Lewis writes, "Don't Say ROI Unless You Mean It." Agreed. I see a lot of bloggers wading into unfamiliar territory, starting to spew opinions on measuring return on investment (ROI). It's easy for anyone with an understanding of business finance to see the shallowness of these analyses. But don't be surprised - has not knowing anything about a subject ever stopped a blogger from writing about it?
There is one correct approach to calculate ROI. The result is a financial ratio.
To get to the root of the problem, we first need to go back to school. Marketing has historically been a right-brain discipline, reflected in academic coursework. Left-brained marketers end up focusing on direct and/or B2B - staying far away from social media.
Fast forward to the top of the food chain. CMOs have a shorter tenure than other executive roles. Why? According to Spencer Stuart, the firm that publishes the most widely cited statistics on the subject, CEO and CMO agendas are misaligned. CEOs want to see business results - I'd say now more than ever. Marketers can't counter with, "well, I can't give you a number, but there sure are a lot of people talking nice about us."
Social media is easy to use. If you can type in a box and click a button, you can blog. Click the button that looks like "play" and sure enough the video starts rolling. There is no secret to using Twitter. Being a social media user meant that you were an expert...five years ago. Not today.
Do you know the story about The Emperor's New Clothes? Let's pick it up near the end:
And so the Emperor set off under the high canopy, at the head of the great procession. It was a great success. All the people standing by and at the windows cheered and cried, "Oh, how splendid are the Emperor's new clothes. What a magnificent train! How well the clothes fit!" No one dared to admit that he couldn't see anything, for who would want it to be known that he was either stupid or unfit for his post?
We know the Emperor should've just used some common sense. Calculating ROI from social media efforts is no different.
If ROI doesn't apply to social media marketing, then social media should not be used for marketing.