If 82% of TV ads generate negative ROI, why are we obsessed with social media ROI?


82% of TV adverts generate negative ROI, according to the book The Social Media Management Handbook: Everything You Need to Know to Get Social Media Working in Your Business, written by a team of three from Accenture.

If this is actually the case, it begs the question: Why are we all so obsessed with social media ROI?

Given that the first TV ad was broadcast over 70 years ago, and social media has only really come to the forefront for business use in the last 5 or so years, it make little sense that brands and businesses are reluctant to invest in social media due to a lack of hard ROI statistics, but are happy to pour millions into TV advertising.

So why is this the case? I’m not really convinced that brands and businesses themselves understand why social media ROI is so fundamental to its adoption. Is it because the likes of Facebook and Twitter are still viewed to be ‘free’ thus there is a reluctance to invest? Or is it a case of waiting to see if someone comes up with the equivalent social media metric for what ‘reach’ is to PR?

To me, I think we’re obsessed with social media ROI because social media, unlike TV advertising, is so much more than just another channel.The smart brands and businesses want a social media strategy that includes measurements, KPIs and metrics that deliver value across the whole business, rather than just for PR, marketing or other one-off initiatives.

This type of adoption- social business- requires uptake from the top level down, cross market, cross department and cross discipline. And for businesses to invest in social media in this way,  it’s vital to understand the value it can generate before taking that leap.

Becoming a social business, and using social media in a way that is potentially transformational to an organisation, requires heavy investment in both financial, resourcing and strategic terms. So for business to willingly adopt this model it’s wholly understandable to see why we’re all obsessed with social media ROI.

Social Media ROI and Obliquity


image via FlickR courtesy of LucyFrench123

image via FlickR courtesy of LucyFrench123

“The problem with brands in social media is that they act like 19 year old dudes”.
Yelled Gary Veynerchuck at SXSW, excited as ever.

His point was that there is a tendency to approach every interaction with a single goal - sex for the dudes, sales for companies. And to rush towards that goal without pausing for breath.

I have been reminded of Gary’s comment a few times this week. Mostly by the economist, John Kay.

John has a new book out: Obliquity – why our goals are best pursued indirectly. And as a result he’s cropping up everywhere at the moment.

The premise of his book is that the greatest, most profitable companies achieve success as a result of focussing on higher ideals than cash generation. This is not an especially groundbreaking theory - I’ve rarely met a successful entrepreneur who was primarily money-motivated. However I do think he has coined a super phrase and one with a distinct social media relevance.

Obliquity - why social media goals are best pursued indirectly
Success in social media rarely comes from being the 19yr old dude. Sustained social media ROI relies on building realtionships, not converting one-night-stands. The tools of social media provide a new form of communication. As a result they can help you improve products, processes and customer relationships. An indirect, or oblique benefit, might be more sales.

However, obliquity is a tough message when you’re a nervous marketing manger who only likes to spend money on safe bets where ROI has been proven upfront or in advance.

The tragedy of social media is that “digital can be measured”. This drives a desire is to spend £1 and get £1 and 10 pence back before investing more. Whilst such an approach is fine for Google Adwords or other search marketing, social media plays by different rules.

Please don’t act like the 19yr old dude. Customers can spot it a mile off. You’re far more likely to achieve social media ROI if you focus on a different (oblique) business goal first. Use social media to engage customers. Use social media for deeper customer insight or to improve your customer service. The cash will follow.