An old saying handed down from the Madison Avenue advertising industry states that 50% of a typical ad budget is wasted. The problem is that you don’t know which 50%. I’d like to update that.

80% of your social media budget is wasted, but you aren’t paying enough attention to know which 20% works. Here’s why I think that way: you always know when someone is trying to bamboozle you when their arguments change or “evolve” as you call them on their BS.

In the modern political arena, you see this in the arguments over global warming. Whatever your views on the issue, it has to raise a red flag of suspicion when one day someone argues that there is no global warming occurring, the next day they say that there might be but it is not manmade, and the day after that they claim that it may actually be man-made but there is still nothing that can be done to prevent it.


These shifts in argument are the hallmarks of the professional huckster, and it’s what you see social media gurus and consultants doing all the time.

Their first line of argument is often that social media is enormously cost-effective with huge ROI and naturally there are great examples that are regularly trotted out. Gary Vaynerchuk increased his family’s business revenues from less then $5 million to over $50 million just by using social media, i.e. his YouTube videos. What they leave out of the story is the competitive advantage gained from the alcoholshipping laws in New Jersey that are grandfathered-in and that allowed Gary V. to essentially do YouTube-based direct response marketing. Gary V. is a great guy, but it’s not just about his charm and hustle.

Then there are those studies that tell us that Ford spends 25% of its marketing budget on social media with the result that they were the only US car manufacturer not to need a bailout. Seriously. Twitter saved the auto industry, apparently.

Or yet another case study – can you tell that I’m on a roll? – which boasted that a web hosting company spent $15,000 on social media and increased website traffic by 300% and sales by 20%. Oh, and by the way, not that it had anything to do with the increase in traffic, but during the same period they just happened to be on page 1 SERPs on Google for “free website builder”. Cause, meet effect. I’m not sure you have been introduced.

Naturally, if you ask a social media guru about the lack of ROI from social media, they will move to a fall-back position: of course there is ROI. You’re simply measuring the wrong thing.

In the planet on which you and I live, ROI is measured by sales, revenues and profits. But the social media gurus inhabit a parallel universe, one in which engagement, likes, views and conversations are all actually useful to a VP of Marketing trying to justify her job performance to a skeptical CEO. They aren’t of course – well, not very much – they are simply placeholders for the concept formerly known as “brand”. And brand is a great thing, very under-valued these days, as a matter of fact. But it’s not the same as ROI.

And finally, if you press your hypothetical social media guru more closely, they will move their argument again. “Why are we trying to measure the ROI of social media anyway?” they cry. It is simply something one must do. It is essential. It is how one competes.

That’s when you know it is BS. That is when you realize that social media is just nice, your customers like to talk and to be heard, and sometimes, if you have talented content creators, you will be able to communicate a marketing message effectively. Some crap does stick to the wall. But it is not the same as having a truly measurable, effective channel that provides ROI. It just isn’t.

At LinkShare’s Symposium earlier this year I listened to a terrific presentation from Andy Hoar of Forrester Research. He said – and I am paraphrasing – that in all the studies that Forrester has done one thing stands out time and again: social media does not drive transactions. It sometimes can drive traffic. It may create engagement. But it won’t drive transactions.

There’s a whole other conversation to be had about why that is, about what the “new purchasing funnel” looks like. But the reality is that selling is always the same, everywhere: you need to focus on filling the perceived needs of your customers and then motivate them to act.

Social media is great, but it doesn’t do that.