Much debate has surrounded the implementation of social media marketing and the manner in which it can be measured in relation to companies ROI (return on investment).
Simply, ROI is a profitability measure that evaluates the performance of a company by dividing net profit by net worth. It is defined by the investment that is lost or gained as a result of the money invested. However when measuring ROI for social media there is no direct tangible results that can be measured, as social media essentially acts as a form of word of mouth marketing. It is therefore important to consider that social media requires organizations to measure not just financial statistics, but also the quality and value delivered by their relationships with customers which is where companies have faced difficulties.
However Jeffrey Gitomer famously states, "If they had measured the ROI of TV, or the computer, or the Internet after five years, nobody would have gotten involved, and we'd be in a technological bog." Suggesting that it is not initially a major issue for companies to feel the need to measure all of their progress on social media, but to instead, maintain up to date with sociological and technological trends in the external environment by actively engaging with their stakeholders through this new form of communication. While in the short term ROI is essential for a social media marketing campaign, in the long term it is less about financial statistics, as Eric Qualman states, "The ROI of Social Media is that your business will still exist in 5 years."