An article on social media in the Financial Times yesterday intrigued me for a number of reasons, mostly because of the focus on marketing ROI and attaching a specific dollar value to marketing spending on social media. It’s as if we have been able to accurately calculate ROI for years…. Was it the television commercial, the print campaign, or the recommendation from a Facebook friend that really drove the sale? And does the customer even know?
Now don’t get me wrong, it’s certainly possible to approximate ROI for a pay per click campaign for an online business, but once we move beyond the basic click though to a shopping cart, things can get pretty muddy. Whenever your social media program is part of a larger strategic initiative, tracing specific sales can get very murky.
Here’s an example.
Oslo Fashions has been active in social media for a while. They have a blog where they publish twice a week, a strong following on Facebook, and have recently decided to run a GroupOn offer. Isabelle Hunter gets the GroupOn in her inbox, clicks on the offer and begins to check out Oslo Fashions. She ends up reading their “about us” page and checks out their Facebook page, as well as a few blog posts. She likes the image of the Facebook page and it’s content. She ultimately decides to “like” the page, and also subscribes to the blog. She even asks a few Facebook friends what they think of Oslo, and they give it the “thumbs up”. Ultimately, based on all the information Isabelle has gathered, she decides to make a purchase, even though the prices are a little bit higher than she is used to paying.
In this instance, most likely, anyone doing an analysis would chalk up the revenue to the GroupOn offer. However, if it wasn’t for the content on the blog and Facebook pages as well as the recommendations from Isabelle’s friends, Isabelle says she would never have made the decision to purchase. The problem is, Oslo Fashions will likely never know that the blog & Facebook activity were the ‘tipping agents‘ for Isabelle’s purchase — the marketing programs that actually closed the sale.
In reality, it’s often this way and has been for years. Welcome to the muddy world of marketing ROI. We sometimes think we are calculating ROI for a specific program that we call easily “measurable”. When in fact, if we have a multi-faceted marketing program, how do we really know which initiative closed the sale?
Many would say, well if it wasn’t for GroupOn, Isabelle would never have found Oslo. There’s a huge validity to that point if we are evaluating GroupOn as a lead generation tool. But if in fact we are evaluating the effectiveness of this marketing initiative as it pertains to customer acquisition, then a basic ROI analysis that only included GroupOn would fall short. What do you think?