My first post here was a parable about Social Media ROI. It's a pretty knotty problem for most Social Media specialists, because marketing and advertising were driven by a broadcast model for so long that quantifying even qualitative measurements was a relatively simple task.
In the broadcast model, the numbers are simple. It cost $X to make an ad, $Y to buy ad space in a chosen media and there are Z numbers of readers or viewers. These will convert into ABC number of sales/other metric.
When the online model was developed, the number were based on the broadcast model - the more eyeballs that saw the ad, the more visits and sales. That's the first mistake.
The other mistake is conflating advertising, public relations and social media.
Advertising is bought space or time on a media outlet with the sole purpose of promoting something. It is clearly a commercial relationship. No one expects ads from a company to be anything more than a one-way form of communication. Ads with "interactive" features still don't talk back to you when you have a question.
Public relations is a two way form of communications...but in two parts. The first part is one way - the company to you. They put out a standard message - it might be slightly customized for different formats or audiences, but the Press Release is a relatively standard message. As a result, you may want to contact the company. There can be a two-way dialog as a result of PR, but it starts off as a one-way communication. Think of it this way - there is no space for comments at the bottom of a typical press release.
These two methods are so ingrained in American business that it's hard to imagine that there's another way of communicating.
Social media is another way of communicating. It's a strategy for communicating.
Social media is not advertising. Your social media profiles can *contain* advertising, just like your website can. You can advertise on social media platforms. These are two good ways to monetize and partner. But if your social media strategy starts with driving people to your Fan Page on Facebook and all they get when they go there is press releases, you're going to find that you might have a lot of fans - but no real audience. "Fan"ning a page is not a commitment. And advertisement on Facebook is a tactic. The time you take to engage with Fans on your Facebook page is a tactic. The decision to engage with those people - that's a strategy.
Social media is not public relations. You can certainly put up links to press releases and other public announcements on your Twitter feed but, when questions come in, you need to have someone there who can respond to them. Otherwise, you've missed the boat. Deciding how you talk with people on Twitter is a strategy - the amount of time you take to talk with them is a tactic.
Tactics, like banner advertising, Search Engine Optimization, Search Engine Marketing, ads on Social Media platforms should be measured. If there is no out-of-pocket cost, it still takes time. Time you spend on LinkedIn, time you spend at professional associations - all of these can - and should - be measured. There is an ROI because time and money are invested. Set your goals, your performance indicators and make sure that you are measuring something meaningful. Your number of followers or fans may not be as meaningful as you think. Try measuring the number of Retweets or Shares you get. Think of them the same way you do number of hits vs visitors on a website. The first isn't really a meaningful measure.
Your strategy needs to have a benefit analysis. Cost in time and money vs what you think you'll get out of it - your tactics are what you are going to measure to make sure that that analysis is true.
Look for ROI in the right places and set your goals accordingly and Social Media will be a no-brainer!