ROI Is Dead.

Ok, that’s a lie. ROI, is not dead. In fact, the fusion of search and social media has spawned a new ROI. Return on Insight.

I can’t take credit for discovering and unlocking the power of this metric, but I can take credit for starting to use it. Sure, our economy is as hot as Traverse City in March and it’s only natural that we’re all trying to justify every marketing dollar spent with measurable returns. But what are we missing by neglecting to use and calculate the insight that social media is capable of delivering? And, how can the new ROInsight affect traditional ROInvestment? Let’s take a journey through a big math-tastic story problem shall we?

Pretend for a moment that you’re Bob/Roberta, Marketing Manager for Frozen In TC, a manufacturer of cherry porter flavored ice cream (if “miraculously” this new flavor is on the Kilwin’s menu this summer without my name next to it, I’m calling someone out). You have a marketing budget of $1,000,000 this year. Since that’s half of your 2008 budget, you cry about it for a while and whine about your job and then you realize that even though this appears to be a dark day, it’s time for innovation! And you seize the challenge. (Nice job Bob/Roberta!)

Knowing that you have to display a positive ROInvestment with this budget to a)keep your job and b)keep the company forging ahead, you make the following investments with your 2009 budget:

$600,000 to SEO and PPC (it delivered terrific returns last year)
$200,000 to display media (some banners and splash of local tv)
$100,000 to trade shows and events (sometimes they work)
$75,000 to social media initiatives (because everyone’s doing it)
$15,000 to direct mail campaigns (because it just feels right)
$990,000

$10k to spare in case it all tanks and you need to head to the casino. (Shame on you Bob/Roberta, that is not your money!)

You tell your agency to continue down the same path with your SEO and PPC campaigns as they did in 2008. Your creative budget is toast, so you run the same display ads as last year. You gallivant around the country and attend every fruity beer flavored ice cream convention you can find. And then you mail out flyers to the entire town of Traverse City, their brothers and their mothers. And oh yeah, you’re agency designed and set up all of those social campaign things, too. But after about two months, you can’t track a single sale or lead back to any of those initiatives, so you just let them ride on auto pilot – not checking in or updating them often, and having no real conversation with customers or prospects. And now you think social is so overrated.

Well Bob/Roberta, I’m about to tell you what you did wrong.

#1. You neglected to realize that search and social are now one. Continuously updating those “no good” social profiles could have further bolstered your search presence, and ultimately, the returns from your search campaigns.

#2. Social media is not a one way tweet. I mean, street. It’s about conversation, building relationships and listening to the people (your customers and prospects). You have to listen Bob/Roberta. What creates positive ROInvestement? Sales. What’s the secret to sales? Listening.

#3: Since you didn’t converse with anyone through your social channels, or listen to what anyone was saying about “Frozen In TC”, you didn’t gain any insight that you could act on. Potential product improvements, customer service issues, marketing strategy – nothing, nada. So you missed all that feedback that circulated about customers being irritated by the long lines, grocery chain execs tweeting about how they would like to start carrying your product, and the group that formed on facebook called “Bring Frozen In TC to NYC”. Oh, and all of the comments about how much better it would be if it were raspberry porter. Yep. You missed all of that.

So Bob/Roberta, since you were only focused on ROInvestment and not ROInsight, your ROInvestment actually suffered. For all of your campaigns. Ooh.

Ah yes. In the words of BusinessWeek’s David Armano, “Listen. Learn. Adapt.” And in my mother’s, “Shoulda, Coulda, Woulda.”