The Real ROI of Social Media

ROI or Return on Investment is the calculation of time, money and resources against what you gain in return. In many cases this is boiled down to how much was spent and what did you make in the end? This is fairly cut and dry in business. In marketing we want to see 4X to 5X ROI on a campaign, if we could hit 10X then it was a home run. But in this new era of social media, somewhere, someone or group of someone's took us off track and sold us a new idea of ROI that felt good but feeling good doesn't pay the bills.

Return on investment ( ROI) is the benefit to the investor resulting from an investment of some resource. A high ROI means the investment gains compare favorably to investment cost.

It was Gary Vaynerchuk that asked a group of people in an audience "what's the ROI of your mom?" when he was responding to social ROI. It got a raise out of the group and like I did here, it's still a point of conversation because in reality, how do you calculate the ROI of your parents? I get what he was saying and out of context from his thousands of other videos and keynotes, I might have walked away believing that social marketing wasn't supposed to equate to revenue. If you know anything about Gary then you'd know that he's all about building businesses and revenue is always at the heart of that.

If you want to build your company then revenue is important.

There are a new breed of snake-oil sales professionals working among us. These "social media experts" or marketing consultants post pictures of a flashy lifestyle, selfies with other notable people and talk about how the ROI of social media should be measured in relationships. The problem is that this advice, though nice, is just fluff. Don't hire someone to build your companies revenue through social marketing if they can't tell you how it equals to pipeline or revenue.

Social media or social marketing has one goal in a business. Generate revenue. That is the end goal. Full stop. Anyone that sells you on the dream that building relationships is the goal is, well, wrong. 

I'm not saying that relationships aren't important. I'm not saying that building a community of fans and advocates for your brand is wrong. What I am saying is that if you're looking to build your company through social media, revenue, conversions and other hard metrics matter more. Your company is not going to grow or much less maintain itself if you just have a bunch of people saying you're great and giving your social updates a 'thumbs up'. 

Relationships matter. Im not against them. Relationships fuel business but it can't stop there. We need to hold marketing leaders to a higher standard.

Social signals, likes, shares, comments should be measured. They are a leading indicator to many hard metrics but thats it. They are leading indicators that need to be understood, optimized and put into a conversion funnel. 

Your social campaigns should ALWAYS have a lead goal attached to it. Even better if you can add a revenue goal to it. There are some that will say they only want to be measured based on traffic to your website or how many Retweets they collect. That must be nice. Don't fall for that trap. If you can't measure that traffic to pipeline then the traffic was worthless and I hope you didn't spend any money on it.

If you want to build brand perception then likes, shares and traffic may be enough. If you want to build your company then revenue is important.