Social Media ROI Not Well Understood

November 14, 2011

econsultancy-social-media-spending-and-roi-info-nov11.gif2 in 5 companies do not have a return-on-investment (ROI) figure for any of the money they spend on social media marketing, according to [download page] a November 2011 report from Econsultancy in partnership with LBi and bigmouthmedia. Data from the “State of Social 2011 Report” indicates that a further 26% say they can only attribute an ROI figure to a tiny amount of the money they spend on social media. Just 1 in 5 say they have an ROI figure for at least half of their social media marketing investments, representing a 23% decrease from 26% of respondents in 2010. According to a study released by IBM in October 2011, 62% of CMOs cited lack of ROI certainty as a barrier to using new technology, while 68% reported feeling unprepared for social media.

Problems with Measurement Down, But Remain

The proportion of companies responding to the Econsultancy survey that say they are unable to measure the value they have received from social media investment has dropped 21% from 2010, yet remains at a significant 37%. For those that feel confident measuring social media value, the results are mixed: 20% report social media to be less valuable than other marketing activities, up 18% from 17% of respondents in 2010, while a similar proportion (19%) say the value is greater than other marketing activities, up 27% from 15% of respondents in 2010.

The supply-side findings are similar, though slightly more encouraging: the proportion of agencies who say their clients are unable to measure social media value has fallen 38%, from 34% to 21%. Among those who measure value, 23% say they see a greater return from their social media marketing activities, virtually unchanged from 2010, while 21% see comparably less value, up 24% from 17% in 2010. One-third of agency respondents say their clients see similar returns than other marketing activities, up 38% from 24% in 2010.

Investment Increase Planned

Although many respondents struggle with social media ROI and value measurement, the vast majority of companies (79%) and supply-siders (87%) plan to increase their spending over the next year. The proportion of companies who expect their level of investment to remain the same has risen 25% from 16% in 2010 to 20% this year.

Site Traffic Main Metric

econsultancy-social-media-metrics.jpg2 in 3 companies report that direct traffic to their site is one of the 3 most important metrics used to assess social media activity, roughly double the proportion to attribute that importance to brand awareness (34%) and customer engagement (33%). Compared to 2010, the proportion signaling sales to be a top 3 metric has tumbled 48%, from 29% in 2010 to 15% this year. By contrast, sales (30%) and leads (23%) are far more important to supply-side respondents, although direct traffic (69%) remains the top metric among them also.

According to the Q2 2011 Quarterly Digital Intelligence Briefing from Adobe and Econsultancy released in July 2011, 91% of marketers believed social media traffic volume to be an important metric, although just 31% reported currently measuring the value of that volume.

About the Data: The Econsultancy report is based on an online survey of more than 1,000 respondents, carried out in September and October 2011. Respondents included client-side marketers (or PR and online communications specialists) and supply-side respondents working either independently or for a range of different types of agency or technology vendor.

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