I'm preparing a talk for the Austin, Texas branch of the American Marketing Association, and my topic is Social Media ROI (especially versus SEO and PPC).

Social Media

Social Media ROI

My emphasis in advertising and marketing is ROI. I haven't worked with Fortune 500 companies that have money to burn. The best clients we have are vigilant about how much money comes back from the money they spend on marketing. They want to know how the ROI of every advertising and marketing campaign compares to the others.

I'm always thinking about how to increase the results from Social Media marketing. I'm unsatisfied with increasing fans and friends, just as I would be unsatisfied with PPC or SEO that simply drives traffic to a client website. What matters is conversions, cost per conversion, and ROI. Fans and friends and clicks are part of the process, but we can't stop there.

Note: in this column I'm talking about Social Marketing for new business. I would treat social media applied to customer service and social media for upselling existing customers differently. I believe these latter two have great potential.

Social Media

The Upfront Cost of Social Media

As we design social media campaigns for clients, we spend a lot of time:

  • Brainstorming big ideas
  • Thinking through visitor psychology
  • Making sure sufficient incentives are in place to drive people all the way to conversion

The corresponding questions we ask are:

  • What would really turn people on, and fit the client and customer?
  • Are real people really going to do what we're suggesting? Would we do it?
  • Why should they do all that for us?

Maybe you can't ensure a viral response , but you can plan incentives and tactics, and hope that the combination creates a viral response.

In the process, I've started to wonder: is it always going to be this difficult? It takes a lot of creativity, brainpower, collaboration, and most of all time to conceive these campaigns. There's a cost to all that.

What's more, we may be tempted to follow the old advertising paradigm- agencies don't get paid for all the upfront work.  Clients may be loathe to spend money without first seeing an inspiring idea that makes sense. And if you're in-house, you might have to do the same work by yourself to convince upper level management to devote the money and resources.


Is Social Media Success Repeatable?

One of the things that gives SEO and PPC their positive ROI is repeatability. It takes less labor and less cost over time to get started if certain strategies work reliably and can be applied and re-applied to new campaigns. A lower start-up cost means an increasing ROI.

But is social media repeatable? I suspect the strongest viral campaigns and most attention-grabbing advertising derive a fair amount of their effect from novelty.

A potential problem with social media is: if copycat campaigns don't work well and you keep having to come up with something completely new every time, then conception/development time never shrinks, and ROI never increases.  You may streamline your conception process, but the cost savings from that are not as huge as those that derive from repeatability. That means social media remains expensive. Whatever ROI you're seeing after 6-12 months may be the extent of it.

The solution is to be good at quickly conceiving complete, new, powerful ideas. Likely, only a few will achieve that and they'll charge more for it. The cost problem remains.

A caveat: what I'm talking about is social media marketing for new business. I think that social media as customer service is smart, and social media efforts with previous customers to increase repeat business and customer lifetime value is a hot opportunity area.

We're Immune to Your Viral Marketing

An interesting related concept is this: if novelty is a large part of what makes effective social media marketing, isn't there a sort of immunity that people develop to previous campaigns? This fits with, for example, how Hollywood keeps having to push the envelope with new directing styles and technology to keep people coming to the box office. Yet there are also formulas (myths and archetypal tales). We sometimes feel we're being manipulated by the same old story with different actors and a new soundtrack, but sometimes we don't care, especially if it's skillfully executed.

I suspect the repeatable advances in social media will be strategic combinations of platforms and technologies (e.g. tweets that lead to a webpage with a social element that incentivizes you to spread a message to your network like this Hershey's Trick or Tweet campaign, or Dell's Outlet Twitter account approach for big brands), but the campaign's theme, words, ideas, and images will need to be novel.

The Post-Hype Social Media ROI Picture

hype Still, I wonder, after the initial hype surrounding social media dies down, in say, two or three years, how will the ROI look? Will we find that copycat campaigns don't perform? Will the less creative social marketing efforts be abandoned when they can't justify their cost? I believe social media customer service and social media customer upselling will survive. But will social media for new business ever beat the ROI of SEO and PPC?  I'm skeptical.

Brian Carter is Director of PPC, SEO, and Social Media for Fuel Interactive, a full-service online marketing agency specializing in the hospitality, medical, and legal verticals. Brian will be speaking January 21st, 2010 for The American Marketing Association- Austin, Texas.