Commentary

Less Than Half of Marketers "Like" Facebook's ROI

by Erik Sass , Staff Writer, February 8, 2011

Judging by all the press coverage, Facebook represents the advertising Holy Grail -- but most marketers still have no idea if it's any good for, like, advertising. At least that's according to eMarketer, which recently published the results of a survey of chief marketing officers about their use of social media. Overall less than half of the 175 execs surveyed by Bazaarvoice and The CMO Club on eMarketer's behalf even knew what kind of ROI Facebook was delivering -- and of these, the majority rated it just "average."

Specifically, the eMarketer survey found that just 15.4% of the respondents believed Facebook was delivering "significant ROI," while 20.6% said ROI was "average" compared to other social media sites. A small group -- 8.6% -- said Facebook was failing to deliver ROI. Another 20.6% weren't using Facebook, and the largest group by far -- 34.9% -- said they didn't know one way or another.

These results may sound pretty mediocre, because they are... but Facebook was actually the leader in social media ROI in the eMarketer survey. For example, just 11.4% of marketing execs surveyed said Twitter produced "significant ROI," 12% said it was "average," and 13.1% said it failed to deliver ROI -- but a whopping 40% said they had no idea what Twitter's ROI was (the remaining 23.4% don't use it). For LinkedIn, "significant ROI" was 10.9%, "average" was 10.3%, "no ROI" was 18.3%, and "don't know" was 36%. For industry blogs and online forums, the "significant ROI" figure slipped to 8.6%, "average" was 23.4%, "no ROI" was 7.4%, and "don't know" was 37.7%.

All this paints a pretty dismal picture of the social media marketplace -- not so much because social media isn't working well, but because most marketers simply have no idea whether it's working at all. The same survey sought to determine which metrics are most popular for ROI, and the answer is "all of them": the responses were all over the map, and many of the most popular ones were also clearly insufficient.

Thus the top metric was site traffic, endorsed by 68% of CMO respondents, followed by number of fans/followers, with 62.9%, and number of positive customer mentions, also at 62.9%; while these may be a good start, I think most would agree they are no more than that -- a start. There were some moves to more concrete measures, but not many: the single big change in the top ranks was increasing popularity for "conversion," which jumped from 32.6% of respondents in 2010 to 65.7% in 2011. Meanwhile revenue, which strikes me as a self-evident winner for ROI, increased from 29.1% of respondents to 49.7% of respondents over the last year.

facebook, social media, twitter

5 comments about "Less Than Half of Marketers "Like" Facebook's ROI".

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Deanna Lawrence from Pallino1021, February 8, 2011 at 12:28 p.m.
We agree, Facebook has room to improve, but marketers must also better understand, how to effectively use Facebook as a way of engaging and then, connecting with people.
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Jean Renard from TRM Inc., February 8, 2011 at 3:12 p.m.

ROI is a fluid number. The question is "compared to what" and does anyone really have any other options.

Jonathan Hutter from Northern Light Health, February 8, 2011 at 3:28 p.m.

My guess is that most of these CMOs cannot define "effective ROI" for these campaigns. The loose terminology of "significant," "average" or "below" indicates the surveyor expected a lack of measurements going into the campaigns (and an easy out for a CMO answering the survey).

This probably starts with a lack of understanding of what Facebook can deliver as ROI, determining how this fits in with overall marketing goals, and using the channel properly, as opposed to because "we need a social media strategy."

Let's face it though, it's still in testing phase. Did people know what ROI other forms of advertising delivered until someone decided to actually try it and see what happened? Trial and error is an approach that provides direction.

Eric Junker, February 8, 2011 at 5:07 p.m.

There is one meaningful metric for our clients: did sales increase, decrease, or remain the same as a result of social media initiatives? Like many others in the field we are finding that facebook and twitter have little or no effect on actual sales numbers whether one has 1000 followers or 100,000 followers. Our experience managing social media (for some major brand) was confirmed by the Social Media Daily Post of January 31rst re:PEPSI). Social media enhances brand perception, but doesn't seem to motivate people to buy stuff. See link below.
http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=143883&nid=123220

Howie Goldfarb from Blue Star Strategic Marketing, February 16, 2011 at 9:52 p.m.

Pretty damning for Social in general. The insight numbers suck. They are completely unrealistic per post.