Return on Investment in Social Media--Does the Hype Pay Off? Towards an Assessment of the Profitability of Social Media in Organizations

Since the popularity of customer-centered social media has increased substantially during the last few years, firms have been eager to profit from this trend. Given the uncertain payoffs and constraints on human resources, however, there is as yet no decision tool to help decide on social media implementation. Our paper addresses this gap by establishing a framework for assessing the profitability of customer-centered social media initiatives in organizations. We first outline the importance of customer-centered social media and demonstrate the research gap. We thereafter analyze the common characteristics of customer-centered social media initiatives and identify their main success drivers. We then combine the current knowledge on social media success drivers with the return on investment (ROI) research stream by proposing a balanced framework towards measuring the ROI of customer-centered social media projects. The proposed framework balances a project´s high uncertainty with managers´ need for hard facts. In a first step towards the framework´s validation, we use 12 empirical examples to showcase the proposed framework´s application.