Last week I was involved in what one tweeter characterized as an “ROI smackdown.”
I was speaking on a panel for Social Media Week New York when one of my fellow panelists said, “This ROI stuff is just a bunch of crap. I’m so tired of it. You can’t measure what you’re doing and people should not even try.”
I began to twitch.
“I agree,” said the second panelist. “Too much focus is placed on measurement.”
My head began to throb.
“As a social media marketer, I can’t measure what I do,” said the moderator. “I just do it.”
At that point, the dam broke.
“Respectfully,” I began, “I disagree with everything that has just been said! As marketers we should measure EVERYTHING. And generally, we can.”
It went downhill from there. This dialogue is nothing new. It is merely a symptom of an anti-measurement bias creeping into the blogosphere.
The gurus aren’t helping.
Unfortunately, the tone is being set by some of our most beloved social media celebrities such as Gary Vaynerchuk, David Meerman Scott and other high-profile pundits.
When Vaynerchuk is asked about the ROI of social media his famous reply is usually, “Well, what’s the ROI of your mother?” Scott’s retort is usually something like, “Why have a double standard? You don’t measure the ROI of the company receptionist.”
These make great sound bites, and I respect them and love the passion and wisdom they bring to their work. But after hearing their rants on measurement for a couple of years now, I am agitated to the point of breaking out in hives when I hear it. Promoting an anti-measurement agenda is misguided and confusing to young marketers.
First, in their defense, I think the point they are trying to make is that social media represents an evolution in the way we communicate and we shouldn’t let an ROI calculation (or lack of one) stop us from getting on board. If you are waiting for a pie chart to make a decision, you’re probably missing the point.
Second, I fully recognize that calculating true ROI is frequently impossible. However there are many meaningful leading indicators and non-financial measures that can be tied to stakeholder value. We have so much data coming at us, there is simply no excuse not to measure.
Why you must measure.
Here are four reasons why you must measure the results of your corporate social media activities.
1. There is an implied value to everything. At some point in the life of every company, there will be a financial imperative to slash overhead costs. The bubble always bursts, at least in a free economy. When that happens, everything will be evaluated under the icy glare of number-crunchers—do we cut or not cut?
This is the day of reckoning that defines the “implied economic value” of any effort. Yes, the social media marketing effort will come under scrutiny. So will the receptionist, your wireless plan, and all these other mundane daily activities not normally associated with an Excel spreadsheet.
When it’s your turn to justify the existence of your marketing efforts, you better be able to demonstrate business value, and it better be an explanation more convincing than “Don’t you see that measuring social media is like measuring your mother!”
2. If we are expending human effort, it should be justified. Every economic activity in a corporation directly or indirectly has to contribute to shareholder value, or eventually it will go away.
Let’s look at how “un-free” social media really is. Let’s assume you have one person working full-time on social media marketing. We’ll assign that person a salary of $60,000. In a typical company, standard health, 401(k) and other benefit costs equal another 50 percent of the base salary, or in this case, $30,000. We’ll assign another 20 percent of base salary for overhead such as office space, shared services support and technology. That’s $12,000. We won’t even address travel, training or bonuses.
So, our minimal full-up cost for one social media professional is $102,000. As a business owner, are you willing to spend more than $100,000 per year without requiring any accountability for a return? What kind of a company are you running?
3, If you’re not measuring, how do you know you’re making progress? Although Vaynerchuk may not be plotting his social media efforts on a chart, I guarantee you he has an acute sense of the return on his social media presence and also knows the point where there is a diminishing return on his efforts. That’s easy for him (and me too, by the way) because he can see the results every day. It’s more complicated in a corporation. Explaining that “it works just because I know it works” may be OK for an entrepreneur but it ain’t going to fly in a board room.
4. There is no excuse not to measure. I’m not advocating that every social media effort has a demonstrable ROI. I’m a practical guy. It may be cost-prohibitive or even impossible to determine the specific ROI of your efforts. Sometimes you need to look at qualitative tools for social media measurement. But there is no excuse for not tracking key measures that contribute to your company’s goals.
I can’t imagine asking a client to trust the progress of our social media effort without some indication of continuous improvement. To support your credibility, your long-term viability, and your personal career in social media marketing, you must measure.
So please Mr. Vaynerchuk, Mr. Scott and all the other gurus out there, please reconsider what could be misinterpreted as anti-measurement rants. It makes for entertaining quotes, but it’s providing confusing advice to many young people who look to you for thought leadership.