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- social capital != financial capital
- social capital and financial capital are complements
- the accounting system for social capital hasn't been built yet but once it is, the first movers will own the head of the Power law.
- Measuring social capital with dollars is like tapdancing about architecture.
- if ANY business could "buy customers" through advertising/marketing in any single medium, that would change this conversation completely. Of course, no one can.
Even open source business models are still business models which in some way aim to reward the originators financially to allow them to do what they do?
And there are quantifiable aspects around human conversations - e.g. the amount of them happening. Then it's down to automated/human interpretation to judge the sentiment and value of each one if that's whats required.
I'm a big fan of Katie and Avinash, and the quality and value of conversation are definitely the best metrics of engagement - but you still need to figure out where engagement sits for the rest of the business, and how it's integrated into other areas. If it's contributing to natural search results, for example, then without any measurement of other outcomes, the results are all attributed to SEO work, and engagement is disregarded. If it's driving purchase conversions, but not being tracked, then the natural assumption is that traffic from search, or a bigger display ad etc have driven the end result.
It's easy, when you've involved in social media every day, to assume that it's just a natural thing that everyone gets should be integral to every part of a business, and that quality of conversation in itself should be accepted as result enough - but that's not going to convince anyone who isn't already a convert...
My argument is a bit more philosophical than practical. The old metrics of impressions, click-thrus, etc., are what we've mistakenly made people comfortable with. We can show an ROI, but those numbers don't accurately justify or balance the goals we (should) set out to achieve with social media. So we're comparing apples to oranges but have convinced the C-level folks that the apple actually IS an orange. I'm advocating that we feed them real oranges, but that requires they unlearn what an orange is.
From a practical, here-and-now stance, however, you are right. We must show them the old metrics, the apple-as-orange, to keep them happy and spending. But we must also find a way to make the actual orange, the real value of the conversations, appealing to them.
I think on a philosophical level, it's easier to say what we should be doing, but there's a risk that we never join the dots between the philosophical end game (with some case studies), and the practical reality of most companies - this is the area where the biggest challenge occurs.
There's a big responsibility for social media specialists to be able to plan the ideal strategy from the social perspective, the old school perspective, and the transitional perspective, and to somehow juggle the three in a way which educates and transforms business and marketing for the better. The good thing is that the very tools and philosophy we all espouse, which is collaboration etc, is actually a huge asset in doing this!
I view the distinction you're making as one of tactics versus strategy. Number of comments seems like a tactical metric, whereas "the old metrics" like traffic and conversion are tied to the end goal - revenue. I think there's an inherent danger in focusing on the methods (participation) without always starting from the goal (profit). There's a risk of being viewed as tactical and dispensable. In my view, PR has historically done this and, as a result, they've frequently taken a back seat to the brand folks (and, more recently, to the SEOs). The people who draw the line between social media participation and revenue are the ones who are going to own budget.
Actually, I'd contend that it's exactly opposite. I think that when we have "visible numbers", we end up screwing ourselves. Look at the the way the Web development biz grew up: in 1999 we were so proud, too proud of the fact that we in the Web biz could show you exactly how many page views a client could get. We used it as a way to say that Web was "better" than print, etc.
But when you looked at the raw numbers, they always painted a vastly more uninteresting picture than what the print folks, for example, were pitching.
Why? Because the print folks were thinking through a lot of other unseen, yet incredibly important considerations. Think what you will about the role of brand impression and market research, but it gives teams a buffer for human thought to take place. Rather than just giving raw data, interpretation allows the interpreter to ...you know... interpret.
Journalism has the same challenge, actually. In WWII, for instance, reporters would witness something, consider it, write it up, edit it, then submit it. The content was therefore vastly more useful because it wasn't just a kneejerk reaction. Reporters were more than just message deliverers like they are today.
I don't want "just the numbers" because they mean nothing until they have context added. Is 75,000 page views a day a good number? Depends... are you a new startup or a Microsoft Windows campaign with a $300 million ad buy? Is this a sustained campaign? A growing number or a declining one?
(Caveat to this discussion, of course, is that it assumes a mostly or at least somewhat successful, unbiased, non-political interpretation process)
My turn for a caveat - this is much easier to do if your goal is lead generation...it gets harder when you're trying to evaluate the ROI of social media for affecting brand attitude. Even harder for product feedback (i.e., "we have an ROI of x% because our engagement with the market helps us build better products").
I'm optimistic that folks like Katie Paine will find ways to apply content analysis to the "conversation," just as they have in measures of traditional publicity messages. It will take time, and it won't be precise. But it will help.
You are smart to shift the focus from ROI. SM is a lot like corporate ethics. You do it because it's the right thing to do, and the entire organization benefits from the exchange and the transparency of it. It protects your reputation and it builds trust.
SM is a tough sell to the accountants, but executives with vision grasp it pretty quickly. (P.S. It'll take them some time to get Twitter. I'm still having a hard time myself!)
Doing these things, correctly, should influence your brand recognition, market share, & ultimately your sales volume. But Social Media is not the ultimate tool, it is just one tool in your repertoire. Your business also needs to manage its core functions well also. As you can see with the example of General Motors, who seemed to do SM right, their core business and labor model is wrong and the company suffers for it.
Attempting to DIRECTLY monetize social media efforts is the quickest way to ensure they fail. But companies that aren't familiar with this space don't know any better. In a few years, after more companies are more familiar with these tools, I think we'll see them looking to INdirectly monetize their efforts, while putting the focus on SM as a way to DIRECTLY connect with their customers.
At least, that's the hope...
As always, you rock, Mack.
Sometimes I think quantitative ROI measurements should be left in the hands of semanticists. What is an apple, or an orange anyway? Are we talking Delicious, Rome? Blood, or Navel?Things can be measured, but connecting those things to actual business growth in the short term might be a matter of perspective, depending on the industry. As Dan commented, if metrics aren't attached to social media, the departments doing metrics will naturally take any increase as their own. Social media certainly has proven itself to have tremendous value for many businesses, so in order to assuage accounting, do certain assumptions/financial projections need to be made about the business value of conversations?
The realities of today's world - particularly in marketing/PR - is that metrics get you budget. Sure, its nice to say that social media is important to have a relationship with your public, but you need to translate that into a metric if you want ongoing funding.
Just a reality check-
It all comes back to objectives really. What does success mean in this case - not just for the social media activities but for the person who's in charge? I agree with you that you can't attach a dollar figure to conversation. Sometimes, though, you can find proxies for business objectives that you can't attribute directly to social media.
There's no way I'm going to walk into a marketing VP's office and tell them they need to use social media so they can "be part of the conversation." I'd get laughed out of the room. Instead, I'm going to walk into their office and show how being part of the conversation can contribute to their end goals (if, in their case, it can). If that involves money then you have to find a way to draw a line between that and social media activities (reputation, awareness, product feedback etc) or you have to step away from social media tactics in their case.
As you clearly realize, it's a mistake to try to apply a standard measure to social media (or public relations activities for that matter), in the same way that it's a mistake to blindly recommend the same communications tactic in every case. ROI and objectives for the activities must revolve around the (internal or external) client's success criteria.
As always, thanks for chiming in.
Relationships - the currency of social media - are unique and distinctive, and the lifecycle of each follows a different path. Perhaps if we weren't so concerned about getting directly from Point A to Point B, and more comfortable with the idea that point A might lead to B, C, D, E and maybe even F before we see a dollar sign, we might be more inclined to find a measurement that makes sense. I know there are exceptions to this rule, but I'd be inclined to say that more often than not, cultivating a relationship over time is never a waste.
I'd put an analogy here about how many times you go on a date before you get to third base, but I'm going to resist that temptation.
Way to steer us to clarity on that point. Nice analogy.
And I suck at golf.
I'm going to have to completely disagree with you Amber. As a C-level exec I can assure you that every expense gets tied to customer acquisition. If a sales rep wines and dines a bunch of clients and never brings in the sales, he/she will be sacked. The good news is that not every prospect is expected to turn into a client. The bad news is, the more golf you play, the more revenue you need to bring in to make up for it.
So, I don't think it's appropriate to use a sales expenditure as an example in this case because social media is a marketing expense. The two are very, very different.
Now, if you have a big enough company that you can bury social media expenditures in the overall budget then you can let it ride along with other programs that can actually be measured and linked back to ROI. But at the end of the day, until social media can move from the experimental phase into the documented ROI phase, it's going to remain a tiny hidden line item.
John
Traditional measurements of ROI have always been bullshit. What I believe all of us involved in social media are really looking for is a way to justify the value of our work in a manner that reflects something more honest than the traditional models of impressions, hits, clicks and pageviews with an arbitrary dollar figure imposed on each one.
I understand that businesses make decisions based on the bottom line, but isn't social media engagement all about humanizing organizations? Ultimately, businesses are made of human beings and most human beings I know are motivated by a number of things in different measure -- profit is only one such motivator. In fact, we have a word for human beings who are solely motivated by profit: psychopath.
Maybe instead of humanizing businesses, social media engagement will simply make businesses healthier, with new definitions of success that include profits, but that are more multifaceted and closely aligned with those of us not suffering from a destructive mental affliction. Or, maybe I'm just especially hopeful today. : )
Jason, you are correct. Many have been calling "the old metrics" ROI. Click-thrus, links, impressions are subscribers are not ROI. True ROI can only be measured in dollar return on investment. That is, our business earned $25 on a $20 investment, making the ROI $5. Any other measurement is not ROI and when we say it is, we drive C-level executives nuts. And rightfully so.
I served as a VP of Marketing in the corporate world, and have worked PR. Marketing and PR, including social media, can be measured in ROI, although it need not be to show value. In order to measure the ROI of social media, we first must established a measurable goal as determined by dollars returned on dollars spent..
To make this simple in terms of PR or social media and for the sake of this argument, let's assume we spend $500 on both this quarter. Our measurable goal is to return $1000. We measure both in terms of sales by either applying a special code or a special 1 800 number to be used by anyone purchasing via a blog for example. In terms of the press release, we always ask buyers how they came to purchase an item. And then we determine the return.
However, not all social media or public relations or any kind of marketing has an ROI goal. At least some of it is designed to build brand, trust and or credibility. We get ourselves in trouble when we try to measure any of that as ROI. You can't and you shouldn't.
Finally, when it is said that "The problem with trying to determine ROI for social media is you are trying to put numeric quantities around human interactions and conversations, which are not quantifiable," we can argue that this is a false statement. I can tell you precisely what my blog's ROI is in terms of dollars returned on dollars invested. Everything is quantifiable when it is designed to be so.
Hope this windy comment makes some sense. My primary warning is, let's use ROI correctly and understand it is measured only in dollars. Then we can justifiably claim that sometimes we correctly have marketing and communications objectives that are not designed to deliver ROI.
When a big company with a lot of outputs wants ROI on marketing efforts, they've already set themselves up to fail. I can tell you the ROI on total sales volume compared to what I spent on marketing, but I can't tell you what percentage was the result of advertising, direct mail, social media, public relations, our CRM program, email marketing, etc., to an exact number. It all works in unison for the greater purpose of driving the sales volume. Some of it is more quantifiable than other parts. But the soft drivers (PR, social media, CRM programs) have a hard time standing the individual scrutiny.
Craig
www.budgetpulse.com
I think that Amy's point about looking at SM through the fund raising prism (today's $20 donor is tomorrow's $20K donor) and Amber's point about no one ever figuring out how much that round of golf was worth both do an excellent job of putting this into perspective.
There are so many points I would like to make but I will stick to this one: there is nothing "new" about new media/social media. Relationship building is relationship building. SM just allows you to cast a wider net and engage more people than just the other 3 players in your golf foursome. Unfortunately, what happened is a lot of us got caught up in the tools instead of the results, thereby slowing down the rate of adoption and comprehension. It's a natural progression, but trying to get an old line, or even not-so-old line, exec to think about his PR and marketing in a new way is a VERY difficult task, as I am sure everyone here understands. "An orange is round and orange in color. Now you want me to think that an orange might be green and oblong? AND you're going to tell me that I cannot QUANTIFY this new method of marketing."
The game changer is when all this stuff becomes as normal as a website or a telephone in your office. Six or eight years ago, you had to do a LOT of convincing that a company needed a website. Today, what percentage of businesses are websites only? Change takes time and is always resisted. The more resistance you get, the greater the likelihood that you're on the right path.
While most people probably know of Jeremiah Owyang with Forrester, I highly recommend checking his blog (http://www.web-strategist.com/blog) out if you don't. He raises many of the same points in this discussion and is highlighting the value of social media through his research and blog.
And to Matthew's point, one will hope that social media in a few years will be as commonplace strategy as a website has become. The difference is that while a "website" is easy to understand, social media is changing at a quick pace. This includes not only the tools that one uses but also how one interacts with one another with these tools. I would venture to say that someone much smarter than me will come with another interesting way for us to connect and engage - all under the realm of social media.
Your right. But advertising, blogging, direct marketing are all tactics. Each one doesn't get measured in a vacuum. Instead, we create an integrated marketing plan with an objective, measurable goal(s) to achieve the objective, strategies to achieve the goal and then tactics to achieve the strategies. Only the objective should be measured for ROI, if its purpose is to raise revenues.
In my case, being a consultant, I can easily measure the ROI of my blog as a separate entitty, because we can specifically learn by asking a client why they called us. Most businesses can't and shouldn't measure tactics. Sorry I used my blog as an example. I guess the reason I did was because the topic is social media. Because social media is a tool set, not a strategy, it should be part of a larger marketing plan, not a stand-alone. And because some are selling social media in a vacuum, I think they lend to the misunderstanding that SM should create ROI on its own.
I can't do this justice, dear friend, because my answer requires a book. Good post.
If we really want social media to gain traction as a legitimate business channel, we have to be able to give clients some sense of ROI when we introduce them to the notion. Without a good ROI model, we might as well be selling hot air.
Part 1: Thankfully, you don't need a super specific ROI outline at first either. Just an elevator pitch that connects the dots for your audience. If you link social media to increased customer engagement, you can also link it to a) net new customers and b) increased customer loyalty. There is tremendous value to that.
Part 2: From there, you can use basic F.R.Y. analysis (frequency, reach and yield) to tie social media to net sales. (Frequency: The number of times a customer interacts or transacts with you. Reach: How many customers you interact or transact with. Yield: The average $ amount per sale.)
This method takes care of the three cardinal rules of selling a conservative business manager on a concept he/she isn't completely familiar with: Simplicity, clarity, and measurable value.
This only handles the selling part, but that's pretty important. Getting a business to sign off on the idea and consider spending $$$ on an unknown is the tough part. Developing and implementing social media strategies... well, that's the easy part. ;)
I hope that helps.
Wow. so many great comments!
I certainly think the presiding approach - to sell old school metrics as ROI until or unless something better comes along - is reasonable, if not accurate. You're right that we, as social media practitioners, have to justify our costs and efforts on the front end just as much as we do on the back.
But I will offer a little push back for you. Randy's Journal - the CEO blog for Boeing - doesn't sell planes. It doesn't sell engines. You can't connect it to a return unless the return is soft (e.g. - influence, thought leadership, reach, etc.). So where is your measurable value and if it's not a dollar amount, how do you convince the executives the ROI report is relevant?
I think the real issue is making the effort to TRY to track ROI. Social media and "brand awareness" at some point should be nailed down to creating, retaining or expanding a revenue stream IF you want social media to be more than conversation, which I think most of truly desire.
The positive news is it's early! Old media have established metrics that executives have bought into for years. Social media will get there, but in the mean time, let's not sound like anti-capitalists and say wanting revenue from customers, prospects or strangers is bad. No, we're not going to ask for revenue at the start of a conversation, but any good salesperson will tell you it takes time to build a relationship, which I think is the same thing social media aims to create.
The fact is... you can't keep asking for more money to be put into any marketing/pr effort if it's not held accountable for dollars. Even direct mail campaigns stink at getting a good return, but they're very clear about assigning a number to what is successful. I don't think social media has to sell more widgets per se, but being "a part of the conversation" is going to get old one day and some who don't "get it" will pull those dollars.
I love the varying theories and thoughts in your comments, but I agree most with Olivier and Amy. Let's try some of the old media (aka creative) ways of assigning return on INVESTMENT towards our new, ever-evolving social media tactics. And to Amy's point, maybe social media is about planting seeds that don't have a short-term ROI, but later can be realized. I think most clients/bosses can buy into a long-term strategy.
Again, I think it's about effort. Let's not put our hands on our hips and whine about money-grubbing corporations and instead try to continue to find ways to define ROI. Saying it can't be done translates to an executive as obtuse and eventually irrelevant.
So we can concentrate on ROI and being capitalists and thinking profits first all we want. What I'm proposing is that there is no true and accurate way to tie social media activity to bottom-line profits. It's not a hands-on-hips laziness or whining. It's an M.C. Escher painting ... there (currently) isn't an answer that isn't smoke and mirrors.
My most consistent refrain with clients and students is the its a conversation not a sales pitch.
Bernie Borges
@berniebay
www.steveradick.com
Hence the debate and discussion.
One idea: I saw a Tweet this morning http://twitter.com/northernchick/statuses/98202... "customer service has ALWAYS been the "new "marketing". Perhaps instead of using SocMed to "join the conversation", it can be used to enhance the service aspect of customer service.
Like Marriott's model of empowering every employee to solve problems for guests ("If you meet a guest with a problem, you own that problem until it is resolved"), using a blog or forum for an open ticketing system could be a powerful tool for showing how hard your company works to solve customer service issues.
Kudos for the great post and getting this conversation started. This is something that we struggle with daily at Watercooler but we're slowly making progress. From my standpoint as a marketing guy, I completely understand that our advertisers need to see some sort of ROI on the ads and sponsorships they run in our applications. My job is to help them see that there are better ways to measure ROI than by looking at the old school metrics of frequency and reach. Instead, we've had great success reporting on engagement metrics and showing how users are interacting with their brands in new and innovative ways. They still want to see impressions and uniques, but they're coming around to taking a look at other metrics as well. We'll get there.
But some businesses have found a literal "ROI" if yet a measurable one, and a few have measurable ones but don't know it.
In both cases I will point to Comcast. For "found ROI" see the mounds of positive press (traditional and new media) that they are getting getting with a tiny investment of a few paid tweeters. That's a pretty cool trick that many could emulate (and many are) and that leads directly effects and returns value in customer satisfaction and the cost of supplying services.
For the not-yet-discovered ROI; it's in those costs of supplying services. In Comcast's case, first you have to understand that Comcast has a very tenuous grip on their actual costs for customer service and how those costs reflect back into higher costs throughout the company. At this point Comcast, and (many?) other companies that use interactive comm, only see it as a tactical, one-on-one problem fixer that happens to be in the public eye. If they'd spin it around to a strategic window into their markets then they could quickly generate an abundance of big cash opportunites: e.g., service cost savings, product improvements and new products/packaging.
It's hard to find a public corporate use of social media that is truly strategic. Most are tactical fireworks. It's in a strategic use that the ROI is hiding.
I have only good news - Social Media Marketing is measurable. In fact, it's significantly more measurable than the game of golf as it relates to customer acquisition. And, it requires more sales skill than marketing skill (contrary to the opinion of John Pozadzides).
If you approach Social Media as a marketer, the tendency is to communicate the brand proposition; to touch on all attributes of your brand. Marketing people rarely participate in the sales dance. What marketers do is support the opportunity for a sale, but they let the salesperson do the deal.
So, as it relates to social media, the marketer must help sales understand strategically which social media have an abundance of qualified prospects. The marketer must set up each social media account properly (e.g. with Twitter, it's critically important to enable an automated-response direct message for people who decide to "follow" you - that is how you put your blog or website in front of them when fresh in their minds). Traffic to your website and analysis through a goal funnel is one powerful way to measure your social media success. My company does it for every client. Some of you will click this link to our website: http://www.aidantaylor.com - and guess what, I'll know it! And, I'll know if you check out our Social Media Directory or our Social Media Process (both goals for customer acquisition).
Now all of us know that sales people succeed generally because of their ability to read and influence people. They know when to overcome an objection, and when to shut-up! People skills are incredibly important in social media. You have to invest in each community - your time and thoughts - many times without immediate return. You have to court each prospect.
Quick Recap:
1. Social Media is measurable.
2. Social Media requires marketing strategy/process.
3. Social Media is a sales environment (real people talking to each other about products, services and everything else).
Wish I'd written this post, and 2/3rds of the (58!!) comments, too.
No higher praise from a bloggedy-blog-blog egoist like me. ;)
An analogy I have been using when describing social media is as follows:
"Think of all of your friends and connections that you have in your life, how much would be willing to PAY to keep them?"
This is how people should think of social media, it's not about how much you can squeeze out of your customers, it's about the value that YOU can provide THEM. It's like to put an ROI on knowledge. When I think about my friends and connections and how they have helped shape me, teach me, and help me grow, it's priceless.
Companies and individuals are taking for granted the fact that users still want to engage with them. What if comments disappeared? What if not a single person was engaging with your brand...ever, then would you still be saying "how much money can we MAKE from our users?" or would you be saying, "what is it going to take for our users to talk to us?"
I tried to echo this in a post called "there is no ROI from social media" which I think touches on a few of these points, id be curious to hear your thoughts.
http://www.jmorganmarketing.com/there-is-no-roi...
thanks jason!
So it gets added to: team meetings, team away days, department events, internal newspaper, online news, senior leader 'skip levels', briefings etc etc. But what social media does is make everything more immediate.
Also, everything I'd read about social media so far says you start small with some trial runs, test and prove the concept, then evolve and grow. If you do that, surely you accumulate priceless anecdotal evidence from the leaders and employees on the value of the process, both in terms of the subjective (e.g. great sharing ideas with people, feel really engaged and involved...) and the objective (e.g. more useable ideas, quicker deployment of the project, results...). And those real experiences become the basis of the business case, rather than asking or a whole stack of cash based on an abstract argument in favour of adopting social media.
I haven't had the time to comment here like I would want to comment here (and please forgive my brevity this time around ... next week will be so much easier). But ROI is not about money, as many comments here seem to imply.
More to the point, as long as people continue to attempt to measure "human interactions and conversations," the exercise in demonstrating the real value of social media will continue to fail.
While it's true that you cannot measure the number of conversations and assign numbers to them, you can measure the outcome of those human interactions and conversations. What happens after the conversation or interaction determines the quality and impact of those conversations and interactions. Until public relations professionals come to understand that, they will never be able to accurately measure social media let alone public relations.
Best,
Rich
If you were to attempt to 'pin' ROI to a monetary calculation then my own blog post http://www.loudmouthman.com/2008/10/13/how-less... uses some fairy tail economics to put some value to metrics.
However I point out that many of the tools used by employees and businesses today are purchased and implemented without a singular thought to the ROI. Possibly because it is understood that the ROI is implicit in its usage. tools such as
Telephones on the Desk.
Word processors and Email clients on the Workstations.
Mobile phones for mobile staff.
at one time a long time ago the same , what is the ROI ? conversation was had about all these tools but in a short while it became clear the metric is inbetween not in the items.
At any rate, a great post! Keep them coming.
Unless we change their opinion of how important those relationships can be.
Now if someone from Toyota and I sat down and had a conversation about why the Tundra is the right option for me, maybe I'd change my mind.
Great ads. Great engagement. No sale.
That's just one example.
While I understand it's important to watch costs, it's more important to build relationships. I think Amy Nowacoski puts it best: "I would spend time making sure everyone, not just the big donors, feel like VIPs because that guy who only bought a $20 ticket today, could be the guy who gives you $20K in 10 years."
That speaks to the long-term commitment of relationship building using social media for businesses. I think many business owners get obsessed with profit margins and return on investment, losing sight of the bigger picture of relationship building using social media. The apparent dollars and cents connection isn't going to be evident from the moment a social media campaign is launched. It takes time. So there should be two levels of measurement.
On the one hand, the initial analysis of social media should be qualitative. We should be examining the tone of the conversation and measuring attitudes of the customer based on their social media interaction. How was their perception of the company brand before a SM campaign, and what is it afterward? While that is only one of many questions, the point is the relationship.
Let me give you a better example. When I worked for a financial company, its brand was in the toilet. Referrals were down when I walked in the door, and one customer said to the CEO, "So, what are you calling yourself this week?" The comment was tongue-in-cheek, I was told. It, nonetheless, was a sign of a much larger problem. One of our strategies to address that image crisis involved social media. But it took us 18 months to show a tangible (ROI-esque) connection. Beforehand, I measured the relationships by monitoring the tone of conversations and other indicators before we got the big $5 million pay off.
The CEO wasn't worried so much about the money. He knew that building relationships and cultivating them was more important. He looked at the long-term investment that strong relationships built today return their weight in gold later. The problem I think with measuring the ROI of such long-term investment is the disconnect between the pay off and what might have initially triggered that customer relationship. If we conduct on-going qualitative measurement, maybe that gap can be closed.
so as not to write a long comment here as I'm rather prone to do.
The short version though is that perhaps focusing on ROI is part of the problem. Not that it isn't important, it is. But I would turn it away from a selling Social Media tools and tactics spiel to focusing on how Social Media can enable businesses to solve their key business pressures.
When you can explain that, not only do you show how to solve their more pressing problems, but you gain buy-in. You can then (strategically) apply scenarios to solving existing identified problems (for a list see my post, but they will differ from company to company) and then the question becomes "what will we need to invest to arrive at our desired outcome?" And "how can we integrate with our existing processes?" How can we measure becomes "how will we know if we're successful?" With measures set to answer that. Of course it takes some digging to find out what these pressures are, but on the other hand, why not ask?
ROI discussions become less of the focus and more self evident.
That's my suggestion anyway.
There are some insightful comments here. I noted a comment saying forget about the numbers....I hope no-one goes to businesses saying that!.
No numbers = out of business.If you are not making profit you are making a loss. It is all about the numbers... from customers to jobs.
www.buzzstream.com/blog
As an ad agency creative guy for nearly 20 years, I can say that assigning ROI to brand campaigns has been a classic problem always. There's a classic line some advertiser said, "I know half of my advertising works, I just don't know which half."
I think there are some businesses that will have a better ability to know if the ROI is worth the time investment or not at some point into a social media program. Others, it will be harder.
There will never be 100 percent agreement on this in the trenches, but I love the points made here in your post.
Thanks!
Great work!
Excellent post...even if I am reading it in a slightly delayed manner. I've been pondering the same exact point for sometime, and agree with your linking it into the goals which vary dependent upon the brand journey i.e. awareness, interest, consideration, commitment, loyalty and advocacy....as well as the big black hole of bad experience and the need for reputation management.
I think there may be a means to loosely get the return on a spreadsheet, but it requires a lot of analysis and ensuring social media is in context with all other online activity and behaviour.
If you have time, it would be great to get your feedback on the following:-
http://www.e-consultancy.com/news-blog/366889/s...
I'll check it out.
We may need different criteria and anothe view on the levers, but we should take care not to build any myths around social media...
Michael
Which is what people are doing with social media ROI as well.
This post has been in head for months and thank you for sharing your insights. I'm trying to translate what you're saying for nonprofits. What do you think?
http://beth.typepad.com/beths_blog/2009/01/nonp...
Otherwise, you're running a hobby not a business. The problem with your logic is that you're applying hobbyist terminology and metrics to a businessperson's question. Yes, you can measure ROI. If it doesn't result in a sale, then it's not worth it. The dinosaur days of ad agencies selling "branding" on a broad, non quantifiable scale, are rapidly vanishing.
Social media can, and should, be held to a business criteria IF USED for business. You wanna have a social media presence for yourself personally? Go for it. Want to do it for free? Go for it. But biz is biz. Just because the channel changes doesn't mean the netrics should.
We are now all interested in a broad response and feedback. Let us know what you think. Thanks a lot.
But you are able to see if people buy more since you've integrated Social Media..
Because due to the social media you create trust & you gain more visitors.
A conversation can laed to trust. And that's the main key before you can start selling your products. If you interact int he conversation, you can gain even more trust. And if your sales increase, you can say 'Ok, there's a big chance it's due to integrating the social media'.
In that way you can determine the ROI.
Thanks for the thoughts. You're not wrong. But your theory doesn't work in all instances.
Good article. With respect to Social Media ROI, I would like to refer you to a post I wrote recently about Social Media ROI. Please go to http://dagholmboe.wordpress.com. The third part of my postings includes a downloadable Social Media ROI spreadsheet.
The spreadsheet helps you determine your social media costs by comparing the offline costs for the same benefits.
Let me know if you have any questions.
Best,
Dag.
While my view is that social media impact (ROI) maybe more difficult to measure the larger the organization and the more points at which the organization is engaging in the 'conversation' but, based on the microcosm of my own experience I absolutely disagree with your assertion that, "...you don’t get money out of a conversation." Ultimately that's where all the money comes from. Whether it's traditional offline relationship building where you establish trust and confidence with a prospect or online through twitter, facebook, linkedin and so forth, the conversation is the end game; it's where all the money comes from.
Case in point from yesterday. One of my twitter followers Direct Messages me with a question. I respond with an email, she follows up with more questions. She likes what I have to say, she responds with a laundry list of items that she wonders if they "are my department". I respond they absolutely are. She's excited, today we'll shift the conversation to Skype and, oh by the way, her professional network has the same laundry list of issues to resolve and they absolutely need someone with my 'expertise' to sort things out.
Bottom line is that, if the conversation continues to its logical conclusion this person, who I'd have never met traditionally because she's a half a continent and a very large ocean away, will end up engaging my services for money. And, if I do a good job for her then I have an automatic 'in' with her peers. My ROI? A bit hard to calculate yet but potentially significant.
Another client, preparing to self-publish her book, mentioned it's title and premise on her LinkedIn profile. An editor for a major book publisher noticed the reference and liked its focus. He engaged her in a conversation the result of which is she kept the $20k that self-publishing would have cost and pocketed $20k as an advance and is slated for a bells-and-whistles release this Fall including major launch campaign and national distribution to leading on and offline book sellers.
Her ROI? A couple of hours invested in setting up a LinkedIn profile + a 5 minute update announcing her book + a couple of hours of conversation via email & voice = $40,000 (20 saved + 20 advance) + royalties + increased fees and speaking engagement dollars due to status upgrade as a 'published' author.
Maybe calculating ROI for Social Media doesn't scale particularly well but if you operate on the assumption, to paraphrase Tip O'Neill, that 'all social media is local', you can easily calculate the ROI of your personal efforts.
but i have some confusion so that we can use ROI likes a Social Media if yes, how...
Thanks
I'm working in social medai. I'm now writing a report about my social media projects. What i did, what are my KPIs, ROI, innovations, and next steps.
When I reached to the ROI part, i really did't know what to write. I ran to google and made a search. Now I understand that ROI is difficult to be measured in social networking bases.