Last week I attended the first meetup of the Mar­ket­ing & Tech­nol­ogy group, which turned out to be a great first meet­ing. Since the inter­sec­tion of mar­ket­ing and tech­nol­ogy is where I’ve lived and played for more than a decade now (since it was just a lonely cross­roads), I’m look­ing for­ward to see­ing the group grow and evolve.

The first meet­ing fea­tured a dis­cus­sion panel, to which Ryan Caligiuri posed a num­ber of ques­tions. Sev­eral of these had me want­ing to inter­ject, like the ques­tion of mea­sur­ing social media ROI (Return on Invest­ment), a prac­tice which some have com­pletely dis­counted as inad­vis­able or down­right impossible.

Per­mit me to interject…

In my view, the ques­tion isn’t so much if, but how. While it may be true that a lot of small busi­nesses don’t mea­sure the ROI for much of what they do, that’s no excuse for not mea­sur­ing it on social media. The prob­lem lies in the nature of social media and what kind of return it pro­duces: if you don’t under­stand these facets, you won’t be able to mea­sure its ROI effectively.

There’s no direct link between time or money spent on social media pur­suits and rev­enue. Some­times there may be a direct return, but this is the excep­tion and not the rule. Social media pur­suits have a grad­ual but cumu­la­tive effect over the long term, which trans­lates indi­rectly to increased rev­enue for your busi­ness. The more directly you try to align social media with rev­enue, the less effec­tive it will be, because it vio­lates the most basic prin­ci­ple of social media interaction.

In the text­book, Infor­mal Soci­ol­ogy: A Casual Intro­duc­tion to Soci­o­log­i­cal Think­ing (1963), William Bruce Cameron wrote:

It would be nice if all of the data which soci­ol­o­gists require could be enu­mer­ated because then we could run them through IBM machines and draw charts as the econ­o­mists do. How­ever, not every­thing that can be counted counts, and not every­thing that counts can be counted.

He was cor­rect, of course, and we find social media ROI much more in the world of soci­ol­ogy than eco­nom­ics. The issue isn’t that a baby uni­corn dies every time some­one tries to mea­sure social media. You must make efforts to gauge the effec­tive­ness of your mar­ket­ing activ­i­ties, and social media is no dif­fer­ent. It’s just that you first have to mea­sure engage­ment lev­els and not merely fol­low­ers or units sold. It’s a bit more com­plex, and you have to really get the indi­rect cumu­la­tive nature of the beast. In the world of old-school mar­ket­ing tac­tics, it’s more like cal­cu­lat­ing the ROI on a bill­board than on a direct mail campaign.

I’m reminded of a fan­tas­tic children’s story that I used to read to my kids, The Last Uni­corn on the Prairies by the late Win­nipeg writer Rick McNair. In the story, a group of barn­yard ani­mals goes in search of a uni­corn. Despite being taught what clues to look for, when they meet one face-to-face he’s wear­ing a hat, and only the horse rec­og­nizes him… and the horse isn’t about to give away his dis­tant cousin’s secret. Social media ROI can be a bit like McNair’s uni­corn that way.

The final word on social media ROI & uni­corn mortality

Social media ROI is not a straight-line cal­cu­la­tion, and so far I’ve not seen any­thing approach­ing a stan­dard method of arriv­ing at a value. Don’t draw the mis­taken con­clu­sion that it isn’t pos­si­ble — it’s a grave error to think some­thing impos­si­ble sim­ply because you haven’t seen it done yet. It’s even worse to prop­a­gate such think­ing. For now, I think you’re much bet­ter off to answer the ques­tion of whether your social media efforts are con­tin­u­ing to be effec­tive than whether they reach the desired ROI stated in sim­ple dol­lar values.

Note: no uni­corns were harmed in the cre­ation and pre­sen­ta­tion of this post.