Is ROI getting lost in social media?

According to a recent study by the Harvard Business Review, nearly one-third (31%) of companies surveyed do not measure the effectiveness of social media and less than one-quarter (23%) are using social media analytic tools.

With social media, a return on investment (ROI) is not just a monetary value–it could be a return on engagement, participation or involvement. Companies can measure the duration of time consumers spent interacting with the brand, the value of time spent participating in social media, touchpoints and the potential return of each touchpoint. A social media return can also be a return on trust, measuring customer loyalty and the likelihood to give referrals.

Let’s look at an example–McDonald’s recently ran this (see video) interactive billboard campaign in Sweden. The innovative campaign combines the use of mobile technology and digital billboards. The concept is simple–participants get to control the billboard and turn it in to a personal game. You don’t have to download an app, which usually discourages participation, instead the phone picks up your location and lets you join the game via a website address. If you play the game for 30 seconds without losing, you win a coupon for free food at the nearest McDonald’s.


While this campaign is certainly interactive and engaging and drives people into McDonald’s stores to redeem their coupons, it may not be financially profitable (there’s the cost of the campaign itself and the cost of all of the free food being given away). If most winners come in just to claim their free prize and purchase nothing more, then was there a valuable return? A monetary one, probably not. A return on engagement, participation and involvement–definitely.

Traditional ROI is calculated: ROI = (revenue – investment) / Investment * 100.

Social media ROI can be calculated: ROI = (revenue – investment) + targeted engagement (new clients) / investment * 100.

How many new leads or conversions did the McDonald’s campaign establish? It’s unclear. McDonald’s goal seemed to be just to engage people and maintain a good customer feeling around their brand. If a monetary return was sought, the coupon should have been for a free food item with the purchase of another item or a discount on your next McDonald’s purchase. Measuring the redemption rate of those coupons (not just a freebie) would be a better indication of new leads and conversions as a result of the campaign. After all, social media is not just about being social, it’s about making money.

Takeaway: Set goals that define what type of return you are trying to get–a monetary return on investment or a return of a different kind (engagement, participation, involvement or trust) and launch social media campaigns that accomplish those goals.

Needs Improvement: More companies need to use analytics tools to measure the effectiveness of their social media efforts. What good is spending money on social media campaigns if you do not know the return you are getting?

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This entry was posted in Food, Mobile Devices, ROI, Social Media and tagged , . Bookmark the permalink.

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