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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,, was seen by who knows how many gazillions of eyeballs, but it remains to be seen if can make it. Let me put it to you this way: If 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.

  1. James McCann says:

    Great post Steve. What’s interesting is that there are some ways to at least guage some effect from social media, yet few wineries use these tools. (and they are VERY basic and harken back to the stone age of phone calls and emails)

    Such as: Sending out specific discount codes only via social media so you can track the effect, as opposed to tweeting “15% off all Cabs in the tasting room.” Companies used to have a whole stable of 800 numbers so they could track which ads generated the most phone calls. Wineries need to adapt this concept so they can guage what is actually being effective. So few social media campaigns contain any “call to action” that I can’t help but wonder what they expect the consumer to do with the information they receive?

    IMHO, part of the problem is that many of the young, social media types do not have a solid enough grasp of the business world to be advising someone as to how to run their winery. Just because you are young, hip, and can run a good blog does not give you the business acumen to help someone grow their sales. (And it does not make their wine taste any better, either.)

    The other problem is that while social media has exploded, its use in certain demographics is still very limited, and if you are trying to sell $75 Napa Cab, social media may not be the right tool.

    BTW, I do believe that Social Media is an integral part of any business, but too many good people are putting all of their eggs in that one basket.

  2. Steve, you and many others are missing the point when it comes to advertising budgets. Social media doesn’t need to much at all. Time is the main input in social media efforts, not cash. For wineries who are just starting social media efforts, the goal is building and fostering relationships. You can’t just buy those. As Sir Paul McCartney once wrote, “Tell me that you want the kind of thing that money just can’t buy. I don’t care too much for money, money can’t buy me love.”

  3. James, all your points are excellent! Thanks.

  4. James McCann says:


    I agree it is about fostering relationships. My fear is that wineries are forgetting how to walk into their local restaurant, chat up the somm, talk about their winery… face to face, like in the good old days – dropping 5 cases for a BTG special that will get tasted by 100 or more consumers.

    Time is the main input for social media, but time is far from free. See: “opportunity cost”

  5. If you are doing robust business via your ecommerce platform, it is trivial to track ROI from any digital communications medium. The problem is that people are choosing not to measure.

    For instance, Facebook is a no man’s land for commerce. Anyone who is watching can see it. One data point is the fact that Facebook ads are performing like complete crap. Another is anecdotal chats you have with individual wineries who have brought an ecommerce piece to Facebook. People are not on Facebook to buy, they are there to look at photos and silently judge their friends, all while being spied on.

    Twitter has slightly more potential if you have an incredible number of followers and can link your message to a societal trend or tech. GaryV was able to pump his twitter feed the other night to get enough pre-orders of his new book to push it into the top 50 on Amazon. No mean feat. It’s now back down at #882. ( )

    Blogs have value as SEO vehicles and help you own the search rankings for your brand. You ROI is simply where you show up on Google when someone searches for your wine. If you were one of the first to use blogs, they also help define yourself to the market.

    As Colorado points out, for brands that don’t have 25K to drop on a BTG glass placement at a brand imaging account but do have spare cycles in an often empty tasting room, SM’s ROI, slim as it is, is still better than doing nothing at all.

  6. James, I am in no way advocating that wineries put all of their advertising eggs in the social media basket. Social media efforts should be started slowly and incrementally. I have heard too many in the wine industry (mostly wineries) say that that they haven’t not made any sales via Facebook, so they see no point to putting in so much effort and money. It grows organically. A few Facebook status updates or Tweets per week by the winery owner and/or winemaker do not add up to much additional time costs, if any at all. Eventually, they might, but the current social media situations of most wineries aren’t there yet.

    If wineries aren’t donating wine to events or meeting with restaurant staff, social media isn’t going to help them. I’m simply advocating that adding social media efforts to supplement and enhance traditional marketing efforts isn’t as difficult as many think. Getting past the lack of ROI fallacy is the next step.

  7. I think it would be simple for wineries to get a ROI from social media sites. You have to do it right though. You need frequent posts, somewhat quick (within an hour or two if your business is open) responses and pictures added often to really keep peoples interest. It takes a considerable amount of time, but I feel the potential return could be huge.

    As far as knowing what effect social media is having, if wineries offered special discounts on bottles or tastings and posted it only on their Twitter or Facebook page it would be easy to see what effect social media is having. Maybe encourage people to “like” or follow them on those sites when they visit to encourage growth of the page and gain even more business through special offers.

    I have used Facebook on occasion to find out more about a winery and I’m amazed at how little some wineries do when it comes to social media. I feel like the possibilities are so great when it comes to utilizing these sites that I have no idea why little to no effort is made.

  8. As someone who has done major social media projects for startups and Fortune 500 companies, I can definitely say there is plenty of validation for the payback on social media from a marketing point of view. Sales cycles can be accelerated. Sales people’s time can be saved – that’s usually quite a big win. Just remember – we never sold email on the basis of ROI or fax or most communications technologies. Companies who are pro-active about listening posts sense customer needs and desires well ahead of the curve and design more successful and targeted products and campaigns. Crowdsourced content is often more credible than the corporate voice. I think the wine industry is hugely behind in social media, and maintains an overly stuffy, corporate online presence. It’s possible to get a lot of mileage out of a social media approach, combined with “custom publishing” (content marketing) to deliver very impressive results. Just happen to be attending the Content Marketing Strategies conference today and tomorrow at the Claremont, so am swimming in case study examples of the goodness other industries are experiencing. I’ve often wondered why the winemakers are so slow on this one.

  9. Would a winery owner ask the vineyard manager, “where’s my fruit?” right after the vines went in the ground? Of course not, because the grapes aren’t ready. It’s not until 3rd or 4th leaf that the winery owner can think about using the fruit.

    Your ROI is the fruit. Your vines are the social networks where a business has a profile. A business can organically nurture their online connections but they aren’t going to have ROI right off the bat. It takes time to grow online connections and build trust. But the fruit will come. I’ve got actual numbers during my time at St. Supéry.

    The reason it’s hard to get an answer is because ‘social media ROI is a thing we’ve never seen before. It doesn’t show up in a form we’re used to seeing. Until now, ROI was, “I spent this and got that”. Meaning, I spent $25K on advertising at an event and I got $X in sales. The advertising effort lived for that short period of time, then it’s gone.

    There’s a new element to introduce into the equation—time. Time is now a multiplier. Any advertising dollars spent online result in something digital that can last for decades. A YouTube video in 2011 can lead to sales in 2020. Not to geek out too much, but the word, “curation” is big this year because we’re all curating our existence. 50 years from now, people in the future can go back and read this blog because it’ll be indexed online somewhere. Anything wineries are doing online today will be seen in the future. In 2025 someone might see a 2010 Cabernet. They’ll go online and pull up all sorts of rich information, including youtube videos, blog posts or whatever right from the winemaker. They might make their buying decision based on what info they can get.

    Instead thinking about ROI, I say think about ROA. Return on Attention has more to do with what you can do once you have someone’s attention online. That’s ultimately what marketers are trying to accomplish—get someone’s attention online, and influence their buying behavior. Here’s my formula for ROA:

    ROA = time(impressions + reach + influence)
    take the $ you put into new media and divide it by the $ you get back. Divide the later by the former and you get a financial metric that’s measurable. The higher the number, the better your return.

  10. Rick, thanks. You have a very unique perspective on all this, and I value your thoughts.

  11. Steve,

    A couple thoughts come to mind. First, “establishing a solid link between social media and ROI” doesn’t constitute a “good business plan.” Perhaps it’s a necessary piece of the marketing strategy, but it’s not a measurement of the business plan. Secondly, getting a solid direct link from any marketing effort has ALWAYS been difficult, and it’s one of the reasons the marketing budget is the first thing to go in times of economic strife. That said, metrics should always be a part of the effort. I like Rick’s metrics. The difficulty I see in it, however, is knowing how to tie the $ you get back to the $ you put in, unless you’re making an offer through social media that you’re not making elsewhere. EG: Use this code when purchasing our wine and get a % discount.

    The “tools” for social media don’t require a massive budget. I haven’t paid a dime for any of the social media tools I use, excepting my monthly web-hosting fee. (I’m not making any money, but that’s because I’m not trying to produce revenue quite yet.) Wine = a product, the same as cars and toothpaste, so if social media work for Ford and P&G, I’m unclear why they can’t be part of the mix for wineries. That said, social media efforts do require time. Social media enhance the ability to make, foster and maintain relationships. They’re also great for “listening” to what your market is saying about you, so that you can make corrections or build on something positive. My fear is that, in getting an accurate measurement, we’re neglecting to include include time as a factor in the equation.

    Frankly, I think the bigger problem for wineries (perhaps exacerbated by social media?) is that they don’t *get* marketing. Most wineries fail at communicating their unique value proposition. It’s rare to read a winery’s marketing materials that don’t shout “we’re premium!” I dare a winery to use: “Plonk that’s meant for swilling! Get crunk’d!” I’ve had some “premium” wines that’d be better served by that message, right?

    Finally, I think you gave a great example for how social media can be effectively utilized: If product reviews and ratings are the best understood tools with proven ROI, then perhaps social media becomes a part of the ROI equation for those reviews and ratings. Social media tools can drive traffic to those review and ratings. That’s a perfect example of how social media can be effective.

    Somewhat off topic, I’m unclear on the distinction between “optimistic” and “hopeful.” I have always believed them to be synonymous.

    Rick, I dig your analogy. Very smart. I will likely borrow it when I give my presentation to the OR wine folks in May.

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