"Return on Influence" Is Social Media's New ROI

Tuesday, February 27, 2007
ROI Is Social Media's New ROI
By Joe Marchese

Looking for ROI on your online marketing campaign? There is a 50% chance you are looking for the wrong thing. That's because ROI is out -- the new thing for increasing sales and building brands in social media is ROI. What I am saying is that before you can really discern return on investment, you need to understand how you are going to achieve influence for investment and return on influence.

Social 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.

Joe Marchese is President of Archetype Media, developing the next generation brand advertising platform, and aiming to bridge the gap between Madison Avenue and Silicon Valley.