Marketers who aren’t quite sure of social media’s tangible rewards should take heart: Few of their colleagues know, either.
In fact, while nearly three-fourths of marketers surveyed have a social media strategy, only 29% have to show positive return on investment in order to secure budgets for their continued efforts, according to a new study.
The study’s sponsors are divided regarding the ramification of this finding. “The lack of the ROI requirement surprised me,” Gordon Plutsky, director of marketing and research at King Fish Media told Direct Newsline. “We are in an era of marketing measurability and accountability. Any marketing initiative would have to have a positive metric attached to it, whether leads or less customer churn.”
But Kipp Bodnar, inbound marketing manager of co-sponsor Hubspot, feels organizations are downplaying ROI concerns partly because of the channels’ newness. Once efforts are formally integrated into specific business objectives, allocations for it will be tied to results, Bodnar claimed. “The concern about social media being free and under-resourced goes away if it is tied to business objectives. If something in social media isn’t driving sales or needs, it shouldn’t be resourced.”
Currently, the top quantitative metrics marketers cite when evaluating social media are not directly linked to revenue. Ninety three percent report tracking the number of visitors or page views they get, followed by the number of members, fans or followers (85%); traffic sent to the corporate site (79%); search engine ranking changes (78%); and traffic sources (77%). Lead generation ranked only sixth-highest in importance, at 72%, and increases in average order size were the least-frequently cited, with 24% tracking these.
Little surprise, then, that only 13% indicated the ROI of their campaigns exceeded their expectations, while another third said their efforts performed exactly as expected. But there is a benefit to low expectations: Only 10% said their campaigns pulled in returns either somewhat or significantly below what they sought.
Where is the money for these programs coming from? Just over one-third of marketers indicated their investment in social media was tied to a specific project or program, while another third said their marketing budgets received an incremental boost to fund their efforts. Only 21% funded these activities by moving funds from mainstream media.
To be fair, it isn’t as if marketers are rushing to pour resources into social media. Only 9% have a dedicated full-time individual coordinating their outreach: The overwhelming majority have added social media to an existing employee’s overall responsibilities. And a similar majority keep their social media activities in-house: Only 13% have delegated these responsibilities to outside firms, freelancers or agencies.
“What I think happens is social media is initially allocated to an intern, or to part of a marketing person’s time,” Bodnar said. “I think there is an initial feeling that social media is free. Lots of the applications [that facilitate efforts, and monitoring results] are free. But you soon realize that free equals a lot of time.”
It’s not as if its role is unimportant. Fully 70% consider it a tool for both customer acquisition and retention, with another 23% indicating its main function is solely acquisition. Only 4% feel it is a retention tool.
To Plutsky, the time for evaluating the true cost of social media is now. “My sense is [the current attitude toward not justifying costs] will change. We are in an adoption pilot phase with social media. It has grown amazingly fast from something that was a niche to something mainstream.
“If we redo this study in mid-2011, the number [of people saying social media isn’t ready to have ROI figures held up to it] will change a lot. We’ll know a lot more about what works and what doesn’t work. People will be saying ‘this is all fun and interesting, but where are my returns? Conversation and engagement don’t pay the bills.’
“You are seeing more and more people creating [for instance] content video on social media,” he added. “The cost to develop good content is an investment.”
Plutsky did not arbitrarily choose video over, for instance, tweets or blog posts. Asked which outlets marketers planned to add during the next 12 months, more (44%) indicated they would start exploiting YouTube than any other.
