Social Media ROI: "Return on Information"?

As social media marketing becomes more popular, quantitative minds are increasingly asking what is the ROI of SMM. By ROI , they mean, of course, Return on Investment. Usually this is framed in the form of: if I spend X dollars and Y time on SMM, how much revenue, R, will be generated?

As studies are showing (along with our own firm's research) it is difficult to calculate ROI for social media in these terms. In fact, often it is impossible. What we all are finding is that it takes an enormous time investment to generate any revenue using social media. If we translte that time investment into an hourly rate, and then subtract that figure from any revenues generated, we would be sorely disappointed; the result would put us in the red, for sure.
The results of SMM are typically unpredictable at best, downright disheartening at worst.

Therefore, some social media marketers have ditched the conventionl ROI metric, attempting to replace it with newer, more appropriate acronyms. "Return on Influence", "Return on Importance", and "Return on Impact" are a few alternative constructs we've seen. But we'd like to propose our own.

*The Most Valuable Commodity
In a previous post, I quoted a line from one of my favorite movies, "Wall Street". In it, Michael Douglas says, "The most valuable commodity I know of is information, wouldn't you agree?" And we do agree. Therefore, we suggest the phrase "Return on Information" as the better construct to use when evaluating the merits of SMM.

We suggest this because we think the true power of social media lies in the collective amount of information being shared and passed around, at lightening speed. If you keep your eyes open, you can find a wealth of valuable information just floating around on social media sites like Facebook and Twitter. But you have to be there to find it.

For example, just yesterday, we discovered a virtually untapped, emerging market that we can capitalize with relatively low cost and few barriers to entry.

You can't put a $ value on this type of information. You can't post it up on some PowerPoint presentation or some Excel spreadsheet in a nice, neat little graph. Nevertheless, this is information which directly improves the bottom line.

When talking of the benefits of SMM, we think "Return on Information" is most apt.