Social Media Isn’t Free, But It’s Worth It

Don Power is the Managing Editor of Sprout Insights, a blog by the company Sprout Social, which also offers social media management software. He writes content and edits articles produced by other contributors. Don is also a Social Media Consultant and Professional Speaker. Connect with Don on Twitter: @donpower.

In response to questions about the ROI (Return on Investment) of social media, entrepreneur and social media juggernaut, Gary Vaynerchuk, is famous for his reply: “What’s the ROI of your mother?”

According to Vaynerchuk, it’s just understood that one’s mother (like social media) has an intrinsic value and trying to measure that value is unnecessary. When it comes to social media, Vaynerchuk’s advice is simply to stop measuring and start doing.

On the other hand, Mark Schaefer, social media advisor and author of “The Tao of Twitter” says: “As marketers we should measure EVERYTHING. And generally, we can. It’s imperative that businesses evaluate the resources spent on social media to determine whether those resources are producing positive results. If you’re in business, chances are you are trying your best to make a profit. If you’re using social media as part of your marketing strategy, then you need to know if that strategy is paying off.

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So, is the investment in social media worth it? Does it provide a positive return on investment? Whether it’s in terms of person-hours spent engaging on social media, money paid for social media management tools or additional staff, there is growing evidence to suggest that the answer is “Yes!” Here’s why.

The Myth of Free Social Media

Although participation in social media is technically free, there are still costs associated with this activity. Perhaps chief among these is the physical time it takes to engage meaningfully with your target audience.

If you haven’t assigned a dollar value to the time that you and your staff are spending on social media, you’re not alone. According to a recent survey from Awareness Inc., 57 percent of marketers said that they “have not allocated budgets to social marketing, but rely on people resources”. Yet these marketers must be realizing a positive return on investment, since in the same survey 78 percent of respondents said that “expanding social reach” will be a major marketing initiative for them in 2012. Like any form of business marketing, you have to allocate an appropriate time frame before you can expect to see results; an investment in social media is no different.

Social Media Marketing Vs. Traditional Advertising

Some business owners may still be inclined to scoff at social media and the time investment it takes to produce results. They may prefer to forego the effort of social media marketing in favor of traditional advertising instead. Not Jonathan Kervin. Since investing his time into social media marketing for his inbound marketing agency, Jonathan has seen traffic to his website increase by ten fold.

“Before social media, I would have spent upwards of $1000 a month on advertising to produce that kind of traffic,” says Kervin. When asked if he’s come out on top of the ROI equation, “Definitely!” he says.

Kervin also takes issue with those who say traditional, or even online-advertising doesn’t take the same effort or committment as social media. He says, “What about the time it takes to research and fine-tune your ads, what about split-testing different versions? This all takes time and money.” No matter what type of advertising you’re doing for your business, you have to make strategic investments to produce positive returns. Now, says Kervin, “instead of money, I invest my time.”

What many business people also tend to overlook when it comes to investing in social media is that you can create reusable social content like videos, podcasts, blog articles and so on. These marketing tools continue to promote your business long after you’ve invested the initial time to produce the content. “I’ve gotten better at social media”, says Kervin, “now that I have the learning curve out of the way.” The bonus, he says, is that “now I have all this content and it’s producing traffic for me even while I’m sleeping!”

It would seem that if you compare the time commitment of social media vs. the money committment of traditional advertising, social media has its advantages particularly if your business is on a tight budget. Factor in the hands-on marketing training and reusable advertising content you produce while investing your time in social media, and the relative dollar value of social media marketing is something a business person can no longer afford to ignore.

Facebook Fans Worth $50 Million

You may have seen the chatter on the Internet asking: “What’s a Facebook fan worth?” Well, according to beer company, New Belgium, the answer is 50 million dollars. More precisely, when the company surveyed its Facebook fan base, it calculated that each member spent an average of $260 on its products. Collectively that amounts to approximately $50.7 million in annual revenue. For an initial social media investment of $235,000 “mostly dedicated to Facebook,” that equates to a very positive endorsement of social media ROI.

Of course, not every business has the social media budget of New Belgium brewery. In fact, the Awareness Inc. survey (mentioned earlier) found that only eight percent of businesses spent over $50,000 on their social media budgets in 2011. Still, as we’ve seen in the above examples, you don’t need to break the bank to get positive results from social media.

Even if you don’t generate immediate sales from social media, there is immense business value in using these social platforms. Whether it’s increasing awareness of your business to a global audience, providing transparent customer service, or establishing relationships with future customers, the results of your social media activities are tangible, measurable, and definitely worthwhile.

[Sources: watermill3, B2C, Awareness Inc., Usa Today; Image credit: D. Sharon Pruitt]

5 Social Media ROI Myths Blown Wide Open

1920s businessman Jon Wannamaker once famously quipped: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” Fast forward almost a hundred years and many businesses are still saying basically the same thing: “I’m investing in social media, but is it paying off?”

There’s a lot of conflicting information about the value of social media and whether it can provide a positive return on investment (ROI), but social media has become so entrenched in the way that your customers interact with each other and your brand that you have no choice but to embrace the phenomenon.

Will you get more out of social media than you put into it? Will you ever see a return on your social media investment? If you want to stay in business, you’ll have to recognize that the answer is yes. But if you still have doubts, consider the following five myths concerning the ROI of social media.

5 Social Media ROI Myths Busted Wide Open

ROI Myths Busted (credit:

Myth 1: Social Media ROI Is About Direct Sales

It’s easy to think of the standard return on investment model: Invest “X” amount of dollars in marketing to generate a return of “X + some acceptable margin” in sales.

This is a good model, but a good investment is not always measured in terms of the sales it directly generates. For example, what about market research? You need to know about your customers and what’s important to them in order to offer the products and services that they will buy. And what about your competitors? It’s a good investment to know what they’re up to so that you can tailor your products and services with a competitive edge.

For example, Facebook — with its members’ willingness to tell everyone about the brands they “Like” — is a plethora of market research and competitive intelligence. It’s free for a business to set up a Facebook Page and to start collecting data from its customers and prospects. If your investment costs $0 and generates any actionable information (like market research or business intelligence), then by definition, this investment has a positive ROI.

Customer and competitor research may cost money or time, yet the best and most successful businesses are conducting these activities all the time. The businesses that are getting the best return on investment are those that have ported these activities into the realm of social media.

Myth 2: Social Media ROI Can’t Be Measured

Yes, it can. We’ve already busted the first myth that social media ROI has to be all about direct sales. Try taking a step back to measure what actually led to those sales in the first place. Is a given sale the result of an online referral? Has someone arrived at your sales page from a social media platform like Twitter or Facebook?

Those type of metrics are actually very easy to measure. For example, you can use our social media management tool Sprout Social to measure how many times your business is mentioned on a variety of social media platforms. You can even search for phrases like “I’d recommend brand X” to measure how many times your brand has been recommended to other people on Twitter or Facebook. Capture your customers’ social media information when they make purchases and correlate that data with mentions of your brand online.

You can also use very powerful analytics tools, like Google Analytics, to measure how many people arrive at your website or sales page through social media. Once you get a good idea of where your target audience is coming from, you can increase your social media efforts on the platforms that bring you the most traffic.

Myth 3: Social Media Customer Service Has a Negative ROI

Many businesses are fearful of opening up their customer service and support functions to social media. The common misconceptions are that you’ll have too much negative feedback on display for all to see, or that your staff will be overwhelmed by customer service tweets and incoming Facebook updates.

The fact is, your customers are already talking about you on social media. If you are not there to address customer complaints (or compliments), these incoming missives can take on a life of their own — beyond your control. Using social media as a customer service tool, you can address both positive and negative comments from your entire customer base. Not only does this model of customer service produce a positive ROI in terms of staffing, it can also introduce your brand to new customers — especially when your existing customers broadcast their positive experiences to their social networks.

Myth 4: Everyone Is Doing a Better Job Than You

We’ve all heard the expression “the grass is always greener on the other side of the fence,” and of course we know it’s not true. If your business is new to social media, you may think you’re already behind other businesses when it comes to realizing a positive return on your investment.

The fact is, many businesses area still trying to figure out the best way to effectively utilize social media. For example, a recent study by Socialbakers shows that only 5% of Wall posts on brand Facebook Pages ever receive replies. This kind of startling metric provides a real opportunity for your business. By investing the time and effort to make your social media presence more engaging to your followers, you’ll have a real advantage over your competition.

Use this competitive advantage to make your brand stand out as a social media leader. Use social media to become known as the brand that listens and responds to its customers. Before long, your followers will be singing your praises through social media, and drowning out your competitors’ voices in the process.

Myth 5: Social Media Is Not Worth The Investment

Often, when brands are just starting out with social media, there’s a steep learning curve and many think “what’s the point?” As you’ve seen in the above examples, social media provides increased awareness of who your customers are and what’s important to them. Social media is also a powerful business intelligence tool that you can use to monitor and outperform your competition.

The social media audience is also becoming a purchasing audience for the brands that are represented there. For example, a recent study found that more than half of the people that follow brands on Twitter are more likely to buy and recommend those brands’ products and services. Brands that have not invested the time or effort to get on social media are missing out on potential sales and powerful referrals.

The social media phenomenon appears as though it’s here to stay. If your business has not yet embraced social media because of your uncertainty about its ROI, the best advice is simply to get in the game and start busting a few of these ROI myths for yourself.

Don Power is Managing Editor of social Web business guide Sprout Insights, and is a social media consultant and speaker. Sprout Insights is a property of Sprout Social, a company that provides social media monitoring and analytics tools. Sprout Social is an official partner of The Social Penguin Blog.

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There Are Still Too Many Social Media Phantoms Out There

My views on people (and agencies) posing as social media ‘experts’ are well known. I’m not about to go on another rant about ‘gurus’ I promise. Bear with me on this one.

Social Media Week has just wrapped up in Glasgow. It was a great week, with a really diverse range of events (massive respect to the organisers for running it so well). During the week I attended an event that focussed on ROI from social media and how you can measure it. It was held by a ‘full-service’ digital agency based in Glasgow and London. I always enjoy hearing other people’s perspective on social media as a marketing channel and the ROI debate is one that appears to have some serious mileage left in the tank.  The speaker from the agency in question took the stage and ran the audience through a typical intro to social media (cliché after cliché). After this, the topic changed to measurement and trying to prove ROI…

We were taken through a talk on some very basic metrics that can be accounted for. That was about it. No insight in to how these are used to prove value, assess effectiveness and shape the way a business uses the channel. The speaker used the old ‘social media is not about sales’ line which we all know is accurate to a certain extent, although I believe there has to be business actions coming from social media activity or serious questions will be asked. I think this speaker and the agency the speaker works for are likely hiding behind this excuse. I judge this on what I saw in front me and nothing else, to me, I think if you are given the opportunity to speak to an audience about such a well-versed topic, you need to get up there and really go for it, get people thinking and give solid advice and examples.

He is a Good Phantom. (image -

After the show was over, questions were invited from the floor. There was a barrage and not in a good way. The type of question that was being asked pointed to an audience that felt severely un-enlightened by what had unfolded before them. One person asked ‘are you guys tracking clicks through to websites and the outcome of those?’ The answer – ‘no that’s not possible at this time, it’s in beta with Google’. Really? Dear lord. Oh and did you know that Brandwatch is exactly the same as

I’m not attacking the speaker here. The agency should never have put the individual on the stage. At one point the boss of the agency asked the speaker two questions that the speaker really struggled to answer. It was painful. The whole thing got me thinking, how many agencies are delivering true value to the clients that decide to spend their no doubt tight budgets on their services? If an agency is happy to work on a basis that ROI is ‘very difficult to prove’ and the client is happy to pay on that basis, then good luck to them. For me, this approach just devalues the work of people and agencies that are really pushing to de-mystify the social media channel, ensuring they are on the cutting edge of the game and ultimately delivering value that not only does all the nice fluffy engagement and brand building stuff that all and sundry preach about, but also actual bottom line results.

Will the wheat eventually be separated from the chaff? Or will businesses continue to be blinded by the ‘ROI is so hard to prove’ line? Thoughts would be appreciated…


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