This blog posting is an edited and revised consolidation of a series of posts written byas an ongoing discussion on whether or not, and if so, then how to generate Return on Investment (ROI) calculations and performance metrics accountability to be used in evaluating Social Media Marketing campaigns, initiatives and the wisdom of making the investments they require.
Social Media Gurus - ROI Measurement... NYET!
As many of us in the automotive digital marketing and social media marketing communities have observed and witnessed, there are generally two perspectives put forth by two groups of social media marketing fans, users, service providers and practitioners concerning ROI calculations. One group argues that the primary reason ROI should NOT be part of Social Media Marketing operations and management is because the development of Social Media and related Marketing practices is so recent that a valid set of widely accepted Key Performance Indicators (KPI) that would be used to calculate the ROI have not yet been defined. Moreover, this "ROI-Not Yet" Group argues that trying to force ROI measurement practices upon Social Media Marketing investments would be counter productive and hurt the rate of strategy and tactics "Best Practices" development. This argument is further extended to support the idea that there is no valid reason to slow down the work on Social Media due to lack of ROI metrics. They argue that the right measurement metrics will emerge on their own and be generally accepted at some point in the future after strategies and tactics are more clearly defined and established.
Social Marketers - Those That Some Would Call "Car Guys"
Them there is the other group of Social Media Marketing practitioners that demand a more focused approach to measurement and ROI calculation. This group argues that even though social media is a recent phenomenon, the fundamental businesses principles that apply to all business investments need to be applied to Social Media Marketing – when car companies or dealers invest in a marketing strategy, they expect a return.
the idea that something is so recent, so new, so different that you cannot calculate the ROI is simply hogwash. Holmboe argues that measurement tools and techniques must be implemented to justify the headlong rush into implementing social media marketing, while pointing his finger back to the Internet bubble of 1990’s. In regards to Holmboe's perspective, Ralph Paglia agrees and is likewise committed to keeping an open and frank discussion on Social Media Marketing ROI, what it looks like, the measurements needed and how it can best be tracked, going within the Automotive Digital Marketing Professional Community.
Purpose of this ADM Blog Posting
To share Holmboe's ideas, recommendations, tools and insights while opening up a discussion amongst ADM Professional Community members that will further clarify the discussion. This post will explain and define different types of ROIs used for different social media marketing campaign purposes, and that there are multiple ways of calculating an ROI based on various sets of metrics. This revised article uses three different sections to make its case, and there will be follow up posts with updates and new tools as we find or create them...
In any automotive marketing campaign, dealers and car companies expect their returns in the form of profits to be more than the amount they invested within a pre-determined time frame. This type of ROI is used when dealers are seeking to determine which types of marketing investments yield the most amount of revenue and profits. In other words, where is the best marketing channel for the dealership to invest their budget
Is Reducing TDS a Valid Form of ROI?
There is another side to utilization of ROI analysis, which we have seen become quite popular during the past two years of recession and sales decline in the American auto industry. Dealers can also use the analysis that comes from an ROI calculation when deciding which types of marketing to cut in order to lower costs.
Hybrid ROI Calculations - Best of Both Worlds?
Then there is the hybrid of both ways to use Marketing ROI analysis. For instance, in the case of Service Reminders, you may use an ROI calculation to see the estimated savings on using Email and Social Media Messaging as a replacement for traditional "Snail Mail". Even though you are not able to measure an increase in service Repair Order written to those receiving the electronic reminders, since the response rate is the same, you are reducing the Total Dealer Spend (TDS) for that marketing function. Your service reminder marketing costs have been reduced, so you have a positive ROI.
What About Social Media Marketing Risks?
What few professionals have been willing to discuss within the subject of automotive social media marketing, is that when calculating the ROI of social media, you need to factor in any additional risks that are being taken by the dealership that are inherent to social media and absent from other uses of marketing budgets. Until FTC releases guidelines, and States Attorney General issue briefs outlining a dealer's responsibility with respect to advertising and disclosure regulations such as "Adverse Action Notification" and payment based, cash rebate or lease payment promotions communicated to consumers on dealer-sponsored social networks or within automotive community forums, the auto industry, and dealerships in general, will need to assess how risk-adverse they are. Those that are the least aggressive and most risk averse should resist using Social Media Marketing until their perception of risk has been reduced.
This Month, This Year and From Now On
As there are different ways best suited to calculating the various types of marketing campaign ROI, there are also different types of social media marketing campaigns. Let's use three types for the purpose of creating ROI categories:
- Short term
- Long term
There will also be social media campaigns that may not easily fall into an ROI analysis category, such as fund raising efforts, community outreach programs, public service messaging and even recall campaign and product launch support. Each of these non-ROI measurable types are defined by reach and messaging delivery rather than more traditional leads and vehicles sold.
In the following section we outline ways of calculating the Social Media ROI. Links included go to Jeremiah Owyang and Charlene Li of Forrester Research, Bill Johnston of Forum One Communications, and Lithium Technologies and Powered Social Marketing.
Above edited from 3 original articles written by Dag HolmboeSocial Media Marketing ROI – Which Group Emerged Victorious in 2010?