Small businesses and ROMI: the social media dilemma

With over 800 million active users per month on Facebook alone, it is clear that Social Media needs to become an integral part of any company’s Marketing Strategy. However, it is also clear that development and management of Social Media campaigns require not just careful planning but also a level of expenditure which must be justified and monitored, as would any other Marketing expenditure, by measuring costs against projected revenue/cost savings/market share, also known as Return On Marketing Investment (ROMI). Social Media campaigns should be of particular value to SME’s (Small-Medium Enterprises), where informal and open communication with customers is often at the heart of their business. But lacking the resources and long-term strategic planning capabilities of larger organisations, SME’s are more sensitive to the expenditure required to develop such campaigns, making ROMI a particularly critical issue. In the case of Social Media marketing, even large organisations struggle to calculate ROMI. This has been primarily due to two reasons; a) misunderstanding of the actual costs involved in running a Social Media campaign, and b) confusion over what metrics should be used to measure success. While businesses are becoming increasingly aware that Social Media campaigns are not “free” but require resources to maintain and manage even a simple Facebook Page, there is still considerable confusion over how to assess and measure the contribution of that Facebook Page to the business. Simply counting “Likes” is not sufficient, as the value of a “Like” to the business is undefined, and this uncertainty over ROMI has been cited by many organisations as a significant barrier to Social Media adoption. A review of the literature has uncovered a number of approaches to Social Media ROMI, which need to be assessed in terms of their suitability to the SME environment.