In the spirit of asking for forgiveness instead of permission, I can’t tell you how very sorry I am for the title of this blog post.
Yes, it is just a shameless attempt at link bait. I’m really really sorry (cue Jim Bakker tears).
But now that you’re here, please read on. Because there is one really good reason why you don’t need to measure social media ROI.
Before I tell you that reason, let’s talk about the reasons that aren’t on the list.
“The ROI of social media is that you’ll still be in business in five years” is not only wrong and inane, it’s not a reason for not measuring SM ROI.
“Asking what the ROI of social media is is like asking what’s the ROI of your mother” is not only a demonstration of your stupidity (and a good reason why you should be fired from your job), it, too, is not a reason for not measuring SM ROI.
“The ROI of social media can’t be measured” is one of those statements that makes your senior management team want to beat the crap out of you, so let’s not put this on the list either, OK?
There’s really just one good reason for not measuring social media ROI:
It’s not worth the effort.
There are three elements to that statement:
- The amount of money you spend on SM is so small that measuring its ROI isn’t worth the effort.
- The amount of money you would need to spend to develop the capabilities to accurately measure the ROI of SM would effectively wipe out whatever ROI you’re generating.
- There are more important things for you to figure out how to measure.
These aren’t mutually exclusive statements. They’re all tied to the amount of money you spend on social media.
When I last asked financial institutions how much they were investing in social media as a percentage of their overall marketing budget, more than half said “too small to measure” which was the answer below “1-2%.” One in five FIs said they didn’t have a separate budget for social media.
So let’s say you work for an FI with $10b in assets, and you spend 1% of assets, or $10m on marketing each year. If one-half of 1% of your marketing budget goes to social media, you’re putting $50,000 into social media on an annual basis.
I’m not arguing that knowing the ROI of that $50k investment isn’t important. What I am arguing is that the cost and effort required to develop measurement capabilities might actually cost you more than the $50k you’re spending on social media.
The other point I’m arguing is that it’s my bet your marketing measurement capabilities regarding the other $9.95m that’s invested in marketing isn’t as good as it could be. Do you really want to invest $50k to improve the measurement of a $50k investment, or spend it to better measure the $9.95m investment? (Take all the time you need before answering).
Bottom line: The level of chatter regarding social media ROI is way out of control, and way out of proportion.
Gurus (and other morons) who try to redefine how ROI is calculated should be strapped in a chair and forced to watch Ben Affleck movies for 48 hours straight.
Gurus (and other morons) who have idiotic reasons for not measuring social media ROI should have their tax rates increased.
If you have other good reasons for not measuring social media ROI, I’d like to hear them.