I hate it when people try to change the name of a well-known concept, just because they don’t think it accurately describes what that thing is anymore.
Some teeth grindingly well-known examples include:
- Changing radio theater to audio theater “because you don’t just listen on the radio anymore — CDs, podcasts, and the Internet are also channels.”
- American Public Radio changing their name to American Public Media for the same reason.
- Debbie Weil wants to stop calling blogging “blogging,” because the term is outdated. It should be called “the social web” (I heard her say it on Doug Karr’s Marketing Tech Radio show last year).
Trust me, this list goes on and on and on.
Last December, Copyblogger did the same thing. Sean Jackson (CFO of Copyblogger) and Sonia Simone (CMO of Copyblogger) wrote a blog post called There Is No ROI In Social Media Marketing.
But the truth is, marketing will never produce an ROI.
Sonia: OK, you’re still sounding insane to me.
Sean: I’m not done yet.
Marketing will never produce an ROI because ROI is not what you think it is.
A pure definition of ROI is simple to quantify.
ROI = (Gain from the Investment – Cost of Investment)/Cost of the Investment
The problem for marketing professionals is that marketing activity is not an investment.
An investment is an asset that you purchase and place on your Balance Sheet. Like an office building or a computer system. It’s something you could sell later if you didn’t need it any more.
Marketing is an expense, and goes on the Profit & Loss statement.
Yes, this makes sense. But it makes sense in the same way that telling an 8-year-old that eating Brussels sprouts will help him grow up to be big and strong. And on one level, the 8-year-old wants to be big and strong.
On the other hand, it’s the dumbest thing he’s ever heard, because Brussels sprouts taste like shit.
We Need ROI
Frankly, I don’t care if you don’t think it’s accurate. I don’t care if you think there’s a term that better reflects all the subtle intricacies of whatever it is you’re involved with. I’m not just talking about the difference between investments and profits (that’s more than a little subtle).
I’m talking about the difference between the words you use, and the words everyone else in the world uses.
When I was in crisis communication at the Indiana State Department of Health in 2006-2007, I had to constantly stop the epidemiologists from referring to the bird flu as the “human flu pandemic.” Whenever we had a news interview, I had to remind more than a few of them not to use “human flu pandemic” when they spoke with reporters.
“But ‘bird flu’ isn’t accurate. It may not even come from birds. And it certainly won’t be limited to birds by then.”
“Okay, then call it ‘pan flu,’ because that’s the term the general public is using.”
They didn’t like it, because it wasn’t completely, technically accurate, but I was satisfied because the public was going to know what the hell they were talking about.
We saw it again in 2009, when — turns out the epis were right — it was the swine flu epidemic that got us. And predictably, the media types and general public were all talking about swine flu, swine flu, swine flu. Predictably, the CDC tried talking about the “human flu pandemic,” and no one knew what the hell they were talking about.
Word reached the CDC, and they started talking about H1N1 instead (it helped when the US Swine Association and other hog people told the media that the term “swine flu” was hurting their sales).
It was still accurate, it didn’t offend the epis, and it was still short and sound-bitey enough for the media and public.
What ROI and Swine Flu Have in Common
(Nothing. It was the pithiest sub-head I could think of.)
But at the same time, we do have to recognize that, for good or bad, people will use the term ROI forever. Like Jackson said, “I’m seeing ROI taking on a mythical status in marketing — a benchmark used to compare every decision to some financial metric of return.”
It’s not just marketing people, it’s businesspeople everywhere. We all use the term “ROI,” even if there’s really not an “I” in the first place. Same way KFC is now just “KFC.” It no longer stands for “Kentucky Fried Chicken,” they’re just “KFC.”
I think the term “ROI” is taking on the same meaning. We know it means something, but it doesn’t reflect what the letters stand for anymore.
Now, ROI can refer to investments in capital products, it can refer to marketing campaigns, it can refer to your website, your cell phone, your networking events, or anything you spend money on and hope to make money back.
(Because if you want to get even more technically accurate about it, most capital items don’t have a return; you use them until they wear out. And my personal finance friends remind me that an investment only refers to things that can appreciate in value; so a house is an investment, a car is not. So should we start referring to it as Lack Of Return On Investment, or LOROI? No, because that’s stupid.)
So Should We Change The Term “ROI?”
No, we should not. Because all the variations I hear — Return on ENGAGEMENT, Return on INTERACTION, Return on EFFORT — are about as mentally repulsive as a cold, half-chewed Brussels sprout in an 8-year-old’s mouth.
Just like with blogging, radio theater, and public radio, we need to stick with the term that people know. Rather than taking a prescriptive approach to language (i.e. “we have to follow these rules, because they’re the rules”), and changing the name of something to be as perfectly accurate as possible, instead just chalk it up to “common usage,” or the idea that too many people are doing it this way to change it.
Rather than complaining about the term, why don’t you instead try to get people to understand that social media is 1) measurable, and 2) can make money? That’s the more important battle to fight, rather than the ticky-tack little details that only matter to a select few people in an already tiny niche.