Where’s the ROI for Social Media?

AN INSTANT POLL that recently appeared on the home page of CPGmatters.com sheds some light on an important part of social media evaluation; namely, Return On Investment. Every CPG company of consequence has a social media strategy nowadays.

So do marketers think social media is a success?

This article originally appeared on ShopperTech.org

Not really, say nearly nine of ten executives who took part in the poll. Only 12% say that social media is a success in CPG. Three of four respondents say concern over ROI is holding back success:

  • There is not enough ROI so far to be a success (19%)
  • It is very difficult to measure ROI at this time (56%).

Meanwhile, 12% say it’s too early to determine the success of social media in CPG.

I concur especially with the largest group of poll respondents (56%) who say that ROI measurement is the top present challenge when it comes to understanding the efficacy and value of social media marketing programs. Know-how and methodology are simply lacking in this area.

I believe some other respondents may be confusing the ability to count likes and re-tweets with something that can be a reliable proxy for conversions.  Some advances are being made on sentiment analysis, based on automated text analysis of posts. That’s progress, but the metric goes to brand reputation, not necessarily to resultant sales. And, of course, heavy posters are outliers. Many are angry about something; others are heavily involved with the product for a variety of reasons (like super couponers and even compensated posters).

Brands make a large commitment to monitor social media content and respond to it diligently. They may have little choice since silence is poison in this context. Still, fine control is unlikely since many opinions are set before they are posted, and defending too vigorously may appear like consciousness of guilt.

Then again, it’s a new era with new consumer expectations, and transparency seems to be highly valued. Brands that try to use social media to mount campaigns that drive measurable sales are likely to be disappointed, at least at present. It’s too difficult to sort out the influences on any given conversion. The shopper’s path to purchase is more of a meander through the cloud. This is why ROI remains elusive.

On balance, social media must be regarded today as a marketing and branding cost, not a driver of sales. That’s OK, I think, since marketing costs have long been justifiable based on their ability to generate awareness, communicate brand values, and build brand health. The days when an ad or promotion campaign could be reliably linked to a sales bump may be over. But that’s true more or less in all media, so it’s no disgrace that very new channels like social and mobile are hard to sort out. Better methods will come, and pretty quick, I’ll bet.

© Copyright 2014 James Tenser
(This article originally appeared on ShopperTech.org. Republished here by permission. All other rights reserved.)

9 thoughts on “Where’s the ROI for Social Media?”

  1. Great article … however, would ask all the marketing guys since the 1950’s … Where’s the ROI on Legacy Media Advertising?

  2. I’d like to know who awarded MBAs to the people who think social media can and should drive package good sales. What can some Tweet or post that will move me to buy Tide?

    It’s more about having an online presence that is consistent with the brand attributes. In higher ed, where I worked for more than a decade it is useful to respond to prospective student queries. But you need to show relation between answering an admissions question and whether someone applies.

    Questions about social media remind me of skepticism in cable’s early days. It will find its place.

  3. Let’s rest knowing it works half the time…

    There seems to be a cultural affinity towards measurability, correlation and causality. Digital media’s problem in part is the usage data it generates and the industry’s challenge is not knowing how to correlate that usage with much of anything, let alone ascribe causality to it.

    In one recent study, we were able to identify the shopping basket size of shoppers using ReDe, our in-store recipe kiosk, and found the engaged shopper was a big basket shopper – $83.31 versus the average basket of $38.44. We make no claim that the kiosk was the cause of the larger shopping basket, but it does suggest the larger shopping basket shopper seeks out opportunities for digital engagement.

    I wonder if digital engagement should be viewed in part as an aspect of relationship building. Just because it is measurable doesn’t mean it is correlated or causally related to sales. Relationship building historically was a people thing. Today, it is also a digital thing. Do we measure the ROI of a friendly employee in the aisle to justify their presence?

  4. There is a social media CPG ROI measurement solution. It is called The Social Media Index. After 13 years in the interactive marketing and advertising space and working for brands like Dannon, I could not find program that measured ROI in dollars vs. clicks and re-Tweets, etc. So, with the help of a first-rate software development team we developed new software that we introduced mid last year at The Future of Consumer Intelligence conference. The software is ready for deployment. Visit http://www.socialmediaindexinc.com, or call me at 910.585.5458.

  5. How about the ALS ice bucket challenge? Isn’t that making brilliant use of social media and benefitting the cause and the organization? Maybe fund-raising is different than profit-making but the ROI in this case seems quite strong.


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