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Forrester Report Offers Analyst Look at Social Media ROI

by Jason Falls · July 21, 201023 comments

Forrester Research has produced another interesting report, this one focusing on perhaps the hottest topic of the social media world over the past year: The ROI of Social Media Marketing. The piece, primarily authored by Forrester analyst and friend Augie Ray, offers what Forrester calls a balanced scorecard for measuring the ROI of social media, complete with expected Forrester graphics and interview-based insights.

Measurement unit
Image via Wikipedia

Ray uses the 1996 book The Balanced Scorecard: Translating Strategy Into Action by Drs. Robert Kaplan and David Norton to offer the argument that the best way to measure the impact of social media is through a wide range of metrics that are both directly and indirectly financial. The report says a balanced social media marketing scorecard will consider and monitor effects across four perspectives that balance the short- and long-term implications while looking at direct and indirect financial implications. These four are:

  • Financial metrics
  • Digital metrics
  • Brand Metrics
  • Risk Management

The report goes on to detail how to measure them and calculate your ROI.

While I applaud Ray and Forrester for being perhaps the first research organization to recognize that measuring success is more than just measuring the bottom line, I have to say I was a bit disappointed by this report. First of all, ROI is a business metric, not a media metric. Stop calling measuring social media marketing success a calculation of “ROI.” It’s not if you’re measuring all of what social media can do.

There’s also a lot of what social media marketing does that isn’t covered in their reporting mechanism. My own presentation from the Social Media Success Summit this year outlined five areas of benefit for a company’s social media marketing efforts and details how to measure them. They are:

  • Branding and Awareness
  • Building Community
  • Customer Service
  • Research and Development
  • Direct Sales

I’ve added Reputation Management to that presentation since. While I’m sure you could spin each of those into Forrester’s four, and I make no claim to be the know-all and end-all to what social media marketing knowledge or opinion, it almost seemed like they edited down the various benefit areas of social media marketing to fit on an X-Y grid.

Is the report useful? For Forrester clients already paying a subscription fee, sure. But there’s a lot of great wisdom about measuring social media success out there that could have made this report better … and that’s not including my own.

If you really want to measure social media marketing success, you don’t need this report. You need to ask what you were trying to accomplish with social media marketing. Based on that goal, ask yourself if you accomplished it or how far you got. Pull your measures from that and you’ll know how you did.

There’s more information on the unfortunate topic of the “ROI” of Social Media available on Exploring Social Media for a considerable amount less than a Forrester Report.

NOTE: Exploring Social Media, an online learning community, is in active BETA. Should you choose to subscribe, know the tool is still being tested and the full array of its content and functionality is not yet available.

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About Jason Falls

Jason Falls

Jason Falls is the founder and editor of Social Media Explorer and its companion learning community Exploring Social Media. He is a leading thinker, educator, speaker and consultant in the world of social media marketing, public relations, digital marketing and communications. Please connect with him on Twitter (@JasonFalls).

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Tagged as: Augie Ray, Forrester Research, measuring social media, measuring social media success, ROI of Social Media, Social Media Marketing, social media marketing ROI, Social Media Measurement, social media ROI

Comments & Reactions

Comments Policy

Comments on Social Media Explorer are open to anyone. However, I will remove any comment that is disrespectful and not in the spirit of intelligent discourse. You are welcome to leave links to content relevant to the conversation, but I reserve the right to remove it if I don't see the relevancy. Be nice, have fun. Fair?

  • http://twitter.com/yourprguy yourprguy

    There is more to measurement that ROI. But we don't have to necessary look any further than traditional means of measuring to find useful data. Your present a very valid question: What are you trying to accomplish with social media marketing? That, of course is a front-end question. We are fast approaching a time — if we haven't already arrived — when communication professionals will be inheriting social media program. That's when we have to ask additional questions, such as, what's going on here? And, what has been the effect of said social media marketing program?

    There's also a list of sociological questions we could investigate. After all social media is about people.

  • http://personalmarketing2null.wordpress.com personalmarketing2null

    “Stop calling measuring social media marketing success a calculation of “ROI.” It’s not if you’re measuring all of what social media can do.” I totally agree. Thank your for this post!

  • http://twitter.com/russ_dean Russell Dean Roering

    I feel that the only reason anyone started talking ROI in regards to social media in the first place is because more and more marketing employees wanted to jump into it, and the managers of these people needed to justify the time being spent on it to their bosses. Those at the top have the most traditional perspective, and social media seemed just too radical of a change, hence the employees below had to try to translate it into something they could measure, understand, and see value in. For startups, value had to be shown to the venture capitalist or angel investor.

  • http://twitter.com/StartupSidekick Jason Sullivan

    Russell hits it on the head; the investment of employee time needs to be measured by returns. Social media is a unique activity though, and it might take months to see a meaningful 'return'. These returns may be leads or brand awareness, and not necessarily sales. When measuring ROI, these other benefits can be hard to quantify, so that could make ROI measurement less than quantitative. I'm not convinced that any product on the market can accurately measure all these factors. Good article

    Jason
    http://twitter.com/StartupSidekick (Follow me on Twitter for fresh entrepreneurial advice)

  • http://tommy.ismy.name Tommy is my name

    “If you really want to measure social media marketing success, you don’t need this report. You need to ask what you were trying to accomplish with social media marketing.”

    Not only should you ask yourself this constantly, but you also need to use this as the foundation of your strategy. Otherwise how will anybody else know what you're trying to accomplish?

  • http://twitter.com/abelniak Alan Belniak

    @Russel: not +1, but +100. Whenever I hear “What's the ROI of Tiwtter?” I want to respond, “Would love to show you in a way you can understand. Mind sending over the template for ROI of that quarter-page print ad, or the… ?” With offline media (and I'm not disparaging it), it's difficult to measure. Online media *can* be measured.

    @Jason: While I agree with you philosophically, you're (IMO) missing a point from an “in the trenches” practitioner. I get this. I live and breathe this. I don't need the convincing. But my C-suite does. If I show them a 12-slide .ppt deck of my own stuff, or an 'expensive' , 'the professionals said it' report from Forrester, which do you think resonates better? Sometimes, it's the singer, not the songwriter, that matters.

  • http://impulsemagazine.net Impulse Magazine

    If you do social media right, it could mean millions of dollars for your business

  • Cameron King

    @yourprguy Great comment! Agree completely that first thing is defining what the biz is trying to accomplish through social media.

  • http://www.socialcubix.com/services/branded-page-design-and-development Facebook Page Branding

    There is no doubt that the ability to measure social media ROI is of infinite importance to a business.

    Great post Jason! Thanks!

  • http://www.convinceandconvert.com jaybaer

    Thanks for this assessment. I agree that use of “ROI” is problematic as a catchall descriptor. Return on Investment isn't flexible or variable. There is a precise equation that is used to calculate ROI, and using “ROI” when you really mean “success metrics” muddies the water.

  • Maguire

    Thank you for this report. I agree with many of the comments below, that it is necessary to find alternatives to measuring the ROI of social media than the standard means. Social media marketing is a different ballgame and opens marketing in a more indirect way than traditional means.

    There is an interview series of social media professionals that you might find interesting discussing various aspects of social media that you might enjoy.
    http://www.ourblook.com/topic/social_media.html

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  • http://www.copyratulroman.com/site/newser/newzuri-despre-social-media-all-over/ newzuri despre social media all over:

    [...] Forrester Report Discusses Social Media ROI [...]

  • JustinAtSmile.ly

    Great Post Jason! I agree w/ you that there is no magic combination of metrics to measure for all companies. It is important for each company to first define its goals before it begins tracking metrics and calculating “ROI.”

    Justin

  • IyaLuna

    I’m pretty sure that when trad media was new, measuring its tangible value perpetuated the same kind of disputes. While the accurate metrics for social media value has yet to be established, I agree that its ‘ROI’ can be assessed simply by gauging its success vis-à-vis the goal of your campaign. To put it even more succinctly, if your project/campaign got the whole interweb buzzing, then you did it.

    Achieving success through social media is not a brain surgery so to speak. To illustrate, you may want to check out this link discussing one of the internet’s successful marketing platforms, Twitter. http://sn.im/z1er2.

  • http://socialmediaexplorer.com JasonFalls

    Just to let everyone know, Augie Ray has been trying to comment. There's apparently some glitch with his Disqus login that is being looked into. Be patient. Thank you!

  • http://socialmediaexplorer.com JasonFalls

    Just to let everyone know, Augie Ray has been trying to comment. There's apparently some glitch with his Disqus login that is being looked into. Be patient. Thank you!

  • http://ryanstephensmarketing.com/blog/friday-grab-bag-zach-galifianakis-edition/ Friday Grab Bag: Zach Galifianakis Edition | Ryan Stephens Marketing

    [...] Reads: Altimeter Report: The 8 Success Criteria For Facebook Page Marketing — Jeremiah Owyang Forrester Report Offers Analyst Look at Social Media ROI — Jason [...]

  • http://randallhelms.com/2010/08/roi-and-social-media/ ROI and Social Media | Randall Helms dot COM

    [...] Social Media Explorer, I found out that Forrester Research have just released a new report on the ROI of social media [...]

  • http://automatedsocialnetworking.com Robert Portman

    Measuring the ROI of your business is really a great help to improve further more your business. Because of the impact of social media in marketing, even the biggest names and company in the industry and in the world of business are applying this kind of marketing.

  • http://www.socialmediaexplorer.com/2010/10/18/are-you-playing-the-social-media-game-to-win/ How To Win In Social Media

    [...] occurred to me that social media measurement and social media ROI have essentially become a big game of Block-Off. Everyone is out there trying [...]

  • http://www.cygnismedia.com/ facebook application developer

    Your work has always been a great source of inspiration for me. I refer you blog to many of my friends as well.

  • http://socialmediaexplorer.com JasonFalls

    Thank you for saying so. Much appreciated.

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