Its crunch time
Up until now, all of my blog posts have been related to the acclaimed benefits of social media within business, some with mounds of academic support. However, what works for some businesses may not work for others, therefore monitoring ones own business in regards to their social media is very important. And how can this be done? Through looking at Return on Investment (ROI).
ROI in this case is the attempt to measure the profitability of an investment in regards to social media for a business. Because what is included in costs and terms may vary, it can be very difficult to actually measure this. Traditional approaches of measuring online advertising used to be easy by analysing defined metrics: cost-per-clicks, unique views and page views. However now, to measure ROI on social media you must measure the framework surrounding the advertising as well (Fisher, 2009). There are different approaches for measuring the ROI of these social media frameworks in business, each of them with different strengths and weaknesses. Below I will endeavour to explain some of the views…
Jeremiah Owyang claims that you need to start off with the basics – the business must define their goal before they can measure it. Is it sales? Increase awareness? Once this goal is in place then the measurement can be done. The weakness here is that a business must always change the way they measure each time as the goals with always be different
Jason Falls thinks that businesses shouldn’t measure ROI in any case because social media has always been about people. Not the bottomline. There is an obvious weakness here, where to remain in business you must be making money, therefore placing importance on it is important…
Hoffman and Fodor talk around measuring the consumers investments and not the businesses. It measures the engagement and involvement of consumers with the brand or product through likes, tweets, shares or comments. This provides a weak link where the CEO’s and CFO’s are wanting dollars and numbers on the pages before allocating $$$.
“This suggests that returns from social media investments will not always be measured in dollars, but also in customer behaviors (consumer investments) tied to particular social media applications”. – Hoffman and Fodor
Although I have no experience so far on these matters being a humble university student and not yet a CEO, I see the sense in what Hoffman and Fodor are saying. Therefore, I will further examine what they recommend to analyse and measure social media investments. And oh look! They have condensed it into a table!!
big, BIG, data and analytics
Social media provides these huge volumes of data and because of this businesses are left with more information on their consumers and target market than ever before. Most are not even aware or making use of this and just have large stockpiles of data at their finger tips ready for the taking. The benefits of them actually analysing this data could be endless. Below are some of the already recognised benefits of big data in organisations from social media.
The information they get from mining the big data will help businesses
- better understand their target consumers wants and needs.
- make more accurate decisions and better educated predictions.
- streamline businesses processes and strategies.
- build relationships with their consumers that are deeper than just buyer-seller relationships.
Thoughts on this…
It’s a lot to wrap your head around. Social media (to millienials and myself) seems so natural and really nothing business related at all. We follow and engage with the businesses we like because we want to. It’s hard to imagine the process (ROI, strategy etc) that is behind it all.
But from what you now understand about ROI and social media do you agree that it is best to measure engagement over $$$? Or do you think there is a better way entirely?
And what are some other benefits of big data analytics from social media applications?
Would love to know your thoughts!
References in order of appearance:
Fisher, T. (2009). ROI in social media: A look at the arguments. Database Marketing & Customer Strategy Management, 16(3), 189-195.
Hoffman, D. L. & Fodor, M. (2010). Can you measure the ROI of your social media marketing? MIT Sloan Management Review, 52(1), 41-49.