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Where’s the ROI for Social Media?

By James Tenser

An Instant Poll on the home page of CPGmatters.com sheds some light on an important part of social media
evaluation; namely, ROI. Every CPG company of consequence has a social media strategy nowadays. So do
marketers think social media is a success?

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 retweets 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.


James Tenser is Principal of VSN Strategies, and also Director of Industry Relations for the Shopper Technology Institute. More info: www.vsnstrategies.com.