OPINION28 September 2012

Measuring social ROI... and why it might be a bad idea


The obsession with converting social media fans into sales dollars might be misguided on many occasions, writes Alastair Heggie, reporting on yesterday’s MRS Social Media Conference.

It is essential for many companies to have a social media strategy and naturally they want to measure the return on investment (ROI) of their social media activities. According to Charlie Osmond, CEO of Freshminds Research, this is a mistake on many occasions.

Speaking at the MRS Social Media Research Conference he argued that it is because many companies misunderstand the point of social media that they expect the ROI to be measurable.

Osmond argued that many brands are mistakenly obsessed by “conversion” of those who engage with them on social media into customers – If their social media strategy is not obviously delivering this, they think something must be wrong.

But if we ask what the best way to use social media is, “the answer is not to build sales; the answer is much more often to build a relationship with existing customers.” Social media engagement is often just a part of good customer service and the benefits of this are obvious, but hard to measure.

So when is it realistic to measure the ROI on social media activities? The aims of social media activities can be categorised as either tactical or strategic, and either single channel or part of a broader communications strategy.

The most appropriate time to measure ROI, says Osmond, is when social media is the only media channel being used and the aim is to achieve a short term, tactical objective.

For example, Freshminds Research helped Jimmy Choo discover if they could drive up sales within community pages: “We ran adverts that either took people to a community where people were discussing Jimmy Choo, or we took them straight to the sales channel. We were able to show an uplift in sales if people had engaged in the community or looked at the community pages before going to buy, and the average basket size was doubled!”

Do social media tools challenge ‘traditional’ research agencies?

Are many traditional research agencies missing a trick by failing to offer social media research tools? “I don’t think the majority of traditional market research firms as defined by membership of the MRS would confidently offer social media monitoring,” says Darren Mark Noyce from Skopos.

“A lot of what we are hearing about today is not research it’s marketing with a little bit of research thrown in…and there’s nothing new about that”

During a panel discussion at the conference it was suggested that MRS guidelines may be preventing research firms taking potentially fruitful opportunities with social media. According to the head of software at Dub, Stephen Cribbett, “social media is the lever for a lot of new approaches which are challenging the research industry”.

These approaches include co-creation programs and mixing research with marketing, which can be hard to reconcile with MRS guidelines. Felix Koch from Promise communities and chair of the event said that “a world where we can clearly say this is market research and this is marketing is not very useful”.

Graham Mytton of Intermedia UK disagreed strongly. “There has still to be a basic, core professional responsibility about reliability, validity and representativeness to the extent that research can be repeated and show the same results. All those things actually do matter,” he said.

“A lot of what we are hearing about today is not research it’s marketing with a little bit of research thrown in…and there’s nothing new about that. It’s just much quicker using new technologies.”

This debate is sure to continue.

Want more?

  • Marketing Sciences’ Amy Nichols blogs her impressions of yesterday’s event here