When social media came to the table in 2005, marketers flew into a frenzy trying to create monetization avenues and figure out how to take the most from the opportunity, all while developing new web presence for their business units. Budgets shifted to compensate for potential ad revenue. Full time in-house roles were created solely to oversee day-to-day Facebook and Twitter account posts. Consulting, marketing and tech firms all scrambled to create analytics able to make sense of – and justify – these new online marketing spends.
It’s been six years, and what we do know is that the state of play has undergone a serious paradigm shift. But the jury is still out on the justification: what is the actual return on investment for social media campaigns?
The first issue is that analytics have lagged behind technology. Social media is still a neophyte in the marketing arena, and has been indulged in the way most youths are: the future is bright, the possibilities seem endless in such uncharted territory and experimentation has been highly encouraged. Combine that wide-eyed wonder with the meta-nature of digital goods, and the result is social media budgets feel more like monopoly money than real dollars and cents.
The second problem has to do with the qualitative modes of evaluation for existing analytics: What is the return on investment for a “Like”? When a company creates a viral video, how does a million YouTube views translate to profits? In a space defined equally by innovation and transience, companies are unsure of their objectives: a 2010 study by Internet Retailer Magazine found that 74 percent of businesses wanted social media to drive traffic to their websites, while only 56 percent wanted to use social media to increase sales. In essence, impressions are suddenly more prized than profits in a digital environment.
Not that marketers are not trying to develop more accurate methods to capture the impact of their social media campaigns. Early this year, Facebook announced a new “People Talking About” metric meant to quantify user behavior with hard numbers. Other metric tools, like DX Social from Data X, are aimed at teasing out the spurious relationships between social media ads and consumer engagement; and the 20-year-old customer relationship management agency Merkle has developed technology to combine a company’s extant client information with their Facebook interactions, allowing businesses to eventually determine a recipe for successful viral campaigns. But until that time comes, they opt to continue and even increase investments in social media advertising: a recent study from EMarketer projects that 3.1 billion dollars will be spent for these campaigns in 2012.
The good news? According to Adweek reporter Erin Griffin, while the formula for viral success is still in its beta stages, it is also close enough to being correct that businesses can more or less identify what it will take to create a potentially sticky campaign. It’s also clear that no matter what else you do, volume matters – and people value bonuses over brand. Give a consumer a steady stream of coupons and offers and they will continue to patronize your Fan Page.
Finally, there is a comfortable similarity between the traditional marketing funnel and that of social media, from reach to engagement, followed by action and next sharing and advocacy. But understanding what all that sharing and advocacy means in real money? We’re not talking monopoly money any more: this is a whole new game, with its own set of rules.