At LeadFormix we deal with many of the same marketing challenges that our customers grapple with. Not the least of these is how to extract maximum benefits from investments in social media. Sometimes you can’t measure the impact directly (or measure it at all) if the investments are outside the context of a campaign. The dilemma always reminds us of the question posed in Janet Jackson’s 1986 hit single. We believe we’re doing the right things with social media, but can’t always prove our case with hard facts.
Some people in our industry have more serious doubts. A few doomsayers have proclaimed the death or decline of social media – or at least have asserted that it’s well past the Gartner Hype Cycle “Peak of Inflated Expectations” and plunging rapidly towards the “Trough of Disillusionment”. As an example, the recent Facebook IPO fiasco was purportedly a market signal that social media will decline in popularity and importance. We disagree strongly because we believe it represents a fundamental change in the way people interact and how societies operate. At the same time, we acknowledge that social media has some significant problems, particularly for marketers who specialize in demand generation.
We’re concerned about these issues:
- Monetizing free platforms over the long term. At what point will users find advertising annoying?
- “Users as a product” as a viable business model.
- A vector for identity theft, privacy invasion and malware.
- Diminishing signal-to-noise ratio. Wading through the muck to get at interesting and useful stuff is frustrating some users beyond their tolerance threshold.
- No differentiation between truth, fiction, useful content or malicious intent. Any wacko with an Internet connection can command the attention of millions of people or endanger reputations.
- Determining ROI.
For demand general professionals, the last item is the most troubling. Social media analytics (as distinct from social media) seems to be sliding towards the Trough. Mountains of raw data and an overwhelming number of tool choices made inbound marketers salivate just a few years ago. The future looked very promising at that time. But unless you were running a structured initiative such as a campaign, it was difficult to understand exactly how social media investments yielded results on the bottom line. We don’t doubt for a moment doubt that they do; but the linkages have often been tenuous or absent, hence the disappointment with analytics.
If you are monitoring social media without active participation (e.g., to compare yourself to competitors or to find out what people are saying), then using social analytics is a no-brainer. In fact, that should be the norm for marketing organizations, especially if you operate in the B2C space. If you are investing to build your brand or to maintain competitive parity, using analytics is a no-brainer as well. There is a lot you can measure; and you can track progress against goals in an objective manner.
But tying social media investments to the bottom line? Frequently the best you can do is to correlate trends. Social analytics in their current form have limited utility, so marketers need a degree of faith when making educated guesses about investments. Online social network complexity and its impact on commerce are barely understood, even in academia. It’s no longer only about counting direct relationships between individuals (or between individuals and organizations), views and “likes”. It’s very much about the direct and indirect influence of groups and unconnected people; the impact of existing opinions; the nature of trust and how you build it; and the role of emotions. We know a lot about the behavior of crowds in a physical space, but less about behavior of crowds in a virtual space. How to measure, interpret and tie those feelings and behaviors to purchases and revenues is not very clear.
Perhaps we should redefine the scope of “R” in “ROI”. A broader view that encompasses non-financial returns (both tangible and intangible) paints a more realistic view of how the world actually works. But that’s fodder for a separate philosophical discussion.
In the meantime, businesses want tools and evidence to make rational decisions about how to allocate limited resources to social media channels, especially in the B2B world. Use whatever analytics are available, but many decisions will need to come from your gut. At the same time we’ll repeat the same advice we dispense frequently in this blog: What’s best for your business will be determined to a large extent by small scale experiments, measurements of results that seem relevant, identification of multiple independent variables and making reasonable inferences. Use what you learn to adjust the parameters of your next experiments. Repeat the cycle as necessary until you feel you have enough information to make the big investment decisions.