Measurement Menaces of the Month: People Who Use Bad Math For Social Media ROI

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One of the most frequently debated questions these days has to be, “What is the ROI of social media?”

In the early days of social media there was a rush to put a “value” on a like. People and firms came up with some crazy calculations (this article shows their wide variety). By far, the worst was the insane notion that you could show “value” by creating a social media version of Ad Value Equivalency.

Another frequently cited but ill-advised technique is Hubspot’s ValueOfALike.com. While on the surface its deceptively simple calculations seem to be every social media person’s wet dream, the logic has many flaws:

  • First of all, it assumes a direct relationship between a like, a click-through to your website, and a conversion. This erroneous assumption perpetuates all the worst aspects of last-click attribution. Unless you are in an e-commerce company, sales seldom work in such a direct fashion. A “conversion” is likely to be the culmination of several different touch points, of which Facebook is just one.
  • Secondly, it doesn’t take into account your business costs required to earn a like. Content— infographics, videos, photographs, etc.— isn’t free. Neither is your time.
  • Finally, it assumes that your organization has accurately defined things like “average conversion value.” Often for smaller organizations, these values are assigned based on a number of potentially invalid assumptions.

The reality is that the ROI of your social media program must be grounded in the goals and objectives it’s designed to achieve. If the goal of your social media program is to reduce customer support costs, then its “value” may be in retained customers (NOT mythical conversions). If the purpose is to increase brand recognition, then you can’t assume that just because people like your content they will recall your brand the next time they’re shopping.

The challenges to placing values on likes are wonderfully articulated by Neil T. Bendle and Charan K. Bagga, the authors of this piece in MIT Sloan Management Review. They do a wonderful job of explaining why the value of a like isn’t meaningful or realistic. The short reason is attribution. You just can’t prove it.

Intrigued? Read the rest of the articles from this issue of The Measurement Advisor to find better alternatives. ∞

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