ROI

Social Media’s ROI is the Same as a Billboard

" Billboard  003" by  Roberto Nieves  is licensed under  CC BY 2.0

"Billboard 003" by Roberto Nieves is licensed under CC BY 2.0

Brooke shared a great link this week about how brands have, and continue to, struggle with tying their social media efforts and spending to return on investment. It’s a great post, and you should check it out, but it’s also a really frustrating one.

It’s frustrating because there seems to be a double standard when it comes to paid and earned media. Most mid- to large-sized brands have, at some point, purchased a billboard or radio ad, and felt good about it because it delivered them X amount of impressions. How do we get those impressions? Who knows. It’s an assumed based on, X amount of people drive by there every day, and that data comes from some traffic study done some number of years ago.

With earned social media, we know exactly how many people have seen an ad—that’s what branded social media posts are—how many of them chose to interact with it, and we can even take steps to roughly, but still pretty accurately, quantify how much actual revenue the ad generated.

Why, then, is earned media held to such a stricter proof of ROI than traditional paid media?

I’m not saying that social media shouldn’t be held to a strict proof of ROI. But I am asking why it seems so inherently easy to consider an ad buy of X impressions a success, while a social campaign with the same number of impressions would just as easily be looked upon with suspicion because it couldn’t prove a direct tie to business results.

I’m also not simply saying this isn’t fair—my point is that if you’re struggling to understand what social media can contribute to your business, you should ask yourself if you can draw an A-to-B line from your paid media efforts to your business’ bottom line as well. Because an Instagram post costs a hell of a lot less than space on a billboard, and in a lot of cases, it’s driving the same return: eyeballs.

Realistically, until we come to a Minority Report-style world where consumers’ every movements are tracked, there’s always going to be some level of educated guesswork with ROI. But it makes the most business sense to measure the effectiveness of all media efforts—paid, earned, traditional, non-traditional—against the question, “What does this do for the business?” and treat all answers equally.

When an ROI of Zero is a Good Investment

I went to see Neil deGrasse Tyson last night, and he brought up a great point about return on investment.

Someone had asked him what he thought about private companies venturing into space. He said he thought it was long overdue. But he also said that when it comes to exploring new frontiers, that’s best left to countries and governments.

Why?

Hypothetically, let’s say someone wanted to pitch a private company on traveling to Mars. Here’s (paraphrasing what Dr. Tyson said) how the conversation would go:

We want to go to Mars.
OK, how much will it cost?
We don’t exactly know, but a lot.
Is it dangerous?
Absolutely.
Will people die?
Probably. 
What do we get out of this, and how much money can we expect to make?
I don’t know.

The conversation’s over before it starts.

The thing is, America did this when we went to the Moon, and we’ve continued to do it in the decades since.

What’s the ROI of NASA? Their stated mission is “To reach for new heights and reveal the unknown so that what we do and learn will benefit all humankind.” Their annual budget for the last few years has been around $17 billion.

So the United States is spending $17 billion annually (less than 1 percent of total U.S. spending) to essentially look for stuff.

That may sound a little wishy washy, and it’s definitely why NASA gets kicked around politically whenever the U.S. Congress is faced with a budget deficit and needs to make cuts (which, when you consider that it only makes up 0.5% of total expenditures, is a complete waste of time). But in looking for stuff, we find or invent other stuff. Stuff like:

  • Cordless power tools
  • Scratch-proof lenses
  • Memory foam mattresses
  • Better shoe inserts
  • Temporal thermometers

(Here’s a whole hell of a lot more stuff that NASA has invented.)

And that’s without even starting to talk about the amazing discoveries that have been made about our planet and universe. This is all just ancillary stuff.

The point is, just because you can’t see the ROI of something doesn’t mean it’s not worth doing.

There’s value in trying to do something new, because even if you fail, you’ll have picked up things along the way that you didn’t have before, and that might come in handy in the future.

What’s the ROI? I don’t know. It could be nothing, or it could be everything you ever need.

--

@paulbalcerak