Will Social Strategizing Bring ROI?

APRIL 22, 2010

 

One-half of companies have a social strategy

A majority of US marketing professionals claim social media is now “invaluable” to their business, according to April 2010 research from online marketing firm R2integrated.

While relatively few marketers reported social was pointless and overhyped or too complicated to deal with, most are still not increasing revenues or otherwise profiting from their social efforts.

Although one-half of respondents said they had a social strategy in place—considered critical for success in the social space—only 35% thought they were making money.

 

Strategy does help, though. Respondents who said they profited were twice as likely to have a formal strategy. They were also more likely to have staff dedicated to managing social media.

Marketers’ main goal in implementing a strategy was better lead generation, followed by brand monitoring.

The biggest obstacle for social strategies was not having enough data to come up with a measure of return on investment. Management buy-in was also a problem, and more than one-fifth of respondents said their audience was not active on social media.

 

“Marketers clearly recognize the need for, and see the potential of, social media, but are still trying to develop models that increase real engagement which then leads to profitability—if that’s a goal for implementing a social strategy,” said Matt Goddard, CEO of R2integrated, in a statement.

“Despite the presence and popularity of social media, many companies remain relatively unfamiliar with its practices, pundits, and principles,” he said.

Marketing management firm Unica reported in March 2010 that strategic integration of social with other marketing efforts varied by channel. MarketingSherpa found that in late 2009 only one-quarter of social media marketers had reached the strategic phase.

 

1. Integration. Becoming a "social business" (meaning true participation as opposed to leveraging social media as a new form of marketing) can impact nearly every function of a business. Marketing, PR, communications--even supply chain and any function that deals with employees. So where does it live? Is it a department? Do organizations hire a "Chief Social Officer" much like they would a Chief Technology Officer? All organizations will eventually grapple with integrating social into their entire ecosystem adopting either centralized, distributed or hybrid approaches.

2. Governance. Many organizations now understand that anything that can and will be said about them on the internet will be. The good, the bad, the ugly. And this includes content produced not only from the general public, but also from internal constituents such as employees. Organizations will not only need to begin actively listening so that they are in the know, but they will need rules of engagement for how they deal with multiple types of scenarios from responding to a compliment to dealing with a detractor to following up with an employee who just posted something inappropriate or sensitive.

3. Culture. All organizations fall somewhere on a spectrum of being "open" or "closed" meaning that they are either more transparent with how they operate and collaborative or they hoard knowledge internally. Consider that it's probable that the Zappos purchase by Amazon had a good deal to do with their notoriously open culture. Likewise, even Apple, which can be notoriously secretive, is benefiting by leveraging a strategy that opened up their iPhone application ecosystem. Sure Apple has a great deal of control over it, but for the first time in history, they have legions of people developing applications that run on their hardware. Organizations have the potential to benefit from embracing customers and employees in new ways, but will have to manage it intelligently and with purpose.

4. Human Resources. In order to transform from a business to a social business, companies are going to have to upgrade their HR protocols, as well as legal. And it's likely to be a never-ending process as new technologies continually hit the scene. Before there was Twitter, companies scrambled to publish blogging guidelines for employees, now the wrong tweet or Facebook status can get you fired. Organizations will not only need to update guidelines but actually train their people who may be leveraging social technologies for work. Customer service in particular comes to mind.

5. Measurement & ROI. Every organization will continue to struggle with measuring results and reporting ROI. Philosophically, this question can be answered with another question: "what's the ROI of e-mail"? But it's a question that won't go away. New social constructs will be needed to measure social initiatives such as attention (the size or number of participants actively engaged) or authority (the amount of influence a participant has in the ecosystem). Because social business is enabled by technology, it is by definition measurable. However, tying it to realized revenue or savings becomes more of a challenge.