When General Motors withdrew its advertising funds from Facebook, it sparked a heated discussion about the importance of social media. Many corporate executives are currently pondering: How can we measure the impact of a Facebook comment against a television advertisement? Or a tweet compared to a high-quality magazine advertisement? Am I receiving the proper return on my investment? These are valid inquiries that, up until this point, have been challenging to address.
Digital had an ROI that was, on average, six times greater than TV
In a recent survey, we found that 91 percent of companies believe social media doesn’t significantly impact sales. The reality is that it’s hard to say for sure because, in our experience, nobody has demonstrated that they can measure the return on investment (ROI) on social. This metrics blind spot means CMOs can’t make informed spending choices between social and traditional channels.
We believe that social media can have great value as part of a company’s marketing mix – not because of some gut feel but because we can measure it. At one large packaged goods client, for example, we proved that digital had an MROI (marketing return on investment) that was, on average, six times greater than TV. After isolating the effects of digital display from other social content (such as user comments and viral activity), the analysis also found that social media had much higher impact than other digital media. As a result, the company is shifting more than 30 percent of its TV budget to social media.
