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Return on investment from social media?

Step forward, please, the social media alchemist who has struck gold…

The leading voices in social media practice and debate are certainly giving it their best shot: Brian Solis’ recent guest post on Mashable paints a daunting picture of senior executives’ views on ROI from social media, including the bar chart below lifted from a study by Bazaarvoice and the CMO Club.

In short, the marketing decision makers remain unconvinced; so, if selling social media is the way you’re aiming to pay for dinner tonight, be prepared for a light salad rather than roast beef.

Solis suggests that measuring social media ROI in 2010 will hinge on real business metrics, such as revenue, rather than the nebulous numbers offered by volumes of followers on Twitter.

Though it’s been around for a while, Oliver Blanchard’s take on the ROI question (presentation below) still hits the spot, although the influence of other elements in the marketing mix make it difficult to evaluate the effect of social media in isolation.

Olivier Blanchard Basics Of Social Media Roi

View more presentations from Olivier Blanchard.

In our experience as a business using social media for our own purposes, as well as advising clients on theirs, there is a significant investment of time in order to make it work. Equally, the definition of a “return” has not been limited to pounds and pence, though that is the ultimate objective.

So what has been our return from social media? In its purest, measurable form of generating income, we have developed an ongoing relationship with a blue chip company that began with an exchange of views on this blog. But there have been other returns too, that oil the wheels towards our destination.

This has included using social networks to develop new contacts in a range of fields whose knowledge we have been able to call upon when pitching for new business. Through listening to networks such as LinkedIn, we’ve been asked to quote for work, opened doors with decision makers where they otherwise may have remained shut and we’ve fostered true partnerships with our suppliers by providing recommendations and referring them to opportunities spotted online. Monitoring Twitter has helped us to protect and enhance client reputation, especially when influential people on the network have a grievance.

Granted, none of this is a guarantee of instant, financial success. But would we rather have it or not have it? In tough times (and, let’s face it, one measly tenth of a percentage point growth doesn’t make for a recovery) every tool in the new business box has to be sharpened, and social media is now one of them.

To borrow from Solis again, “Defining the “R” in ROI is where we need to focus, as it relates to our business goals and performance indicators specifically”.

In business, the “R” is beefing up the bottom line. But there’s more than one way of getting there and building a presence within social media can mean you leveraging a little help from your friends.

Twitter users are growing by a factor of 10, so says web measurement firm, Hitwise. Not bad going for what was a niche, online tool with no clear use apart from giving other intrepid social media pioneers a running commentary on your day-to-day life - in 140 characters or fewer.

But now the BBC, according to correspondent, Rory Cellan-Jones’ “Tweets”, is having meetings about its own reporters’ use of Twitter, surely it’s gone mainstream.

And so, social media is becoming part of the fabric of our lives. When your Mum and Dad are on Facebook - even if they are slightly bewildered by it - you sense a corner has been turned.

In the past 24 hours I have been involved - for the first time - in a new business discussion that began on a social networking site. A few hours later, it went offline and is progressing in a way you’d never expect after meeting someone in today’s equivalent of the infamous “chatroom”.

But it makes absolute sense. If you need a service, and you know that people looking to do business are gathering in particular places online, why not congregate? Not only can you get an insight into the background, knowledge and expertise of prospective business partners or customer (it tends to be spelled out in a clear chronology), you can open a dialogue and get a feel for the person you’re dealing with. Interacting on social media is disarming, so you should get a truer, more unvarnished view, free of marketing gloss.

This model, in my opinion, would serve the procurement of professional services such as PR and marketing very well, as it allows for a more natural evolution of understanding between buyer and seller, rather than the unnatural beauty parades that dominate the sector. Companies can be dazzled by a pitch, but does that translate to a long-term working relationship? Sometimes, but not always.

Social media is out there and - for business - it’s coming of age. Get with it, before your Granny beats you to it.

Update: Here’s what the FT has to say: “Social media…transforms a business if you use it correctly.” (Bob Pearson, Dell)