Agencies appeared in the mid 19th century as retailers and manufacturers recognized they could communicate with the masses through the explosion of newspapers during the Industrial Revolution. From that point on, agencies adapted to changes in mass media (e.g. TV, radio), society and business. That is, until the rise of the Internet at the end of the 20th Century. At that point, most traditional agencies (whether creative, PR, full service or other) were slow to adopt interactive skills which opened the door for a new kind of interactive agency that would work with a new kind of marketer focused specifically on the digital space.
I moved to the Bay Area from Milwaukee about five months ago. Among the things I miss from my hometown are my two favorite burger restaurants--AJ Bombers and Sobelman's. Both have used Word of Mouth (WOM) to become successful small businesses, but while one built its buzz over 10 years, the other used social media to become a success in just one year. The stories of these two businesses can provide insight and inspiration to much larger brands seeking to create benefits with social media.
I've recently found myself in interesting discussions--one might call some of them debates--about ROI and Social Media. In recent weeks, Social Media ROI was the agenda for meetings with several clients, the focus of a panel on which I participated at Digiday Social, and a lively topic of discussion at a dinner of marketing leaders in town for the OMMA Global event. And today I read an article about Wal-Mart that got me to thinking about the dangers of too narrowly defining ROI.
It's interesting to hear the wide range of attitudes toward social media ROI. Some companies measure quite a bit about their social media activities but do not evaluate ROI in its most literal definition: The financial return generated by a specific monetary investment. Others go through a great deal of effort to measure ROI, creating complex models to calculate an approximation of financial return.
Some in the direct marketing space are beginning to value their social media efforts much as they do their PPC campaigns--assessing the cost of participation compared to the clicks, conversions and sales generated from trackable links seeded into tweets and Facebook posts. This sort of measurement is essential and inevitable for companies that sell direct to consumers, but it's important companies not become overly narrow and begin to assess social media as just another click-generating channel.