This is the second of three posts about my experience at SXSW this year. The first one is here.

One of the big topics on my mind before heading to Austin was social media measurement. Sure, I know about the dozens or hundreds of tools out there. I know about influence, sentiment, and plain old conversation tracking. I read articles, blog posts, industry reports, case studies, tarot cards and anything else available to get my head around the matter. But at the end of the day I still struggle to define what it is we are measuring, and to what purpose? Revenue growth? Brand heath? Customer satisfaction? And of course, the $65 million dollar question, “What’s the ROI?”

No surprise, I wasn’t alone. All the sessions that even hinted toward covering the subject were full. And even on the last day at 3:30 pm, hundreds of overtired, overstimulated people trekked across the campus to the Advanced Integrations of Social Media Analytics panel led by experts from Edelman, Altimeter and Crimson Hexagon. Hopes were high. Looking around, everyone was eagerly clutching their mobile device, ready to tweet the magic gem(s) that would justify their existence, or at least the price of their badge.

Turns out, there was very little magic to be had. Even the panelists disagreed, one of them stating that “ROI is just not the appropriate measure for social media…” (audience applauds), while another rebutted that “It absolutely is appropriate if you think about what goes into the “I” in investment…” (audience deflates).

One thing that’s evident is the potential power of the data available to us now. There is so much data. Really amazing, valuable, never-had-before data. Demographic data, product data, psychographic data, behavioral data. Data on referrals, location, engagement and intention. And while there are hundreds of tools available and new ones cropping up every day, we’ve only begun to grasp how it can be used.

At the Austin 2 Boston event last week, Tyson Goodridge of DIALOGUE (@goodridge) stated a key takaway from SXSW was “Data, Data, More Data – what do you do with it?” (That’s it. No attempt at an answer.)

So while I didn’t leave Austin with any magical insights around measurement, I did take comfort in the fact that we’re all asking the same questions (read: there are no real experts). And it’s absolutely clear that the companies that will succeed in this space will invest the time, resources and tools to measure the data and, most importantly, figure out how to turn data into insights and insights into strategy.

As for the ROI question? My view is that yes, it can be measured, but it’s not a simple output-input equation in this case and it can’t and shouldn’t be the holy grail of measurements. This is another post entirely, but  my favorite response to the ROI question is, “What’s the Return on Ignoring?” Here’s a great article on the subject with perspectives from the likes of Gary Vanderchuck, CC Chapman and Sean McDonald.

Stay tuned for my third and last post about SXSW. I’ll tell you about the best session I attended and why you should be sleeping more.