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Reflections on the Social Media ROI Charlatans


April 26, 2013

Doug Hadden, VP Products

There’s an amusing Adobe advertisement about the ROI of social media. The irony that the advertisement is injected into on-line entertainment through interruption seems lost to the marketers at Adobe. Social media is an always-on and non-linear experience. It’s profoundly digital. Advertising is industrial, electronic, linear and interruptive.

Social is a network

It is true that digital tools enables tracking on-line behaviour. People do not spend all of their time on-line.

Yes, you can inject an advertisement into social media. You can track clicks and buys. But, you can’t “traceroute” the always-on network across time and platforms to find how social media may have positively or negatively influenced a complex buying decision such as Government Resource Planning (GRP).

And, buyers are no longer investigating solutions and making decisions based on linear processes – expect simple consumer decisions. Social has significant influence on consumers and companies have limited ability to control brands.

Social is what social does

Social is not yet another broadcast medium. Social is a business model. Companies who understand social recognize that authenticity is necessary in off-line and on-line. We sponsored a Public Financial Management (PFM) event a few years ago. A major ERP vendor was our neighbour in the trade show area. It is unusual for major ERP vendors to attend these events. When they do, it is even more unusual to see the vendor staff at conference sessions. I asked one of reps who pointed out that they only attend conferences with a “clear ROI.”

The irony, today, is that this very same vendor promotes a software application that purports to help companies become more “social”. Yet, there is no interest in engaging the PFM community in discussion. They’d rather create roadshows and sponsor yacht races.

Social is operating within the network

ROI assumes cause and effect. It’s a crude instrument in the digital era. Digital has brought the shift of power from companies to buyers. From governments to citizens. Social organizations operate within the network. We engage the network across the entire spectrum of what we do. It’s not about “sales” or “customer service”. It’s about everything. Business development, product innovation, methodology, sales, influence.

Organizations that broadcast into social media operate out of the network. Organizations that operate within the network develop credibility and authenticity. I follow our ERP competitors on Twitter. The vast majority of tweets are about the ERP vendor. It’s PR at 140 characters. The vast majority of tweets that we do are about the domain: technology, public finances, aid, governance.

While the social media charlatans try to measure the sales and customer service ROI, we find significant value in learning market trends. In improving products to better serve customers. To predict future needs. To interact with leading lights.

Make no mistake, PR is an industrial process. Press releases go through editing processes to ensure brand consistency based on the organizational myth. Tag lines and “about us” have been approved by committees. It lacks authenticity. People can tell the difference.

Content marketing is the new “horseless carriage”

The notion of “content marketing” where companies provide some content of value is a new market trend. Customer-centric companies have been developing useful white papers and case studies for years. These companies understand that they must provide compelling value and demonstrate that value.

Current ROI processes are the equivalent of evaluating automobiles in terms of carriages. Television in terms of radio. Blogs in terms of print newspapers.

Towards a better ROI

ROI needs to mature from linear to network analysis. And, ROI should not be leveraged as the mechanism organizations use to not adopt digital technology. We need to move the conversation away from metaphors like the “digital assembly line” to network concepts. This includes analyzing long-term results from in-network and out-of-network vendors across sales, profitability and customer satisfaction dimensions.

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Doug Hadden

Doug Hadden

Executive Vice President, Innovation at FreeBalance
Doug is responsible for identifying new global markets, new technologies and trends, and new and enhanced internal processes. Doug leads a cross-functional international team that is responsible for developing product prototypes and innovative go-to-market strategies.

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