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Clear Link Demonstrated Between Social Media and ROI

2011 April 1

Edit: Yes, yes, this is April Fool’s. Deceiving customers produces the best returns? Lolcat consumption as a cost metric? Perhaps even most unbelievable, specific demonstrated value for using social media!?! The insanity!

Recent research by Landre[1] in the Journal of Social Media Studies examines the elusive relationship between business engagement in social media policy and return on investment [ROI].  Using quantitative data collected over eight years at a variety of businesses in Virginia, Landre demonstrates a mean ROI of 180% for engagement in social media, with increased gains for specific types of social media use.  Landre splits social media engagement into four categories:

  • Overt Brand Promotion: The use of social media for straightforward brand promotion, such as posting advertisements on Twitter.
  • Subversive Brand Promotion: The use of social media for brand promotion through channels unclear to consumers, such as hiring people to post fake comments about your brand on random blogs.
  • Hired Engagement: The active engagement of consumers by paid third parties; for example, a person hired specifically to be the social media “face” of the company
  • Honest Engagement:The active engagement of consumers by actual employees of the company; for example, all employees start Twitter accounts and chat freely with customers throughout the workday.

Landres examines each of these approaches specifically and finds that Subversive Brand Promotion is the clear winner, with a mean 450% ROI for companies engaging in this strategy.  Hired Engagement is a close second-place, with 375% ROI.  It may seem surprising that strategies involving the active deception of customers produce the best returns, but it turns out that the average consumer doesn’t really pay much attention to where the message comes from, but instead to how convincingly that message is written.  An additional problem for the Honest Engagement approach is that a large portion of the companies examined were in the technology sector, and having engineers and programmers talk directly to customers may have resulted in substantial company losses.

ROI was calculated by examining the ratio of gains to losses, examining the total dollar value of goods purchased by new customers brought in via social media versus the increased bandwidth costs due to employee mass-watching of lolcat videos.  Happy April, everyone.

Footnotes:
  1. Landre, R. N. (2011). Totally conclusive and not at all fake study proving link between social media and ROI. Journal of Social Media Studies, 34 (7), 654-655. []
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