Where’s The ROI In Social Media?

January 27, 2012 by
Filed under: Marketing Strategy 

Does Social Media Produce ROI?

If your business is going to put the time, effort, and attention into social media marketing, it would be nice to think we’d actually get some sales out of it.

In other words, we want a return on our investment.

Everyone is looking for how to improve the ROI of their social media marketing.

Social media marketing is never going to produce an ROI. No marketing will.

What’s the point of even doing marketing if there’s not a return on the investment?

Organizations create entire processes around the idea of measuring this performance index, all so that marketing professionals can “justify” their activity.

The truth is, marketing will never produce an ROI.

Marketing will never produce an ROI because ROI = A positive gain from investment – costs.
A pure definition of ROI is simple to quantify.

The problem for marketing professionals is that marketing activity is not an investment.
An investment is an asset that you purchase and place on your financial statements. Like an office building or a computer system. It’s something you could sell later if you didn’t need it any more.

Marketing is an expense, and goes on the Profit & Loss statement.

Unless your organization is cheating on its balance sheet every marketing effort you pursue is an expense in time, money, and resources … it’s not an accounting asset.

But the bigger question is why do so many people use the term ROI and marketing together? The answer to this question provides insight into how an organization views the role of marketing.

What is the ROI of email?

Quick, calculate the ROI of using email within your organization. Not email marketing, but just the emails you send back and forth to get things done.

If you are like most, you don’t know. You probably don’t care.

But the absence of email in your organization would lead to more harm than good. Its “gain” is not so much a measurement of return but an implicit cost of being in business.

Unfortunately, this is not the same view shared by people who use the term ROI when they’re talking about marketing.


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