Social networking and ROI

Every once in a while, most of us get involved in a client meeting wherein we are asked to justify the expense of social networking in terms of return on investment (ROI). Whether you are charging a company big bucks to completely handle their social programs, or charging them a little to teach them how to do it, they deserve an answer to that question and it is not always easy to justify the expense, especially in the short term

It takes a great deal of time to handle all of the pieces of social networking, and it has to become an integral part of your marketing operations. Build a Facebook page. Post there on a regular basis. Tweet cleverly and often. Always link back to your Web site, but don’t seem to be a gung-ho marketer. Look at every post from either service. Whether aimed at you by hash-tag or direct message, reputation management requires that you always know what people are saying. If you have a product that would benefit from services like Foursquare or Groupon, invent suitable promotions and run them often.

All of these processes take knowledge, thought, and time. They are best done by a professional, but more cheaply done by an extant employee. In either case, it is not always easy to attribute sales directly to social networking. Much of what is gained is made possible by conversations with customers and potential customers over time. And not everyone who is positively influenced by these factors mentions that social networking brought them to your client’s store.

It is probably more difficult to track the benefits of services like Twitter and Facebook than those which are represented by specific offers. And often, when tracking the outcome of specific on-line offerings, businesses find that they are more trouble than they are worth in hard dollars, especially for local businesses. Nor does it help that companies as large as General Motors are abandoning featured sites like Facebook. It gets harder every day to make an ROI case for social networking, especially on Facebook.

Admittedly, it is not easy to define the ROI for print of broadcast media, either, but those marketing paths are venerable and there are established norms for tracking success or failure. My take is that today’s marketing climate requires at least some involvement with the major services. The question is, how much expense can you justify via ROI if you bill for doing it, and how much less effective will a client employee be at the same tasks, given the combination of lesser expense and concomitant lesser expertise.

Do you have any strong feelings on this subject? We would be happy to learn from them if you’re willing to share.

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