I’ve always told people that if they only participate in social media for a dollar ROI, then they are in it for the wrong reason, and they are destined to fail. Making money with social media is an indirect result, not a direct result. But, it’s important to keep in mind that ROI does exist in social media. It’s a debated topic because those who do not know how to use social media effectively will tell you that ROI does not exist.

With the connections that are available trough social media, the possibility for viral activity increases, which also means that the possibility for your message to be viral exists as well.

This article is a textual representation of “Social Media ROI: Socialnomics” by Socialnomics.

Think about this. More than 300,000 businesses currently have a presence on Facebook.

Gary Vaynerchuk grew his wine business from $4 million to $350 million using social media. Vaynerchuk found that he could accrue 200 new customers through a $15,000 direct mail campaign, 300 new customers through a $7500 billboard ad, but yet he could spread his word for $0 to 1800 new customers through social media.

Companies that are engaged in social media surpass their peers in both revenue and profit.

Social media is not just about making more money; it is also about saving money. As an example, Lenovo reduced its call center activity by 20% when customers began using the social features of their community web site.

Burger King ran a promotion through Facebook which became viral and was ultimately shut down for various reasons. However, the campaign cost them less than $50,000. Their return on the investment was estimated to be more than $400,000 in press and media value. Media impressions were more than 30 million; more than the combined population of 19 states.

Blendtec ran a video campaign called “Will it Blend” where they attempted to blend various, every day objects in their food blender product. The videos became popular, and sales of their device quintupled.

Dell has a Twitter account. Using the service, they have sold more than $3,000,000 worth of computers.

Traditional advertising outlets do not produce near the same results that social media can produce. Only 18% of traditional TV campaigns generate a positive ROI.

For social media to work, strategy is important. Simply being on social media is not enough. “You can’t just say it. You have to get the people to say it to each other,” James Farley, CMO Ford. 37% of Generation Y was aware of the Ford Fiesta through social media before the car was even launched in the United States.

Ever heard of Scott Monty? 25% of Ford’s marketing spend is on digital and social media. They are the only US auto company that did not take a government loan.  Volkswagen launched the GTI through a campaign that was 100% mobile.

Naked Pizza set a single day sales record by using social media. 68% of the sales and 85% of new customers came from Twitter.

The companies that I have mentioned have all been B2C companies. Is social media effective for B2B companies too? Absolutely.

Tweets for a Cause utilized Twitter to encourage support of the Susan G. Komen for the Cure initiative. Their message was retweeted; a lot. Retweets from @mashable, @G_man, @zaibatsu, and others caused the Atlanta chapter to receive 11,000 site visitors in 24 hours.

Intuit introduced their “Live Community” into Turbo Tax products two years ago. Since then, unit sales have increased 30% each year.

Genius.com is a software company. Their reports have shown that 24% of their leads from social media convert to sales opportunities.

This one is a big one. Social media helped put the president into office. Barack Obama has more than 5 million fans on social media. 5.4 million people clicked on an “I Voted for Obama” Facebook button. 3 million people donated to Obama online; more than $500 million. The donations were not big donations. Every bit counted. 92% of donations were in amounts of less than $100.

The University of Texas MD Anderson Cancer Center had a 9.5% increase in registrations using social media.

Did you ever see the hashtag #moonfruit on Twitter? Moonfruit is a web hosting provider. They invested $15 in social media. Their web site traffic increased 300%. Sales increased 20%. They received a higher search rank. They landed on Google’s first page for the search term “free website builder.”

A study by eBay found that participants of online communities spend 54% more money online. With social media, they save money on customer support costs. In their customer contact center, they would spend $12 for every $.25 spent via social media self service.

Of course all these numbers from each of the case studies will make you think more about social media. But, social media is not a traditional media channel, so why are we trying to measure it as such? “Social media touches every facet of business and is more an extension of good business ethics,” said Erik Qualman (@equalman).

“You can’t buy attention anymore. Having a huge budget doesn’t mean anything in social media. The old media paradigm was ‘pay to play.’ Now you get back what you authentically put in. You’ve got to be willing to play to play,” said Alex Bogusky, Co-Chairman, CP&B.

So, how do you respond to questions asking you about why social media is good for ROI, or how social media will make money? Another quote from Erik Qualman is, “When I’m asked about the ROI of social media, sometimes an appropriate response is ‘What’s the ROI of your phone?’”

Morgan Johnston of Jet Blue Airways said, “Think of Twitter as the canary in the coal mine.”

71% of businesses plan to increase their social media budgets by an average of 40% because it is low-cost marketing, it will help the business to gain traction, and most importantly, they have to do it to be competitive. If they aren’t doing it, their competition is.

Doing nothing in social media is a risk your business should not be willing to take. The social media tidal wave is here. Are you swimming with the current, or remaining anchored to your current status? Businesses that do not evolve will not survive.

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