Mack Collier, in a post at The Viral Garden, raises the question of ROI in reference to social media. He talks about a conference where a presenter talked about "Return on Interaction," saying you don't need to monetize
conversation. Someone then said you do have to figure out how to monetize interaction via social media, since "businesses are in business to sell stuff, not just to have a conversation."
Mack then writes, "Here we go again. Business doesn't want to jump into social media and have a conversation until they can figure out how to monetize that conversation."
He adds... "You don't have to; the conversation monetizes itself," offering the following formula as proof:
Communication=understanding=more effective/efficient marketing=lower marketing costs.
Mack's formula makes perfect sense to me, but I'm not so sure it'll fly in many boardrooms. I'd say most of us bloggers would get it and would wage a battle in the agency's or client's conference room to make sensible use of social media to engage in useful conversation with customers and prospects. But we, alas, are still the minority experimenting and learning what's possible and what works in this wild new frontier we've chosen to be a part of. Not every marketing exec, CMO or CEO knows much about social media and the power it can unleash on their behalf.
Those who get it might accept Mack's formula and say, let's do it.
But business is about money, and the reality is, most managers need a way to
determine where to allocate resources. It can be on hunch, or it can be
on a more solid measurement. I'd best most managers would go with the
solid measurement, whatever form it may take.
If we're looking
for ways to promote use of social media in marketing, then we'll also
have to figure out methods of measurement that we're comfortable with. Mack's formula may vary company by company, depending on how flexible
management is. But in most cases, there will have to be some formula, whatever it may end looking like. I don't know the answer. If and until there's a formula that becomes widely accepted, we'll probably have to develop our own that works for us and our clients or our bosses.
In the end, I'm afraid, it is about money.