Should marketers be optimistic about social media ROI?
Almost since I started blogging, I’ve been asking wineries precisely how they expect to make money through the use of social media.
Their response has been, pretty much, Uhh…well…err…umm… It reminds me of when I was a kid of six and we were visiting my mom’s relatives in Oklahoma City. Oklahoma=oil, right? So I spent the better part of 3 days digging a hole in my uncle’s backyard, hoping to strike liquid gold. If you’d asked me precisely how I thought this would happen, I couldn’t have told you. But I believed.
Belief, though, isn’t a good business plan. And I haven’t seen a good business plan from wineries, not in 2008, not in 2009, not in 2010, and not yet in 2011. What would constitute a good business plan? Establishing a solid link between social media and ROI.
ROI! It’s the Gold Ring, the Pot of Gold at the end of the rainbow. No, it’s not the French word for “king,” it’s short for “return on investment.” If you’re not a business person, here’s how ROI works. Let’s say it costs me $1 to do something. If I then earn $2 for that effort, I have a positive ROI, and it’s probably a good idea for me to do that thing again. If, on the other hand, I earn only 50 cents for my dollar investment, then my ROI is negative, and I’d be pretty stupid to keep on doing it.
Well, the “pretty stupid” part has been the defining characteristic of the wine industry’s investment in social media so far. Yes, it’s true that the social media boosters have said that, even though they can’t identify ROI, they still benefit from social media because it creates “branding” and “buzz” and “imaging.” But those things are unmeasurable. Will.I.Am’s Super Bowl commercial for his new social media business, Chatter.com, was seen by who knows how many gazillions of eyeballs, but it remains to be seen if Chatter.com can make it. Let me put it to you this way: If Chatter.com issued an IPO now, would you invest in it? I wouldn’t.
All of this makes the new study from Bazaarevoice, as reported on Mashable, so interesting. The study queried 175 Chief Marketing Officers about their social media goals in 2011, and found that 74% of them “predict they will finally tie social efforts to hard ROI this year.”
Finally! I’m tempted to clap my hands and say, “It’s about time, good for you guys, I hope you tell us how you did it,” except for one thing. Try as I might, I cannot find anything in the study (a summary of which you can find here on Bazaarvoice’s website) concerning precisely how the CMOs plan on tying social efforts to hard ROI, this year or ever.
What the survey did find is not without interest.
•CMOs move towards social insight and customer-centricity
“Social insight” means that companies can better understand the beliefs and behaviors of customers and potential customers. This can be incredibly useful in product development and improvement; “insights that fuel improvements across the business” can “serve as the launch pad for innovation and business change.” As for customer-centricity, it sounds good, right? But I still don’t see how a wine company can accomplish ROI on social media. Maybe Apple, Ford or Proctor & Gamble can; they have massive advertising budgets, and can afford to have social media be a part of the marketing mix. But wineries don’t have massive advertising budgets.
Okay, but now come the study’s caveats. The CMOs may be eagerly figuring out how to use social media for social insight, but
•Linking company revenue to social media is the next frontier
This gets us back to the Uhh…well…err…umm thing. Next frontier? Space is the next frontier for NASA, but it’s not coming easy, is it? The CMOs “were optimistic about tracking ROI for social media,” with 81% saying “they planned to track social media to revenue…”. But here’s the kicker: “However, standard ROI metrics proved difficult to measure for many social efforts…”. That’s putting it mildly. Anybody can make a plan, but if a plan is based on flawed or incomplete information, it’s not likely to work. (Paging Secretary Rumsfeld.) So, while [M]easurability remains a top executive priority” for the CMOs, don’t forget, striking oil in my uncle’s backyard was my priority, at the age of 6.
Lastly–and I love, love, love this
•Product ratings and reviews remain one of the best understood tools with proven ROI
Can we talk? (as my father’s cousin, Joan Rivers, might ask). Most CMOs use social media “without clear insight into the ROI that tool is delivering.” But a clear majority sees “product ratings and reviews,” including blogs, as enormously influential. Ratings and reviews, including wine reviews from trusted sources, work. CMOs know that. The advent of social media does nothing to change this, except to put credible reviews online.
So there you have it. It turns out the headline on Mashable, “Marketers Optimistic About Finding Social Media ROI” is somewhat misleading. The CMOs are hopeful. They’re keeping their fingers crossed. They’re really, really trying to make ROI work so they don’t get fired. They’re going to breakout sessions in the hope they can learn something they don’t already know, paying a whole new cottage industry of social media-ROI gurus to tell them how to do it. They figure that, if everybody keeps saying there’s social media ROI out there at the end of the rainbow, why, then, there must be. But are they optimistic? I don’t see why they should be, unless all that Prozac and Viagra is affecting their brains.