7 Myths of Social Media ROI

Published: Tuesday, December 08, 2009 in articles » management by Thomas Baekdal

Before we start talking about social media ROI (in articles to come), we first need to debunk some of the many myths and misconceptions that are floating around.The buzz around social media return of investment (ROI) is just staggering. It is a good sign that this social media thing is moving away from being an experiment, to actually be part of a business strategy. And every business strategy and business plan must be focused around making money.

Myth #1
- You can measure social media ROI by looking at volume of fans, level of engagement, downloads, number of links etc.

Wrong! None of these things provide you with insights about any meaningful return to what you have invested. Getting 1,000 more fans doesn't mean you will sell 1,000 more products. Just because people link to your viral video, doesn't mean that people come flocking to your store.

In the article "100 Ways To Measure Social Media," you can find many very useful tips on what you can measure, but it doesn't tell you how those translate into Return of Investment.

Return of investment is about making money. To measure that, you first need to find out what your product is.

• If you are selling cars, then your "return" is to sell more cars.
• If you make blenders, then your "return" is to sell more blenders.

But, not everything is about selling goods. Take newspapers or professional bloggers. What do they sell? Articles? No, those they give away for free (unless you are really old and called Rupert Murdoch). You make money selling ad impressions. Which means that blogs sell "quantity of ad impressions," or "conversions of product affiliations" (meaning how many people you can persuade to buy the product you are advertising for another company).

You simply cannot ask "how many fans do you need to sell more products, or more ad impressions on your blog?" That just doesn't make any sense. You still need to persuade your fans to actually buy the product. Your return is when your product is delivered to the person buying it.

You need much more than just fans. Getting more fans are a just step towards getting a return, it is not a return in itself.

Myth #2
- We need to get as many people to visit our website

Wrong! You need to sell your product to as many people as possible. You should only bring people to your website if it helps to get them to buy more products.

Consider this. Many companies merely use their social profiles as "link profiles," linking to their website. This is the old way of doing things. It is like a poster that encourages you to go somewhere, where you then decide buy the products.

You end up with Twitter feeds, linking to your websites, linking to your online shop, linking to the checkout process. And that is just too many steps.

At every single step, you will lose customers. By the time they finally click the buy button, you have only a fraction of the energy and volume you started with.

Sell your products as close to where people are. If you give people advice, and are using Twitter, then change the format so that it fits 120 characters (then you can always expand it with more in depth articles, on your website).

You need to make Twitter and Facebook a primary channel, just like your website is a another primary channel. Move your checkout process directly to Facebook (like Resource Interactive is doing with "off the wall.")

Myth #3
- Marketing works

It doesn't, at least not the way you think it does. There is a really strange thing about marketing, and its ROI, that most marketers know instinctively but have a hard time explaining.

Marketing doesn't pay. No matter what you do. A poster, a tweet, an article on a website, a TV ad during Superbowl or anything else. None of these things produce enough return of investment to cover the cost of doing it.

You don't buy the new Ford Fiesta just because Ford posted a tweet about it. You don't buy the new Nook (ereader) from Barnes&Nobles, just because there was an ad for it in a magazine.

Every single thing you do is, in itself, not worth the effort. It doesn't provide enough return of investment.

However, we also know that if you don't market you products you go out of business. Communicating your products to the world are essential to your success. The old saying "build it and they will come" is perhaps the biggest myths of all.

So, what is really going on here? If every single ting you do is a waste of money, and that not doing anything is even worse? How does marketing work?

The answer is that marketing works because the sum of its part is much greater than the whole. Nobody buys a new book just because you see a tweet about it. But, if you already read some of the author's previous books, if a friend has recommended it to you, if you see other people discussing it, and if the description and reviews on Amazon are interesting - then you buy the book.

Marketing works when you influence people via many different channels and many different methods.

This is even statistically proven. EngagementDB found that there is a direct link between how many channels you are on, and the level of engagement you get in return. And Microsoft Advertising Institute found that banner ads have no effect if people just see them once. It is only when they see them more than once, in different settings, that people react to them.

This is the most important thing to remember when measuring Social Media ROI. If you measure each individual thing you do, you will end up with a loss. But, when you measure all your communication as a whole, then it suddenly makes sense, and you start to see a positive result.

Twitter alone is not worth the money or time you put into it. It is only when you combine Twitter with other channels that it starts to make sense.

Myth #4
- It is just about marketing

No! The real power of social media is its ability to communicate more effectively across every department, to cut cost, and to make customer support more personal and effective.

Social media is actually not very good at attracting new customers, instead it strength lies in the way it motivates existing customers to spread the word.

This also means that most normal marketing "techniques" doesn't work in the social world, because you need fans to get more fans. And you focus your energy on your existing fans.

You do not measure the effect directly (which tends to be very low), but instead what the indirect effect is. It's not about how effective you are in relation to your fans, but how effective are your fans in relation to the people they know.

Myth #5
- Return of Investment is all about the Return

It's not. You also need to look at how you are investing your money. It easily cost $100,000 to put an ad on TV, but using Twitter or Facebook is practically free + spending about 15 minutes per day tweeting and replying (which is about $4,000/salary).

Which one is the better investment a TV ad for $100,000, or engaging your customers in a long term relationship for $4,000? (BTW: that is probably one of the easiest questions to answer.)

This is also why so many companies are still focusing most of their time on traditional marketing. They are trying to optimize their return (by making flashier print ads), but are failing to look at new investment opportunities (social channels).

Or they focus on getting more return for their department (marketing), and fail to see that Twitter is about much more than that (sales, customer support, contact with individuals - e.g. the people who actually design the products)

Getting the right return is as much about investing in the right things, with the right people. And that is the real trick to Social Media ROI.

Myth #6
- We need to measure Social Media ROI

Wrong. You need to measure Customer Communication ROI; it is not really just about social media. You need to measure it across all your channels (myth #1 & #3).

Myth #7
- It's all about money

Well, it is. But, the best way to get money is not to focus on earning more money. Instead, you need to focus on creating remarkable products, having meaningful and relevant interactions, and really engage with people around you.

Apple is a textbook example of this. When they fired Steve Jobs, and instead focused on "making money," they completely lost track of why they made computers, and as a result, their products became mediocre, and they nearly went out of business.

Then Steve came back, and the first thing he did was to refocus the company around making remarkable products. Since then Apple have soared in profitability.

It is the same with Social Media. When you focus on "selling products," then you end up sounding like a used-car salesman that nobody wants to follow. It is only when you focus on being remarkable, that people will notice. Only then will you get a "return of investment" ...only then will you make money.

Benefits of Web 2.0

the owner of a jewelry business wants to know how she can utilize web 2.0 to promote her business and increase sales. What do you recommend to her? 

My Answer:

I would tell her Web 2.0 would increase her sales! Facebook alone will increase the word of mouth buzz about your business. With this buzz you can do special promotions for percentages off of products bringing foot traffic into your store. I would definitively tell her to use all the the social networking tools such as Facebook, Twitter and linked in. 

Also with Web 2.0 you can use goggle applications for communication for in house use. At no extra charge, Google Apps supports over-the-air mobile access on BlackBerry devices, the iPhone, Windows Mobile, Android and many less powerful phones. This will help with on the go transactions and keeping you up to date with info.

If she were to say no to this she would be selling herself short!

Blogging assignment: Other than Amazon.com, what is your favorite online shopping site and why? Include a link and explain in a few paragraphs what you find favorable about this online shopping experience.

Really, I dont do alot of online shopping BUT what little i do its usually Ticketmaster not my favorite online site to purchase tickets due to there crazy prices. I do it anyway. That was kinda off subject maybe. I dont know. The times i have purchased other goods online are through those one deal a day sites such as whoot.com and steapandcheap.com. They both do basically the same thing different produce steapandcheap is basically outdoor gear and whoot is just random electronics and shit. When i stumble there I tend to get a pretty good deal. Check'um out. I'm Pretty sure they dont really think they make any money but who knows.

cheers

This case is a crock of shit!
I think there are so many people bad mouthing company's online.
ie facebook,twitter and everything sucking off that teat. If this case favored the company the courts would be a fucking mess. This would never happen. Not in my lifetime. If it does it will eat my shoes gladly. SOOOO. fuck this company and this case. I have nothing more to say about this.
now i can cool.
Sorry guys this is quick and to the point
Please respond to this and tell me how shitty this post is

cheers

blogging makes anyone a journalism

People who went to school for journalism must be pissed right about now. One simple reason blogging!

honestly i would much rather read www.daytrotter.com or aquariumdrunkard any day over the guys at Rolling Stone. Honestly, I haven't even heard anything about Rolling Stone in quite a while now Pitchfork is the new Rolling Stone. So The answer is yes blogging is making a huge impact as apposed to the classic journalist.

Cheers

SPIES

so i will say i didnt know much about security before reading this. I found it really helpful and answered alot of questions i had. For instance i always wondered about how facebook add's were tailored toward me. Now I know. Thats creepy but clever. I think im only going to give out my side email from now on. No matter what. The main email will be used for biz only. I guess thats common sense. Is there a way to be fully protect. I think not. If someone wants your info they are going to get it. The question is if they will get caught.

cheers

Inaccuracies in "Hackers" (the movie) circa circa 1995

So there are a bunch of goofs in hackers but the most notably is the representation of the web as a acid trip filled with equations. I only wish. It would make my job so much easier just to make abstract things. (IDEA) Now im not a super tech guy but i do know how to use IMDB and they say there is a bunch of stuff. Mostly there is alot of continuity issues with placement of objects or people and most of the tech goofs are with dialogue between characters.

• Continuity: When Dade first enters Cyberdelia, there is an overview shot of the whole place, and for a moment we see Joey and Phreak on the top balcony talking around a table. The problem is, this is the scene from the next day. You can tell by the clothes they are wearing.
  
  
• Revealing mistakes: Guide wire visible on Kate's flare gun.
  
  
• Audio/visual unsynchronized: When Dade is typing on Kate's laptop at her party she stands over his shoulder and says, "I hope you don't screw like you type," but her words don't match her mouth.
  
  

• Continuity: Several scenes show the Met Life building (with "Met Life" in huge letters) behind Grand Central. However, the old stock "sky view" footage right before Dade's first day of school shows the building with its original "Pan Am" signage, which was taken down ten years before filming.
  
  
• Crew or equipment visible: In the police car right after Acid Burn beeps Cereal Killer, the passenger turns to the left and you can see a red light shine on his head. That light is from the camera.
  
  
• Anachronisms: The satellite shown orbiting the Earth at the end of Cereal Killer's announcement is Skylab, a U.S. space station which crashed to Earth in July 1979.
  
  
• Audio/visual unsynchronized: Margo and The Plague are talking when she warns him to "get the file or else you'll loose all your toys" but her lips do not match the audio.
  
  
• Continuity: The characters are arrested on the 14th of the month. However, When the hackers are being chased through the streets, Dade's watch (in the close-up) says 10-18-1995.
  
  
• Audio/visual unsynchronized: At Kate's party, you see Cereal Killer walking through the crowd. You hear him talking, saying something along the lines of "... big man, big boots..." but his mouth is not moving.
  
  
• Continuity: When Joey initially "hacks" into the "gibson" he stashes the disk in the air vent. However, his clothes change as it goes from the air vent shot to a normal shot.
  
  
• Continuity: At school when Dade is looking at Kate's profile information to promote himself to Adv English, Dade's school photo is shown in the new window that is opened on the computer before Dade enters his name.
  
  
• Continuity: We see Kate kissing Kurtis on the bike outside Cyberdelia. In the background we see, Crash, Phreak, and Joey walk up and stop. In the next shot, Crash and Phreak are in different positions and Joey is still walking up.
  
  
• Continuity: When they are at Lord Nikon's apartment they are watching TV and the news broadcast they are watching is Joey being arrested. Joey is not arrested till the following day.
  
  
• Audio/visual unsynchronized: At the beginning of the movie, when Dade calls the Television Station and talks to the Security guard, the guard says a different phone number than the one on the modem.
  
  
• Continuity: When Dade gets tricked into going to see the 'Pool' on the roof of the school, right after he walks out of the door, he turns back to the door and turns the door handle completely. In the next shot, he can barely wiggle it because it's locked.
  
  
• Continuity: When hacking into the TV station at the beginning of the movie, Dade's alarm clock is continuously counting up.
  
  
• Continuity: When Kate and Dade are walking beside the river on their date, you can clearly see Kate's intricate eyeliner/eye makeup. Yet when they are swimming in the pool before her head goes under and her face gets wet, it has all disappeared leaving just her eye shadow and no smears.
  
  
• Revealing mistakes: Hackers is set in NYC however in the "Hack the Gibson" scene Plague places a call to Dade in Grand Central Station but the phone rings using the European tone (ring ring - pause - ring ring) rather than the American tone (riiiiiing - pause - riiiiiing) indicating that this scene was either filmed or sound recorded in the UK.
  
  
• Continuity: In the "Hack the Gibson" scene Dade steps out of his phone booth to the one in front of him to answer Plague's call, which is the same booth occupied by Burn who is present before the phone rings, disappears during the call and then reappears again after.
  
  
• Factual errors: The P6 processor was only twice as fast as even the slowest Pentium processor, not 3 times as Kate claimed.
  
  
• Factual errors: When Kate is describing the specs of her machine she says, “It's a P6 chip. Triple the speed of the Pentium”. Dade then says, “Yeah. It's not just the chip, it has a PCI bus”. Kate says, “Indeed. RISC architecture is gonna change everything”. The P6 chip is a CISC design, not a RISC. Also, the Pentium has a PCI bus so there wouldn't be any reason to mention it.
  
  
• Factual errors: On the Gibson's list of directories, 'Shipping Forecasts' is misspelled as 'Forcasts'.
  
  
• Factual errors: In the scene when Acid is showing-off her laptop, they speak of the laptop having a processor called a P6 and a PCI bus. Further examination of this scene and another scene with them looking over the damaged code, the laptop that Acid-burn has is clearly a Macintosh Powerbook 280C (sub-notebook) made by Apple Computer Inc. This model does not have a PCI-bus, or a P6. It does have a Motorola 68030 33mhz CPU.
  
  
• Continuity: In English class, Kate is seen underlining her quote from her mother’s book on the chalkboard. After the teacher reads Dade’s quote, and Kate says that he is not supposed to be in this class. In the next couple of shots there is no underlining under her quote. Also the exclamation point at the end of the quote has black chalk used as shadowing, Kate is clearly only using white chalk.
  
  
• Continuity: In Cyberdelia, as Dade starts playing the video game after Libby moves out of the way, she stands behind Dade to his right. Yet, in the next scene when Curtis asks if Dade is bothering her, Libby is behind Dade to his left.
  
  
• Factual errors: Kate's "insanely great" laptop is described as having a "28.8 bps" modem: a thousand times slower than a standard 28.8 kilobits per second one.
  
  
• Anachronisms: The movie took place in 1995, but the Kate's P6 processor wasn't released until two years later in 1997. With a marketing name of Pentium II, it was more than three times faster than the previous generation Pentium chips.
  
  
• Factual errors: When Plague is looking at the FBI's NCIC system in order to incriminate Dade's mother, the file he's looking at has 'possession' spelled incorrectly twice.
  
  
• Errors made by characters (possibly deliberate errors by the filmmakers): When Dade is making a fake personal ad for Richard Gill, Kate reads aloud as he types, "Disappointed white male..." Dade is actually typing a word beginning with "dissa"... (spelling mistake)
  
  
• Continuity: In Cyberdelia, as Dade's score is appearing on the high score list, we see his score "crush" the fourth and third place scores on the high score list. The camera then shows him looking at his score while two more sounds of "crushing" occur. This should put him in first place, however, the camera then goes back to the high score screen where his score "crushes" the second and first place positions. Thus, the error occurs in the existence of the sound of "crushing" while the camera is not on the high score list.
  
  
• Revealing mistakes: When swimming in the rooftop pool at the end, Kate and Dade's ears are underwater as they talk to each other. They wouldn't be able to hear one another if their ears were submerged.
  
  
• Continuity: New footage of Joey being arrested appears in the film before it happens. If you pay close attention to the scene where Cerel, Freak, Nikon, and Crash begin to watch "Hack the Planet." You can clearly see Joey being led out in cuffs in the background.
  
  
• Audio/visual unsynchronized: In the scene where Crash is typing away on Burn's laptop, Burn says "I hope you don't screw like you type." If you watch her lips, it's clear she says "I hope you don't f*** like you type."
  
  
• Revealing mistakes: In the opening scene of the plane flying Dade and his mother from Seattle to New York, the plane's tail clearly shows "757" on it, indicating this is likely Boeing stock footage of the plane (and not a commercial airline). Additionally, the cabin shot shows 2-by-2 seating, which is not accurate of the economy class plane seating configuration (which is 3-by-3) unless they are in first class. Based on appearances (narrow seats) and coordination with the described economic situation of the mother, them being seated in first class is highly unlikely. At the end when "Mr. Babich" is making his getaway, the plane shown is clearly a Boeing 727. The flight attendant tells him the flight time is about 14 hours. A 727's range is about 2700 miles, and cruises at about 615 mph. Simple math would tell you that a 14 hour flight was not feasible with this plane, which is logical since the plane was always considered a medium-range aircraft.
  
  
• Continuity: In the last scene, Dade and Kate take some clothes off while making out in the swimming-pool, yet their clothes are nowhere to be seen when they zoom out in the next shot.