Orange Envelopes | Small Business Optimized Marketing > By Design

David Meerman Scott garnered attention this week with a 3 minute rant deploring the fixation of corporate types who insist on justifying social media marketing expenditures with Business 1.0 anachronisms like ROI (that’s Return on Investment folks).

He attracted dozens of comments from supportive readers who share his distaste for the MBA scourges who dominate corporate America and insist on facts, data and analysis to support requests for capital investment. After all, we all know that social media is good, strong relationships are beneficial, and any effort we can make to become closer to our clients should be pursued. Unless you do it wrong.

You see, there’s a burr under this social media saddle. If you do it wrong, you can irritate your prospects, alienate your clients and permanently damage your personal and company reputation.

When your CEO asks for an ROI of your social media marketing program, what he is asking for is a strategic plan and analysis of likely outcomes. Without the plan, you and your marketing/social media staff may simply leap into the social media void and flail around aimlessly, without clear objectives or measurable goals. Sure, you’ll be able to brag about the number of Twitter followers you have and the percentage of retweets you generate, but what have you really accomplished?

I admire many of the marketing activities that David has pursued over the past several years. And I agree that his approach – creating interesting, entertaining and highly useful content and then giving it away – is successful for many people and companies. But not all.

It obviously works for David. How do we know? Because he tracks the ROI of his activities. He knows that when he posts a controversial blog entry that gets commented upon across the web he generates more traffic, increases his search engine visibility, receives more comments, and sells more books. Activity = increased revenue. ROI.

The straw man in his argument is his assumption that establishing ROI requires that one track the value of every tweet, blog post, Facebook entry or YouTube submission and then generate a value of that singular activity. No one is asking that anyone do all that to prove the effectiveness of a social media program. No company can get that granular in their analysis.

However, we can demand that marketing departments have a strategy in place and mechanisms established to measure the success of that strategy. If you are going to produce and disseminate free content, you need to know what type of content you need to produce. Videos? Podcasts? Slideshows? Webinars? White papers? Interviews? And where will they be available? On your corporate website? On your blog? On your Facebook Fan Page? On all of them? Then you need to track, analyze and adapt. If the downloads of your white papers overwhelm the views of your online videos, then get busy producing more white papers. But how would you know any of this if you didn’t prepare to measure the effectiveness of your efforts?

And then what are your next steps? How do you extend the relationship with the individual who downloaded your white paper? Do you ask them to become a Twitter follower so you can engage them online? Do you ask that they join your Facebook Fan Page so they can gather even more useful content? And to what end? At some point, your actions/their reactions/the non-financial impact must convert into a financial impact or what’s the point? (hat tip to Olivier Blanchard at http://thebrandbuilder.wordpress.com/)

If you can’t convince your CEO that you have a plan to increase revenues or reduce your costs, then you don’t deserve the investment. Don’t blame their fear of your social media prowess or resistance to trying something new. Their understanding of business fundamentals hasn’t changed. Prove the value of your ideas. Something David’s Harvard Business School audience should understand, even if David doesn’t.

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