B2B marketers are rapidly incorporating social media into their marketing mix, and for good reason. Studies show that companies active in social media generate more revenue than their less social counterparts, prospective customers are increasingly comfortable interacting with brands on social media sites, and the downside risks of not engaging are too significant to ignore.
The challenge, especially for smaller companies, is measuring the results from social media activities. Particularly in tough economic times, every marketing activity is expected to show an ROI.
But it’s easy to measure the ROI of social media marketing, right? That’s certainly what some bloggers would have you believe, at least. The standard formula goes something like this:
- Create a knowledge asset such as an eBook, white paper or helpful online tool.
- Create a landing page to collect lead information before giving access to the asset.
- Share the link to that landing page on social media sites.
- Determine the total revenue from any sales resulting from the leads you collected in the previous step.
- Divide that revenue number by the cost of creating and sharing the asset. Boom! There’s your ROI.
Never mind that there can be a significant cost involved in building up a following on Twitter, Facebook, LinkedIn and elsewhere before you can even run such a campaign, and that cost should be allocated across time. Even ignoring that cost, and assuming you can show results using the above formula, at best you have demonstrated an ROI from a social media program, but by no means the ROI.
Demonstrating a hard return on social media investment in the B2B realm is problematic, for at least three reasons:
1. Social media is much more of a PR activity than a direct response marketing vehicle. Like other activities, it increases name recognition, enhances branding and builds credibility. It helps establish relationships with thought leaders and other influential voices in your industry. It can also strengthen customer relationships. It is not, however, generally a good medium for direct promotion, and attempting to use it that way (e.g. by turning your blog into an extended marketing brochure) is likely to backfire.
There is an exception to this, though it applies more in the B2C world than B2B: if you are selling a commoditized product and your primary differentiator is price, then social media can be effective for direct marketing; e.g., you can blog about your specials or Tweet something like “Great deal at the minute – Epson Stylus S21 Printer, Pack of 3 Inks AND a free pack of paper all for only $96.09 + FREE DELIVERY!” But in most B2B situations—differentiation on features, substantial price points, complex sales cycles, multiple decision-makers, significant service component—this doesn’t apply.
2. The problem of last-click attribution. Research shows that in more than 90% of b2b sales, buyers were influenced by multiple brand exposures rather than responding to a single ad or other medium. In other words, that customer you attribute to coming to you through AdWords, or Twitter, or a Facebook ad most likely saw your name in numerous places—an online publication, a press release, your blog, someone else’s blog, in an analyst report, at a trade show, in a directory, on your website, in an email newsletter, somewhere else or any combination of the preceding—before they made that last click. Marketing automation and demand generation software is great for tracking touch points after a prospective customer is identified as a lead, but no software can magically track all of your brand exposures prior to that point.
3. B2B social media is as much about “influencing the influencers” as it is about reaching buyers directly. A typical B2B Twitter or Friendfeed account, for example, may include as followers consultants, analysts, industry journalists, bloggers and others who will never buy your product or service, but can most certainly influence buying decisions in your market. Rarely will you be able to trace a sale back specifically to your social media outreach efforts to these key influencers (see the last-click attribution issue above), though such efforts unquestionably had an impact.
In short, while social media can certainly play an important role in demand generation (along with advertising, PR and other activities), the complexity of b2b buying processes makes its precise impact difficult to gauge.
About the author: Tom Pick is an online marketing executive with KC Associates (http://www.kc-associates.com), a marketing and PR firm in Minneapolis, Minnesota, focused on b2b technology clients. He also writes the award-winning WebMarketCentral blog (http://webmarketcentral.blogspot.com), a blog about B2B lead generation, social media, interactive PR, SEO and search engine marketing.
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Great article! I’m always amazed to see companies holding social media to a higher measurement standard than they do traditional media. As you note, how do you measure PR? The only way you can do it is:
1. In isolation
As you note, it takes multiple impressions to make an impact. Before the last click, there was the last exposure (yellow pages, news article, etc.) that made it hard to measure PR. So, the only way you could be sure it was PR, was to do nothing else–and vice versa.
2. Against baseline:
Did your sales increase–or did activity at any stage of the buying process increase? Even if measured in isolation, measures that don’t affect sales are less meaningful.
3. Survey
How do you know who was affected, unless you survey everyone–which gets expensive.
Thanks for yor post
Nice post but:
“Research shows that in more than 90% of b2b sales, buyers were influenced by multiple brand exposures rather than responding to a single ad or other medium.” without attribution is pretty weak.
[...] Go to comments A good highlight of what makes ROI calculations difficult for B2B social media (here). I think this point is [...]
Fantastic post Tom! Your ideas are “right on” the mark. I have what is seemingly the obvious follow up question. What is your take on “top 3 or 5 social media initiatives” that business’ should really focus on? [These activities might not give the 'biggest bang for the buck' but must be the most meaningful.] Would like to hear your thoughts?
Companies should at least establish their social media presence. They should seize the opportunity to take some control over the online conversation about them rather than allow the vacuum to be filled by a different message.
Using social media to develop a more 3-dimensional perspective of yoru company could probably measured for effectiveness over time if the right metrics and questions were devised.
Indeed, very informative article.
I do agree that it is difficult to measure the direct impact of the Social Media Marketing on your top line but it is an excellent platform to increase the visibility in front of decision makers.
Thanks
[...] metrics as a topic in Social Media for Dummies. Tom Pick covers some good points in a blog post on Business.com. It’s geared towards the B2B space, but I think it can be relevant to anyone. Here’s [...]
[...] Guest-posting on business.com’s B2B Online Marketing blog, Tom Pick points out that measuring a true ROI for social media programs – in the way that marketers are used to doing for, say, PPC advertising – presents a number of difficult challenges for B2Bs… [...]