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RSSSocial media is all about influence and, like it or not, everyone who participates is an influencer. Social media decides what's in and what's out. Social media allows brands to be amplified or destroyed in the blink of an eye. And social media is as fickle as a high school lunchroom. I am not just talking about MySpace and Facebook here -- although they do represent a sizable chunk of social media. Social media is all media developed by, incorporating or facilitating the formation of community for the purpose of self-actualization. This definition includes everything from major media's online video components to upstart video-sharing sites, from the MySpaces of the world to the fledging baby boomer social networks -- and everything in between. And what social media delivers for investment can't always be captured in clicks and actions. What social media delivers in return for investment is cultural and generational influence.
Positive return on investment is a great thing; however, just looking at traditional return on investment skips an important step. Advertisers and agencies need to be looking to maximize influence obtained through their investments, and return on that influence should be the end goal of the total investment. Important to remember is that investment to obtain influence can take a number of forms. The easiest way, obviously, is to look at dollars spent, but influence isn't always for sale (at least not in an efficient manner). The pivotal balance for maximizing influence obtained through investment is to balance investment in creative, which enhances the content in which it resides, with investment in purchasing distribution for said creative. There is any number of ways to optimize a particular combination of creative and distribution, once you find the right platforms. It's true that social media means more expense on the creative side, since it demands greater content pull, and explicit acceptance of messaging, than traditional media does. But social media does not eliminate the ability to purchase distribution, as there can be a number of advertisers able to produce creative relevant to a particular piece of social content.
The battle isn't over once social media decides to lend an advertiser its influence, since advertisers then need to capitalize on that influence. This means controlling the message, not to garner a single transaction, but rather to leverage the influence lent to the advertiser for its investment to build premium brands that command premium margins. I am still not sure why I buy Coke or Pepsi instead of the cheaper store brand, but I am pretty sure it has something to do with this factor. Maximizing return on influence is again a balance, a balance between investment in creative messaging (back to relevancy) and ensuring that online brand experience/messaging resolve in the real world. Making sure the experience resolves in the real world is 50% product quality and 50% product availability. Insuring premium product quality may be outside of marketing and advertising's control, but ensuring that the premium product is available (for its premium price) to social media influencers and those influenced (commonly one and the same in social media) is promotional marketing at its finest.
Return on influence takes into account the lifetime brand creation and/or lift delivered by brand advertising within social media. Now their devil is in the details; how do you calculate influence? How do you create an efficient market accessing influence? How do you measure the effectiveness of your social media campaign when the campaigns goals aren't to drive immediate actions (or if immediate actions only represent a portion of the total value)?
The takeaway is this: if all advertisers are looking at is immediate return on investment, there is a good chance they are missing the real potential for maximizing their investment in social media -- and probably spending way too much in the process. But it's not the advertiser's fault entirely; the platform hasn't been built that efficiently facilitates accessing the type of brand-building influence offered by social media ... yet.
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My blog article "Is Your Marketing Just A One Night Stand..." addresses this issue as well.
As a point reference, I offer that the same was true in 1995 regarding the effectiveness of advertising on websites. The web provided an opportunity for brands to engage with their customers, to make an impression on them that mere TV or print could not. We made many of the same arguments you (and all of us) are making now and initially tried to relegate perhaps the most effective direct marketing tool in history to simply an immeasurable branding opportunity.
I believe social media has a measurable and direct impact. I believe it lies in quantifying a users' network (friends, connections, etc.), but I don't think it's that simple. There is a contextual element to influence as well which means that just because I have 1000 friends on MySpace doesn't mean I can convince them all to visit a site or view a video. But at the end of the day, that's what really matters. How many people can I influence to take an action on behalf of an advertiser. I think we could move this discussion forward further by embracing some traditional measurement.
But let's not lose sight of the ultimate measuring stick of marketing...ROI. We have to generate more new revenue as a result of our marketing efforts than we invest in those marketing efforts, or the campaign is a failure.
What's missing here is the formula we use to determine the actual return. Before we could calculate a cost per click, media worked with some loosely defined metrics. Aside from direct mail, phone centers and a few coupon campaigns, there was not a lot of data to accurately define how well a campaign worked. Did a television campaign for a car work when it drove customers into the showroom the next day? Did it have an impact (or influence) on a customer who was in the market for a car six months later? Measuring and quantifying the latent effect of advertising is nothing new.
Measuring the latent effect of influence is no different - except that it brings us full circle. In a new media environment where we expect to know the click-throughs and conversions of every campaign, we now struggle with results (and returns) that cannot be measured.
Returns are returns...not a question of if, just a question of when.