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Published January 18th 2012

Conversation: Is ROI a Ridiculous Concept?

This article is about a series of conversations sponsored by Brandwatch, covering all facets of social media. To see a full list of the conversations that have taken place, click here for our archive.

Click here to hear the conversation

One of the stickiest ingredients in the social media cake is the notoriously difficult task of measuring how well it is baked. Understanding the quality of your return on investment on social media spending is absolutely essential to building an effective business strategy: but what is the best way to do it?

The guys at Whiz Bang Pow Wow are running a 24-part series on conversations about social media, in partnership with Brandwatch. Host of the series is Neil Glassman, and the opening discussion features the CEO of Blitzmetrics, Dennis Yu.

This fascinating dialogue discusses whether there is any point in even seeking to quantify ROI with regard to social media, and addresses many of the problems that companies encounter when trying to do so.

Dennis describes how a Google search for ‘Rosetta Stone’ immediately prior to a purchase may well have been the final driver in making a sale, though it shouldn’t take all the credit for this sale.

Other factors, such as word-of-mouth, Twitter, advertising and all manner of things may influenced that particular customer’s decision to Google that term in the first place.

Drawing on an analogy with basketball statistics being skewed towards forward players unless assists and other data is also accounted for, Yu describes the importance of tracking all the contributing factors that lead into a sale.

Companies should not be measuring conversion rates based solely on the last thing that happens before a sale.

Yu continues to say that there will never be a universal figure for all businesses to use for measuring ROI, and that there are two parts to the sales funnel that increase purchases. Further up this article is the picture that accompanies Yu’s description during the conversation.

To find out exactly what Yu said, and what advice he had for Glassman at WhizBang in measuring ROI you can listen to the conversation here.

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