ROE or ROI…Time for a mindset shift?

Companies often wonder to what extend does a piece of content on social media contribute to brand equity of a brand. Is ROE the new measure for that? Return on engagement is a new buzz term used in social media marketing to measure the positive impacts or results of a brand’s social media efforts to engage with its audience. It comes, though, with a challenge, being to collect as much data as possible about the people who engage with the brand in order to understand their engagement.

Companies with a strategic thinking need to engage in conversation, message distribution, and 24/7 interaction. Engagement leads to brand interest, awareness, engagement and ultimately sales. With that in mind, companies should focus on Return on Engagement (ROE) instead of Return on Investment (ROI).

ROE is a long term goal: to build bigger communities inspire stronger loyalty, create a strong bond with your brand and create advocators that will “love” to talk about a brand to others. While ROI deals with economical terms with what you get back from your investment, ROE aims at what you get back in brand strength with key “return” components being:
• Participation;
• Degree of authority;
• Influence; and
• Sentiment

Engagement is the “holy grail” for every successful company. But when it comes to measuring the results of social media efforts, there is a significant difference between quantity and quality. Numbers (for example # of twitter followers) do not necessarily equal social media success. The digital agency 22Squared supports that social media efforts should focus on objectives such as advocacy, trust, loyalty, and influence instead of reach, awareness, and simple engagement.

And YES, engagement can be measured. Check out this interesting case study by 22Squared !

Apropos, while I was about to finish this article with the above phrase, I read this article by Don Bartholomew (a person I admire deeply) about the difference between Value and ROI. Don argues that “many of the well-intentioned but misguided attempts to rename or reinvent what ROI means in social media – return on influence and return on engagement probably getting the most play – seem to be the result of an inability to distinguish value creation from ROI…”

Note: this article was included in the FIBEP Q2/2014 MarComm Business Bulletin

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