How do you calculate ROI for marketing dollars invested in social media? The author explains the process like this:
1. Describe the possible investment
2. Sketch out the rationalze
3. Develop a marketing/sales funnel
4. Hypothesize how the initiative might work through the tunnel, resulting in an estimated range of dollars produced.
5. Share ROI information with decision makers
6. As the initiative progresses, assess how well the step 4 hypotheses is supported by reality
The alternative to this approach is to use the "gut feel" method used by as many as two thirds of top managers. What I find interesting is that this six step "process" is doing little more than applying a process to the "gut feel" method, with a single exception. Step 6 calls for a reality check to ensure that ROI is what was expected so the initiative can be quelled if not working.
The single best take-away from this article is the point that now is the time that marketing departments should be experimenting with the different forms of social media to build meaningful metrics that may be used in the future to determine what should be invested in social media.
I could not agree more with your argument. Marketing departments have been provided the ability to engage in multiple forms of social media including podcasts, blogs, twitter, Facebook, Myspace, and YouTube,etc. There are so many possibilities out there and the opportunities to reach customers are endless. Additionally, the cost of these forms of advertisements are a fraction of what budgets for TV advertisements and billboards are. The internet makes endless opportunities for companies to market their brands. All it takes is an imagination and URL- then potential buyers only become a click away.
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