In 2009, social media was enthusiastically embraced by a growing number of companies who recognized its potential as a new and valuable communications, marketing and sales tool.
The attention on social media was propelled by the fact it’s becoming increasingly difficult to ignore the hundreds of millions of people using social media services such as Facebook, Twitter, blogs, LinkedIn, MySpace and YouTube. As well, the uncertain economic climate has encouraged many companies to explore creative ways to do business that don’t require them to spend a lot of money.
According to a recent study done by CMO Club and Bazaarvoice, 81% of chief marketing officers expect to attach as much as 10% of the annual budgets to social media investment next year, compared with 44% in 2009.
What’s particularly interesting, however, is that despite the excitement among CMOs in social media, at least half of the study’s respondents have some uncertainty about ROI. What it means is many CMOs are taking a leap of faith in social media.
To me, ROI is going to be the biggest issue within social media in 2010. While there’s been a lot of discussion about ROI in 2009, it’s really going to be thrust into the spotlight in 2010. ROI is going to be studied, picked apart, scrutinized and extensively tested as companies spend more time determining the benefits of social media and whether the money being spent generates returns that are as good if not better than other marketing programs.
The biggest challenge in determining social media ROI is defining the expected returns. For many companies, ROI simply means more sales. For others, it’s about more leads, increased Web site traffic, a stronger brand, being part of more conversations, better customer service, product feedback/development, community building, SEO and matching the activities of competitors.
In other words, social media offers a mix of hard and soft metrics. Some metrics such as sales and Web site traffic can be measured, while others such as better customer service and a stronger brand are more subjective. The question for many companies is deciding what’s more strategically important. If social media is about driving more sales, does is make sense to focus and spend on social media if all you are generating is great returns from the other variables?
Another key consideration for social media ROI is measurement, which is why social media measurement and monitoring companies such as Sysomos (a client) have attracted so much attention – and customers – in 2009. Using services to get an in-depth view of the social media landscape (monitoring, measurement, understanding and engagement) will become corporate necessities. And as much as there are plenty of free social media monitoring tools, premium tools offering more features will become logical and pragmatic choices.
The focus on ROI will be a practical and positive process. It’s an indication that social media is not only being embraced by businesses but becoming a key part of how they do business. As a result, investments in social media will face the same tests and scrutiny as other corporate activities.