the trouble with tracking social media is boiling it down to a dollar amount. so far there is not tool or platform that can translate a relationship into a dollar amount. now that being said, roi can be a lot of things such as site traffic, pr, hr, sales, leads, etc. however it will never be possible to say “this is how much this relationships is worth” in dollars and cents.

clearly social media is a valuable tool and there are a few great examples such as dell, who have used tools such as twitter to generate sales of over $1 million. However at the end of the day, the most important thing for any business is customer relationships and that is what social media allows for.

in relation to bob’s comment, you don’t need to shrug off roi, you just need to understand what it is you want to measure before you get involved in social media and work from there. you must define your roi and in order to measure it.

makes sense?

That’s partly for tactical reasons: if you go into a budget review in today’s harsh financial climate, and shrug off any questions about ROI, all you’ll get is a big pair of scissors right in the line item.

But there’s a more fundamental reason, too. Marketing is constantly called on to estimate the returns when quantification is very hard to come by. Was that conversion because of the banner ad the customer clicked on, the earned media she viewed two days ago, or the conversation she had last week with a salesperson? Marketers use some sophisticated tools to draw inferences about how much of the share of the conversion value should be assigned to each interaction – but those are ultimately still inferences.

The same can apply to social media marketing. For instance, we can conduct broad measures of brand and product awareness before and after a social media campaign; track visits that come from referring blogs, follow them through to conversation and estimate a value from there. Condensing drops of useful information from the cloud of data isn’t easy, but it can be done.

What that doesn’t change – and where Jacob’s post may be pretty important, and valuable – is the fact that this is still only the tip of the iceberg. We won’t and can’t capture and quantify the whole of the value of social media efforts because so much of that value goes into aggregates and intangibles.

What’s it worth to be seen as an organization that communicates openly with our customers and supporters? What’s it worth to have a collection of friends talking about us below the radar? And how much of that can we attribute to social media instead of other factors?

Yet those have real, monetary value to the organization. And even intangible values get measured sooner or later – for example, when a company acquires a brand.

One challenge for marketers is to encourage organizations to do a better job of measuring that value on an ongoing basis. Even if the precise contribution of social media is difficult to ascertain, rough estimates can help ensure smarter, better-informed decisions… and make a stronger case for social media.

My argument wouldn’t be that there’s no ROI from social media. It’s that there may well be a lot more than we know… and we need to get a better handle on measuring it.