What Is The ROI For Social Media?

October 28, 2008 · Comments

Jason Falls

I spent a good portion of Sunday and Monday thinking about social media measurement and proving return on investment or ROI. Many of the sessions at PRSA International in Detroit were about social media, web-based communications strategies and the requisite question of how do we report success. Fortunately for PRSA (Public Relations Society of America), Katie Delahaye Paine was on hand to present and share her considerable expertise in the subject.

I attended both a roundtable discussion session, one component of which was a talk with Katie (I reported it for PRSA’s blog) and a session called, “How to derive ROI from Interactive Communication,” presented by Joanne Puckett of Ketchum. The confluence of all the thought, which I’ve outlined some salient points from below, really led me to one clear thought:

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.

To illustrate that point for all our measurement and metric geeks out there, what you are trying to do is assign multiple choice scoring to an essay question. It’s not possible.

Katie hit the nail on the head near the end of her round table discussion when she said, “Ultimately, the key question to ask when measuring engagement is, ‘Are we getting what we want out of the conversation?’” And, as stubborn as it sounds Mr. CEO, you don’t get money out of a conversation.

To further the discussion a bit, I sat down with Katie for an episode of SME-TV:

What Katie evangelized a bit in her session was that the conversation (comments on your content) was the best measure of a level of engagement. Avinash Kaushik says much of the same in his discussions on web analytics. This isn’t an end-around the need for ROI, it’s the answer. Or at least a big part of the answer.

(Side note – Provided this is true, isn’t it sad that most companies haven’t even upgraded the technology used on their websites to enable commenting and conversation. Of course, it’s even more sad that if they had the technology right, they’re still afraid to use it. I digress.)

When you ask businesses why they are participating in social media, what do they say? If they say, “to make money,” then they will fail because currency in the social web is found in both relationships and content. If they say, “to grow our business,” they’re just saying, “to make money,” in a nicer way. If they say, “to participate in the conversation,” which is the more appropriate reason to be involved in the social web, then why on earth would they not measure success by the value of the conversations they have?

This is why every session on measuring ROI in social media is a waste of time. None of the measurement experts are going to make that point and that point alone because without throwing page views and unique visitors and number of subscribers and sentiment and tone, they have nothing to offer. Puckett actually said in her presentation that there are three types of results in interactive measurement: outputs (impressions, share of voice, tone, etc.); outcomes (attitude shift, behavior change, expanding reach); and business results.

She said about business results, “We haven’t figured that part out yet.”

And they’re not going to. And neither are any of us unless we start looking at the results in relation to the goals.

If your goal is to participate in the conversation, to enhance your relationship with your audiences and become a trusted member of the community that surrounds your brand, then your measures should prove you’ve done those things. Your ROI is what you got out of the conversation, not what you got out of their checkbook.

Do social media thinkers and measurement mavens owe businesses more than that? If so, how would you draw the line between having a conversation and making your monthly spend look reasonable to the boss? Push back, now more than ever, is welcome. The comments are yours.

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Tagged as: Katie Payne, measurement, metrics, return on investment, ROI, Social Media

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  • Tasneem
    Mr.Jason Falls, thank you so much for the very intresting article.
    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.
  • It's got to be about Dollars, Yen, Euros, INR, etc. if it relates to business. There are ways to track activity and tie it directly to sales. The systems are in place now so that these activities can be measured and an ROI produced.
  • Thank you for putting this together. I know it's "old" from October 08 but I think it's still very relevant. It's helped me realise I can't always justify ROI in a traditional sense.
  • Just proof the archives are useful. Thanks for stopping by and finding it, John.
  • webbedmark
    As a Internet Marketing Professional I can say that Social Media is comparatively a new concept in Search Engine Marketing so it would be early to comment on its ROI. I would say just wait and watch.
  • But if you wait and watch, then someone will figure it out before you. Heh. Thanks for the thoughts!
  • Very good article, thanks.
  • Jason, start here and work your way up the posts that week: http://thebrandbuilder.wordpress.com/2009/05/18...
  • Great resource, Olivier. Thank you for sharing it.
  • great information of ROI for social media i impressed this lots of information and can you tell me what is the use of Right hand side SME Community if i join.. will this anything give profit on our website..because you say that "SME Community" and i saw lots of people joine this..
  • Excellent post: i am very happy because i knew that ROI by your great posting..

    but i have some confusion so that we can use ROI likes a Social Media if yes, how...

    Thanks
  • tomgray
    This is a great post and an important topic.

    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.
  • Thanks Tom. Great examples. I'm impressed you took the time to share all that with us. I wish every social media interaction were as easily trackable, but the truth is that as you scale and as brands are looking to measure, the math just gets hypothetical and vague. But I love the examples and how there is a starting point on which we can build.
  • Jason,

    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.
  • Thanks, Dag. Will go check it out.
  • Nice blog - good points. I think there are comprible actions, though, that businesses pay for - and effect of social media can be compared. I created a worksheet to this end - and if you have any feedback, or additions, would love to hear from you: http://www.dragonsearchmarketing.com/social-med...
  • Excellent work, Ric. I like the worksheet and may do something more with it soon. Thanks!
  • Olivier
    "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."

    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.
  • Olivier, I would agree, only for one point. You can't accurately track an increase in sales since you've integrated social media unless you've done absolutely nothing different in other marketing areas. If you've not changed your approach there, it's not likely you'll have as big an impact in the social media space, either. Sure, some companies can track it, particularly those who choose to focus most if not all of their marketing efforts in the social media space, but for most brands -- ones with above the line advertising campaigns, CRM programs, direct mail initiatives, email marketing and the like -- social media is just one of many efforts going on simultaneously. Thus, you can't circle one and say, "Here's where the bump came from."

    Thanks for the thoughts. You're not wrong. But your theory doesn't work in all instances.
  • The Social Media Academy developed a way to calculate ROI on social media. http://www.socialmediatoday.com/SMC/77179
    We are now all interested in a broad response and feedback. Let us know what you think. Thanks a lot.
  • Thanks for the point, Axel. We'll check it out.
  • Jeff
    The problem with your logic is that you think having a conversation and making money are two different things. But, sales reps, marketing managers, focus group facilitators...all are people who have conversations for a living. They all must build rapport. They all must build loyalty and a following. And all, every last one of them, leads to a sale.

    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.
  • Thank you for this article! When companies and entrepreneurs understand the power of Social Media is in the conversation, then they will start to see a healthy ROI. The conversation is the relationship created between you and another person.
  • Jason,

    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...
  • Actually - I dont thik it's impossible to quantify human interactions - we're doing that all the time in traditional media. We're quantifying even stranger things like switched-on TVs.
    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
  • I would push back only to say that the human interactions of traditional media aren't quantifiable either. You can measure how many TVs get turned on, but you can't put a number on how many people A) pay attention to the ad B) are enticed to try or purchase based on the ad and C) tell someone else about the ad. Sure, you can put some assumptions and statistics parameters in place and extrapolate estimates, but you're essentially just guessing.

    Which is what people are doing with social media ROI as well.
  • Jason,

    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...
  • Thanks Karl,

    I'll check it out.
  • Phenomenal Post. Of course any business who participates in the conversation does so to make money...it's just not the IMMEDIATE goal, and it's not as easy to measure as a direct sale.

    Great work!
  • Thank you, Carrie. Agreed - Conversation can't be immediately converted. But at some point, we need to be able to quantify that conversion.
  • - Money can't buy a business everything it needs
    - 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.
  • Interesting thoughts, Ethan. Thanks!
  • Brilliant article! I have been mulling over the online social media ROI question for some time, trying to convince my bosses of the value of blogging. Your article definitely furthered my thinking on this matter.

    Thanks!
  • You're welcome Toby. Thanks for chiming in and saying so.
  • Cheers for such a brave post, as I know it will bring metric-holics out of the woodworks screaming out you in through the comment box.

    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.
  • Agreed - agreement here is tough. And thanks for the perspective from ad business. You're right. It's muddy water all around. Maybe someone will come up with an answer some day. Thanks!
  • I couldn't get this one out of my head all weekend, Jason...just posted my thoughts on the BuzzStream blog:

    www.buzzstream.com/blog
  • Wow Paul. Thanks so much.
  • No doubt because of this conversation, I noticed today (Nov 3) in the Australian Financial Review some comments by STW Communications Group exec, pitching a "digital consulting business" in their group, Kineo, whose role would be to help chief execs and marketing directors create a marketing "dashboard": she was quoted as saying "Companies have spent a lot of money investing in individual areas such as CRM, digital marketing and so on. Now they want to pull it all together and start getting a clear picture of the return on their investment." And so it goes. But let's not give up on communicating a better story.
  • Agreed. We owe the C-level folks better than we've given them. Let's keep working on it.
  • This is very topical. I had quite a lot to say so I re-blogged it on my blog http://nickyjameson.com/2008/11/02/expressing-t...
    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.
  • Excellent points, sir. And I've added a comment to your blog as well. Thanks, so much, for the additional thoughts.
  • Thanks Jason, for raising the topic in the first place.
  • Jason, this is great and a point that most miss. Too many are trying to "fix" things with hard numbers instead of realizing it just doesn't work. Great stuff!
  • Thanks, Maria. Glad you thought so and glad you commented.
  • There's a lot of buzz words flying through these comments: ROI, conversion, bottom line, humanizing conversations, and measurement. But what's really important to businesses -- people. What gets people in the mood to buy -- relationships. People and relationship, without them there's nothing. There's no business. There's no ROI. And you can kiss that bottom line good bye.

    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.
  • Totally agree with you Rodger, but the one thing you're missing is that most brand managers, thus brands, don't worry about relationships. They worry about quarterly profit reports. They are concerned about their jobs and if they don't hit their numbers, their relationship with that brand's consumers doesn't matter. It's the classic problem of misappropriated priorities from the top down. CEOs want numbers. CMOs want numbers. Brand managers want numbers. Ad agencies are told to produce numbers. Big brands fail (normally) to recognize the only way everyone wins is if they stop focusing on the numbers and start focusing on the relationships.
  • It’s entirely possible to put a price on human interaction. Marketing agencies do it every day. It's about strength of engagement. It's always been that way. It's what made good ads, good tv commercials, good marketing. Healthy conversation about your business *might* help sell your service, but it might also teach your service how to be sold better.
  • Think I might need more convincing on this one. A television commercial can be extremely engaging, but does it sell stuff? Maybe not. I love Toyota Tacoma commercials but don't own one and probably won't ever own one. Still, I love the Toyota Tacoma because it's ads exude masculinity, no B.S., and all the other qualities the brand has I might wish I possessed as well.

    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.
  • It's so fascinating because brands are TAUGHT the ratings system for television, radio and print advertisements. They can say, oh well this spot has this GRP, or whatever. We havent' yet found that measurement for a conversation. Believe me, I have sat through COUNTLESS Measuring WOM seminars that try and do it, but the average brand doesn't buy that data. This is about a two way communication-- a conversation, versus a one way shouting of an advertisement, which people are becoming more readily equipped to be able to avoid (DVR)
  • Then clearly, persuasion isn't part of your conversation message, as it's not always part of every "ad" (ads serve more than a single purpose)... when it should be - but only when the time is right. Great sales people know when that time is.
  • Chuck Hemann
    Jason - first time commenter, long-time reader. This is a really great post. As one of those measurement mavens, I often hear that social media cannot be measured...or better yet that the ROI of social media cannot be determined. Frankly, when referring to either traditional or social media I prefer to talk about measuring results and NOT ROI. I've found ROI to be a polarizing topic/term. Measurement seems to be something more professionals can get their heads around.

    At any rate, a great post! Keep them coming.
  • Fair point, Chuck, and I think "results" is more closely aligned with what I feel is most important in the outcomes of social media. But I would measure them on an individual basis, not a collective aggregate. Still, the people who sign the paychecks want to know what they're getting for their investment and, "125 new relationships with people who love our brand," isn't enough.

    Unless we change their opinion of how important those relationships can be.
  • loudmouthman
    Thanks for highlighting this post in the twitter stream and its great to see more people take a stand to talk about ROI as being more than just dimes n dollars.

    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.
  • The value is in the connection, in the network itself (from Doc Searls?), imagine being the salesman who had to go out there and sell that first fax machine. The good news for us is that the network already exists. We just have to find the "phone numbers" to make our fax machine work. And to keep in mind that the people getting the fax can edit it and fax it along.
  • Jason,

    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
  • Much better breadth than the Twitters. We're on the same page. Thanks for chiming in with that. Wise advice.
  • My head's spinning from all this great stuff. I'm a recent convert to the 'social media way' and come at it from an internal communications perspective. One of the things that's struck me - and it's something someone else says too - that social media simply becomes another tool in our box when it comes to achieving the objectives we work towards internally: engagement in the corporate strategy, understand it, believe you can play a part in making it happen, feel like your contribution is valued etc etc.

    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.
  • Excellent points, Mr. Shaw. And thanks for providing them here.
  • Hi Jason,

    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!
  • Excellent point, Jacob. I'm off to read your post soon.
  • thanks jason, id love to hear your thoughts on there!
  • Brain. Melting.
    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. ;)
  • Yeah, I'm pretty stunned at the vigor and genius coming out of this conversation. Guess I happened onto something nice. Thanks for the point.
  • First, I love that the game of Golf was brought up as a means of comparison to social media marketing. As one of my social media marketing clients is Hot Stix Golf - the #1 club fitter in golf!

    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).
  • Jack
    To begin with an answer to your direct question; yes the "measurement mavens" do owe more to those who pay the consulting fees. Even so; please note that the "yet" is crucial.

    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.
  • Just to throw this out there: Two Tweets to a Comcast rep and he was able to fix an accessibility problem that 4 calls over two weeks to tech support could not.
  • Excellent feedback and perspective, Jack. Love the example and illustration with Comcast. I would also, however, love to see a strategic use with the ROI presented. I still think it's impossible to quantify human interaction, but if someone can come close, I'm all ears. Thanks again. Great points.
  • Jason,
    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.
  • We will get there Bryan. I like the composite notion I get from all this discussion which is that we have to please with the old metrics while we teach the rethinking to make new measures make sense to them. Of course, we still need to do a better job of defining those new metrics as well.
  • Great post Jason, my comment in the form of a blog: http://blog.jasonkintzler.com/
  • Thanks, J. Off to read now.
  • Sradick
    OK, maybe I'm missing something here, but why are we even discussing the ROI of just social media? I've always been an advocate (and Jason, I know you are as well) of not just doing social media strategies and tactics, but integrating social media into larger communications/PR/outreach strategies. So, wouldn't the ROI of the "social media" just get sucked up into your metrics for the broader communications strategy? What are your goals and objectives of the larger comms strategy? Getting involved with social media will just improve your ability to reach those objectives that already have metrics, etc. assigned to them.

    www.steveradick.com
  • You're right, Steve. Should be compiled into a larger ROI statement, but because it's so new, CEOs, CMOs, and brand managers are saying, "We spent an additional X on 'social media' this year. Should I put that in next year's budget? Break out the return for me."

    Hence the debate and discussion.
  • Sradick
    I realize that, but I still don't see why I'd have to break out the return on just the social media part. I'd say, "Look - here are the metrics from our communications activities (earned media, # of positive comments vs. # of negative comments, etc.) from BEFORE we started using social media. Here are the metrics after." Look at it like customer service training - you start providing better customer service, everything else is going to start to improve (returns will go down, CS surveys will skew more positively, sales will go up, etc.) - not all of that can be traced directly back to that customer service training you provided last year, but it helped set the table for all of those other improvements.
  • We have all of these tools (blogs, Twitter, etc) but we do not always know just what to do with them. Depending on the company/business/market SocMed can be used in any number of ways. The use needs to be focused in order to measure the return.

    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.
  • I generally agree that measuring conversations is a key part of measuring social media efforts. But, I also believe it's possible to connect business dots between the quality of the conversations, what is learned from those conversations and the actions taken that result in money. Ultimately, a business makes decisions to achieve its business goals. Conversations in social media can certainly aid good decision making, which is very quantifiable.

    Bernie Borges
    @berniebay
  • Thanks for posting this. Its a conversation I often find myself having with clients (I"m a social media guy and pro blogger). I've found that casting it as a reputation management scenario seems to be the most broadly effective way of getting things across.

    My most consistent refrain with clients and students is the its a conversation not a sales pitch.
  • Great perspective Loki. Thanks for bringing that up as well. Reputation management is certainly a relevant focal point for good social media activity. That facet alone can be a valid argument for the spend in most cases.
  • Jason - Great job stirring the pot and getting folks to think about ROI which I think is sorely missed in most social media planning.

    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.
  • The difference that you don't seem to recognize, my friend, is that if an executive thinks it's obtuse and eventually irrelevant and being part of the conversation is getting old, and they don't spend or stop spending, it could feasibly spell disaster for their company. (At least unless the consumer population starts to tell us otherwise.)

    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.
  • I totally agree with you BUT when dealing with most clients (especially of the Fortune 500 variety), it IS about the Benjamins. Up-front too. The ROI of getting into social media has to be part of the initial conversation, or they will brush you off in favor of "proven" (old school) marketing tactics.

    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!
  • Great input Oliver. Thanks for the thoughts.

    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?
  • Jason,

    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.
  • OK, follow-up to previous: here is the URL to the "Return on Whatever" post at MarketingProfs: http://bit.ly/row
  • There are some brilliant comments on here. Jason, you are lucky to have such avid followers.

    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.
  • This discussion has been invaluable in reinforcing what social media can do for you if applied strategically for your business.

    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.
  • Well said, Matthew. Great perspective.
  • I don't know if you can place a concrete number on how much value and potential value you can gain through engaging in conversations and establishing relationships. Building trust for your brand and acting as a thought leader go a long way. The bottom line though, is that the bottom line matters. It's easy to write off that companies should not worry about the ROI, but they have to in order to succeed, especially in times like theses. Even though additional traffic (impressions, clicks, sign-ups) may not be the best way to judge social media, it certainly can give a quantifiable result. For now, that might be the best way to judge. I think sometimes people involved with social media don't fully understand that ROI is important and hitting numbers is important. May be traditional and old school, but those values in business are still important. Now we just need a better system to measure the two.

    Craig
    www.budgetpulse.com
  • Amen, brother. Thanks for chiming in again.
  • "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."

    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.
  • I like your argument and agree with your points, my friend. I would offer this, however, on your blog ROI assessment: Your blog does drive business, but it's not the only thing that drives business. So when you get a new client, you might be able to say, "That's $10,000 generated from my blog." But what about your book? Your relationships with people the client knows? Your previous jobs or connections?

    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.
  • KDPaine
    not to push back here, but that's what SPSS, SAS and Marketing Mix Modeling is for, You can do basic ANOVA and correlation analysis and get those answers. The packaged goods people have been doing it for years.
  • This post got me to think that maybe a way to rephrase the question of ROI is to ask: Does Value = Price?

    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. : )
  • You're hoping for the same things we all are, my dear. Well put.
  • Something that continues to frustrate me is that we've spent millions of dollars over the years taking our clients out for dinner or to a golf game, and we understand the inherent value in developing that relationship, even if that one transaction (or interaction) didn't drop to the bottom line. The understanding is that if I develop my relationship with this person, I'm deepening their affinity for me as a person, and therefore my brand and my company. I can't remember the last CEO who demanded that the straight line be drawn from the golf game to the account buy. Why can't we make the same connection in social media?

    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.
  • "I can't remember the last CEO who demanded that the straight line be drawn from the golf game to the account buy. Why can't we make the same connection in social media?"

    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
  • Great analogy to the golf-game Amber. I like that. And, "cultivating a relationship over time is never a waste" - Amen!
  • Sradick
    @Amber - I agree - great analogy!
  • Here's the key, Amber - the company/CEO/CMO doesn't see the customer as a human being. They seem them as a bottom line-generating operational necessity. By participating in social media, however, companies not only need to act human, but see their audience as such. THEN they'll get it.

    Way to steer us to clarity on that point. Nice analogy.

    And I suck at golf.
  • OhioMan
    You could also look at it as, in times past, companies only had the bandwidth and resources to create relationships with a few top customers. But social media allows you to develop and maintain that trusted relationship with a broad customer base. In other words, you can play 'golf' with millions.
  • Well put Amber, though I am sorely disappointed that I can't pass on some charts and graphs to my teen son to think about as he moves into the bases. Ok, I didn't just write that...
  • Nice post, Jason.

    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.
  • Great points, Dave. Hopefully we can clear the water a bit with more discussion. It just seems like it gets muddier and muddier. We do need to show provable business objectives but we can't draw a solid line from conversation to dollars. If someone can, I'd sure like to see it.

    As always, thanks for chiming in.
  • Great post! Because short-term social media ROI is so fuzzy, my advice to clients is make a long-term commitment to social media marketing, and stay engaged with their audience over time.

    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?
  • Spot-on Ghennipher. But we still have to convince the bottom-liners of the world that you are right. Hopefully, through discussions like this, we can. Thanks for stopping by!
  • I have to say that needing to quantify does not doom an effort to failure, and a direct response is possible. If we can get out of the mindset of bigger brands and companies, and perhaps try to think this through in a smaller, more targeted way, that would help. Also, this gets back to the root of PR anyway communicating to the public about a company. In this case, its about communicating with the public.

    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-
  • I think the key is, you have companies that are NEW to social media, wanting to use metrics and measurements that they are used to when using TRADITIONAL marketing methods to 'get their message out there'. Their thinking is 'how do we make money from this?', whereas companies that have been active in this space for a while, such as Dell, understand that by PARTICIPATING that they will make more money as a BYPRODUCT of their efforts. Dell has been in the game long enough to see the impact that their efforts are making, and as a result have shifted away from the 'how do we make money with this?' mentality.

    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...
  • Yes, sir, it is. When I read your first graph, I thought of Doc Sears's Because Effect. Companies don't make money through social media. They make money Because of social media. That's a strong concept.

    As always, you rock, Mack.
  • It's all about long-term commitment - because it's the RIGHT and SMART thing to do - not short-term metrics. Long-term business growth will happen. A whole post on this at MarketingProfs Daily Fix (Return on Whatever)
  • Thanks Steve. Hit us with a URL, dude. You can pimp wares here. Heh.
  • This is dead on: "If your goal is to participate in the conversation, to enhance your relationship with your audiences and become a trusted member of the community that surrounds your brand, then your measures should prove you’ve done those things. Your ROI is what you got out of the conversation, not what you got out of their checkbook."

    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.
  • Good point. I just worry that the sales volume is going to continue to be the judge (incorrectly) of what social media provides. Let's hope some clarity comes to the decision-maker's heads on this soon. Thanks for the comments!
  • ROI on human interactions is always very tricky. I've worked in fundraising and development for years, and have always held that fundraising events cannot always be about the bottom line. It can't be about just the dollar figure you amassed that night. Events are also about cultivation and engagement. 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. So how do you how do you put a value on that? Social media is the same. I run a blogging program at www.indium.com/blogs and I'm very keen for our bloggers to understand that the engineering student who asks a goofy question today, could be the head of a major customer down the road. Thankfully, all the decision makers understand that the blogs are not money-makers, they are perception-builders
  • Sradick
    Amy - this is a great point, and one that I'm going to use in my interactions as well. Social media IS similar to fundraising in this perspective!
  • Bravo, Amy. Very salient point for all to remember. It's about the life of the consumer, not the cling of the cash register. Give me 100 people who will buy my stuff for the next 15 years over 10,000 who will buy it today every single time.
  • Thanks for the post, Jason. Measurement will continue to be difficult as long as we're dealing with qualitative outcomes. I think the advantage that many social tools have are the measures built into the tools. Being able to show number of followers, friends, views, etc combined with traditional measures like site traffic provide an improved view of roi, even though, to your point, it doesn't provide a true reflection of the value of the conversation. But, we may be getting closer to business justification for our efforts.
  • Thanks Brad. We get closer with each discussion. Just waiting on someone really smart to connect dots the rest of us can't quite get to. Someone will. Just a matter of time.
  • BillSledzik
    Thanks for the insights, J. Wish I could have heard that session. Difficulty in quantifying results for SM is a continuation of the measurement frustrations PR has experienced for decades. SM is best compared to a focus group. You gain a lot of insight and understanding, but you can't generalize and you can't assign statistics. That's frustrating for bottom-line folks who've been told in business school "if you can't measure it, it doesn't exist."

    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!)
  • KDPaine
    We definitely are applying content analysis techniques to the conversation. That's why we have defined the 27 different types of conversations, so you can figure out which ones you need to pay attention to. And an Optimal Content Score that forces clients to determine their goals, And the 15 different types of video content so you know what type of content you should be working on.
  • Well said, professor. And keep Tweetin'. Your contributions there will be a goldmine for the rest of us.
  • Is there not a bit of an elephant in the room, in that a business which is participating in conversation is still doing it to grow business and eventually make money - or it's not actually a business?

    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...
  • All valid points, Dan. Thanks for the push back.

    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 that there are lots of similarities between the current measurement challenge and the challenge that marketers and sales people have always faced. Why do companies advertise? Because it increases brand awareness, which leads to deals. Why do product managers conduct market research? Because it improves the product...which leads to deals. In many ways, drawing the line between participation and revenue is easier now because the metrics are so much more visible (e.g., I know exactly where my traffic comes from). I'm not suggesting that marketing hasn't fundamentally changed as a result of social media (in fact, I posted about this yesterday)...but I don't see changes in the end goal.

    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.
  • "In many ways, drawing the line between participation and revenue is easier now because the metrics are so much more visible."

    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)
  • I agree with you that looking at metrics like page views by themselves without any interpretation will point you in the wrong direction, but that's not what I'm talking about. We now have a number of products that will help string together a person's interactions with the company, from the point when they first click on a URL in a tweet, to the point where they become a paying customer. When I say that drawing the line between participation and revenue is easier now, I'm talking about conducting real lifecycle analysis that looks at each of the different conversion points and determines where people at each step are coming from (basically the equivalent of a funnel analysis). Take a look at Kyle Flaherty's guest post on Jennifer Leggio's ZDNet blog to see a more specific example of what I'm talking about - http://blogs.zdnet.com/feeds/?p=321&page=2

    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").
  • No problem. As a Community Marketing Manager, tackling the strategy and tactical implementation of engagement across the portfolio of a 'traditional' magazine,radio,TV and internet company, it's obviously a philosophical and practical dilemma I'm pretty familiar with!

    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!
  • garry
    Bravo!!! That's right you said it! Embracing the fact that ROI isn't always about the Benjamins would do some of these stakeholders good.
  • Agreed. Still, without the Benjamins, the business fails. So we have to find a way to justify it. We just haven't found it yet.
  • KDPaine
    But it's not about "justifying" its about making data-based decisions about what is working and not working.If we think of it as "justification" we work to defend money that might be better spent elsewhere. We need to take a zero-based approach to measurement
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