The ROI of Social Media

Many people ask: “What is the ROI – return on investment – of social media?” Usually, they get two answers:

1. Some people – usually those who ended up engaged in social media because they are young, use Twitter, Facebook, Flickr or whatever other channel in their personal life, but don’t work in marketing or strategic communications – respond that there is no ROI in social media. Those people – far too common in the fast growing field of social media – do businesses a disservice. Besides being wrong, this keeps busineses from hiring a firm that understands marketing. After all, why should a business invest in something without ROI?
2. Others promise millions of customers and viral outreach. But this, too misleads.

Of course, there is an ROI of social media marketing, just as there is in any other marketing, advertising, public relations. Social media is a channel, a tool. It is a channel with unique rules, that requires specific marketing strategy, and that crosses disciplines – marketing, public relations, and even customer service, for example.

Instead of asking “What is the Return on Investment of Social Media?” perhaps companies need to be asking “What is the Return on Inaction?” or “What’s the Risk of Inaction?”

According to Forrester Research, “Consumers will rely on their peers as they make online decisions, whether or not brands choose to participate.” So, if you’re inactive, your customers are still talking about you … with someone else.

Radian6 asks this question to many marketing gurus . See what the top marketers have to say.

Gary Vaynerchuk (my own favorite guru, since I’m also a big oenophile) says that he doesn’t care if companies are on social media – because those that don’t are dumb and should fail.

While I wouldn’t call you dumb, are you spending your time too worried about the ROI of social media to actually be engaging in social media marketing? To actually hire a professional marketing consultancy, with a background both in strategic marketing and web-savvy, social media marketing? Or are you letting the kid down the block who has a Facebook profile and may be on Twitter handling the future of your business?

Because, really, as Gary V would say, don’t be dumb.

Social media is changing business. It’s transforming and evolving processes, customer service, and communication as we know it. Exploring investment return for social media is valid and necessary within a business framework. But equally important is carefully assessing the price for not being involved.