A post by Joanna Stratmann, head of marketing at social media agency FreshNetworks, caught my attention this morning. The post is titled ‘If 82% of TV ads generate negative ROI, why are we obsessed with social media ROI?’.
Hang on, I thought. If TV advertising doesn’t work – and this is somehow an established ‘fact’ – then are most marketing directors idiots?!
I wanted to find out more about this ‘fact’, so I delved a little deeper.
Joanna attributes the 82% figure to The Social Media Management Handbook: Everything You Need to Know to Get Social Media Working in Your Business by a team from Accenture.
But it seems the original source is a 2004 study by Deutsche Bank titled Commercial Noise: Why TV advertising doesn’t work for mature brands.
There are a few important things to note about this research:
- 18% of campaigns showed positive ROI in the short term, but the figure rose to 45% in the ‘long term’. Deustche Bank defined ‘long term’ as one year.
- The research was limited to mature brands. It did not include growing brands or new products. So, for example, campaigns for the launch of the iPad or a new price comparison website starring a meerkat would not be covered.
- The research was limited to consumer packaged goods.
But the most important fact that Deutsche Bank didn’t highlight, as explained in this piece by Andy Farr, was this:
- The average ROI across the 68 cases Deutsche Bank studied was +30%!
Yes, that’s right, overall in this study, TV ads produced a 30% ROI even for mature brands. In other words, although some TV campaigns produced a negative ROI – when the campaigns worked, they really worked.
Two wrongs don’t make a right
But there was something else that troubled me about Joanna’s blog post. Even if TV advertising is sometimes ineffective, why should that be an excuse for not being ‘obsessed with social media ROI’? Surely it is every marketing manager’s role to work out which marketing approaches will produce ROI, whether that be TV, price promotions, social media, email, web banners, direct mail, print advertising, or whatever.
Joanna puts her theory, saying: “I think we’re obsessed with social media ROI because social media, unlike TV advertising, is so much more than just another channel.”
Well, I would agree that social media success is far more about the long term (certainly more than one year!), and therefore short-term ROI should certainly not be the only measure.
But I don’t agree that this is why we are ‘obsessed’ with trying to prove it works. The reason there is so much discussion about social media ROI is that CEOs and marketing managers need to know whether to spend their budgets on social media or something else. Yes, measure the long term effects, indicators and trends, but if you can’t eventually make a good case for social media ROI, then you can’t ultimately make a good case for investing in social media.
So I say that social media agencies, consultants and experts should stay obsessed with measuring results. We believe (yes, I’m a believer) that good, strategic use of social media does contribute to business success. But I certainly wouldn’t want to try to persuade a CEO to invest in social media by using the argument that TV advertising doesn’t work either.
Would love to hear your thoughts on this…