Social media ROI vs. the value of your mom
Some say it’s fruitless to try to definitively measure the ROI of social media, but HubSpot’s marketing scientist, Dan Zarrella, believes you can measure the value of a Twitter follower or Facebook like—and he created a formula (and a handy calculator) that attempts to do just that. So does this answer the question posed by Gary Vaynerchuk about social media’s ROI being as immeasurable as your mother’s ROI? No, but it may be good enough.
Social media author Gary Vaynerchuk (who compared the question “what is the ROI of social media” to asking “what is the ROI of your mother?” (video [explicit])) diplomatically says he agrees “100%” with Zarrella.
Technology has dramatically improved the ability of marketers to measure the results of their efforts—online as well as offline. And while social media has been scrutinized for being more difficult to measure than other channels, no measure of marketing ROI (regardless of whether for TV, search engine marketing, or social media) is perfect. That’s because you can’t possibly attribute every single lead or customer to his/her source. There is a ripple effect of good marketing, which can only be estimated at best. It’s true for all media, but arguably more true for social media, because it is inherently, well, social.
Your ROI reports won’t give social media credit for that businessman who saw your tweet, went home and thought about it, and then called you the next day. Social media won’t get credit for the entrepreneur who contacted you through your website after her friend e-mailed her a link from your post on Facebook. Yet any measure of ROI that excludes these new customers is inexact. And Zarrella admits that while his formula can help you determine the value of your social media following, “It becomes more difficult when we want to understand how much time or money we should feel comfortable spending to build our reach.”
But, as with all marketing, what you need isn’t a perfect measure of social media ROI (although you should constantly be improving your ability to measure it). What you need is a reasonable benchmark against which you can measure success and on which you can iteratively improve. And that is what Zarrella’s “Value of a Like” (VOAL) formula can certainly provide—a very meaningful benchmark.
— Gary Vaynerchuk (@garyvee) December 9, 2012
Both Zarrella and Vaynerchuk have reasons to make their respective claims about social media ROI. They both earn their livings by helping businesses with digital marketing. Vaynerchuk owns an agency (VaynerMedia) and would understandably prefer not to prove ROI. Zarrella works for a software company (HubSpot) that has an interest in convincing businesses they can calculate the ROI of social media (because hey, maybe HubSpot software can help). Either way I respect both of them – they are both very good at what they do.
Image credit: flickr.com/deltamike