Strategic Internet Marketing: Four Perspectives on Social Media ROI

ReadWriteWeb recently posted an article based on a Forrester analyst report called “If You Think Social Media Marketing is Worthless, You’re Probably Doing it Wrong” and I tend to agree.  The only adjustment I’d make to that title, and a point the author hits on later in the post, is that even if you are doing it right, the way you’re measuring its effectiveness could be wrong.  Right now, there are hundreds of articles, blogs and statistical reports available that can show you why social media marketing is necessary, why having an online marketing strategy reaches your target audience, and the ways you can get involved now, but the remaining problem is this: if you are measuring the wrong metric and asking the wrong analytics questions, you will miss the value of what you’ve created.

The report showed that most marketers and executives are focused solely on the monetary gains from social media.  Of course, all businesses should pay attention to the revenue generated by any marketing initiative, but that direct metric does not go far enough to do the social side of social media justice.  The author points out that “beyond clicks and coupon redemptions there lies a case for social media marketing that shows its value is well beyond what we see on the surface,” which is where the four types of online marketing ROI come into play.  Forrester marketing analyst Augie Ray breaks them down into these four categories:

1. Financial: Since the inception of the online marketing campaign, how have revenue, profits and costs changed?
2. Brand: How have consumer perceptions responded to the social media involvement?
3. Risk Management: How does the social media marketing strategy impact the business’ ability to handle challenges to its reputation?
4. Digital: How has the company’s digital status changed?

Considering the effectiveness of strategic Internet marketing from these four perspectives takes into account the online social standing gained by fans, followers, tweets and retweets that have built community, not just directly converted a reader into a lead then a convert. That conversion process is the end goal, but to get there, marketers must understand a holistic picture of what is built using social marketing strategies and pursue the online community involvement. Individual social media activities may not directly increase revenues in the short term, for example: an increase in the number of retweets your microblog receives does not translate directly into sales.  But increased visibility among target customers builds the foundation upon which social media engagement can drive measurable long-term ROI, such as when a Twitter follower who has been engaged by your businesses messaging for several weeks eventually clicks on a link and makes a purchase.

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