The Problem with Social Media ROI and the PR Agency’s Dilemma

The Problem with Social Media ROI and the PR Agency’s Dilemma

There is more to social media than immediate ROI. BUT, I think the majority of businesses are still waiting for the verdict and the ratio of dollars-to-leads or dollars-to-sales to be established for social media. And until that time they will dabble (set up a Facebook page) and let their staff or interns post and tweet for them. In small and medium business it’s pretty much a wait and see climate for social media.

I was having a discussion yesterday about why a major PR agency couldn’t execute on my friend’s social media goals. “We hired them, thinking we were going with the best, but they really didn’t do much with our social media.”

What’s the problem at agencies, then, who are supposed to be building the case for social media? And why are PR agencies typically so bad at social media, I mean, aren’t they sort of the same thing?

The answer is no, PR and SR (social relations) are not the same practice. While PR is primarily announcements and events, SR is more about frequent communications about more routine things, and more about getting the potential (or current) customer into a dialogue about your product or services. And if you can unlock that two-way exchange, you begin exponentially increasing the “reach” of your message. PR agencies use massive distribution networks, that they pay for, to broadcast news, press releases, and announcements. And they certainly get the information OUT THERE. But usually that’s the end of the PR agencies involvement. They get the message “release” out there.

While PR agencies have started adding social media as part of their services, the task is usually assigned to the junior members of the existing staff. Why? Well, the real reason is, back to the first part of this discussion, what’s the ROI of social media activities and efforts? So if you are an agency trying to bill for each hour your staff spends on an account, and social media takes 3x to 4x what your push media takes, can you actually bill those higher hours? Not if you want your clients to stick around.

So at this national PR agency my friend was discussing, they were spending several hundred thousand dollars a year and this industry leader was supposed to be handling the SR as well as the PR. The problem was, there was no leadership on the social relations part of the account. And the main reason behind that disconnect was the billing rate of the more senior staff, would’ve pushed the social media costs well out of alignment with the rest of the agency’s work. So what did they do, the tried to fake it, with junior people getting limited direction from senior staff, most of whom didn’t care a flip about social media. I mean, it’s still “unproven” right?

My friend fired the agency for both the PR and SR.

So what’s the ROI of social media? How do we calculate the dollars per customer acquisition, or cost per lead?

You can work harder to get the funnel to match the social intake. And you can set up very detailed goals and tracking codes in Google Analytics. And you can attempt to justify each dollar spent on Facebook or Twitter or blogging by tagging it with a sale that happened. BUT… That may not be the best approach.

With small and medium businesses there is not a lot of time and budget to go around for experiments. Same in the PR agency trying to cover social relations as well. And measurements like “activity” and “share of voice” do little to encourage the practical metrics of social media.

Unfortunately I cannot give you the A + B + social = sales formula for social media. I can try, and I have some ideas, but it probably won’t work for your specific business. That does not mean that a social media strategy and execution firm cannot help you, and help you at a reasonable cost with very clear benefits to your bottom line. We can. And the STRATEGY is the easy part. What’s not easy is the CONTENT.

Once the accounts are all set up, what are you going to blog about, tweet about, facebook about? And who’s going to watch the accounts and make sure you are responding to the people who do show up and ask questions on the social media channels. (An alarming statistic says that 95% of all facebook questions go unanswered on business pages.)

So, in my opinion, the hard part about social media is

  • figuring out what to share about that will be interesting or of “social” value to your customers or potential customers
  • assigning staff to monitor and respond to social media, even if you can’t assign a sale to each interaction
  • developing clear traffic measurements and goals that are actionable, that you can use to make positive changes

The rest of the equation is much more relative to your particular business, the length of your sales cycle, if your product is eCommerce ready, and how you measure success.

Ignoring social media, or assigning your intern to do it all, is probably not the best approach if you want to see results. But using an agency that now claims to do social media, may not be very effective either.

John McElhenney

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