes, I've just described the tumble down the Hype Curve from the zenith of inflated expectations to the nadir of the slough of disappointment and the slow climb out as a useful service)