Pros and Cons of Social Media – ROI

Hi all, the following post is based our team – The Real World next Monday’s (7th Oct, 7pm) Google Hangout activities.   #smpro_con

Traditional Media ROI vs. Social Media ROI

In traditional media, communication is one way– content attracts an audience.  Based on counting the number of newspaper they sold and how many flyers they spread. It is much easier to form an idea of what the potential benefits a business could get from traditional media. Also, by using this, a business has a pretty good idea of who they are talking to, and the reach of their effort. Also they know how to evaluate audience respond, and figuring the ROI as a straightforward calculation to persuade investors.  Right?

Now, most of these effort are focus on social media.  I know even though on the marketing side, compare to the traditional media, the investment in social media is still not enough, however, no one could doubt that, social media is as incredibly complex as the millions of different personalities who log on to its networks every day. They are potential profit the organization want!  But, There’s not a clear direction/ strategy of communication and the benefits of social media is intangible and pretty hard to predict.  For example, when an agency post a post about your product on social media web site, the main focus of the public may be shift to comments section merely because of a unreasoned debate. And then, no one will focus on the original product, your revenue of this investment is hard to predict then. The reason behind this is that, social media integrates clicks, comments, follows, likes, pins, posts, tweets, and shares etc, and those actions may or may not translate to sales, which is hardly to predict.  To be honest, if giving sales a quick boost is the only reason an organization is on social media, then social media could only lead to failure and cost/waste much.

 

So, as the point of mine, benefits of social media is more based on following three points.

  1. Building brand awareness
  2. Growing targeted customer database
  3. Improving services and reputation

However, business’ reputation is really hard to manage based on organizational expect. This needs a good and experienced team with prompt and proper decision making/ strategies.

There is also several formulas and rules for organization to predict and calculate the ROI of social media online, however, these could be found easily and selected variously based on different managers’ experience and matter of fact of the organization.

Dis-benefits/ cons listed below:

  1. Unpredictable costs – software misfit, virus attack, increased member fees of social media etc. This could cause a huge damage and losing unpredictable money, as well as confidential information in somehow.
  2. Intangible costs – time consuming, unreachable campaign payback period. Estimation of a social media campaign always doesn’t work at all, and sometimes the payback period is relatively slow. Hence, during this period, the cost is very hard to estimate and record.
  3. Unpredictable revenue – how do an organization evaluate a customer’s database? Or how much is brand awareness?

Unpredictable revenue and costs let the ROI calculation been underestimate and unreliable.

As the result, businesses, small companies in particular, may lose their confidence of social media operation, as most of the investments are unforeseeable high and payback period is long. However, operating should not based on figures only, it is suggested that businesses should also consider and evaluate previous and peers’ investments as a baseline to come up strategies and make decisions.

 

Thanks  and Hannah for ideas support.

Comments and Ideas are welcome. Thanks all!

Chuan

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