In Part 1, we attempted to define a framework for thinking about measuring the ROI of social media activities and programs. In this post we’ll take a relatively high-level view of specific research approaches that are applicable to calculating social business return on investment.
One of the items I stress to my PR/Advertising research students is the need for a researcher to understand the industry/business in which they are operating, how the discipline (e.g. PR or advertising) works as well as how the specific program or initiative is designed to ‘work’. Two baseline concepts of the ROI Framework presented in Part 1 are the need to establish measurable objectives, and that these objectives should tie to one or more relevant business processes. Alignment is crucial here and must be addressed as part of the planning process not post-execution.
At the risk of throwing-out a less than fully fleshed-out idea (OK, I am, so lets improve it together), here is a table to help you think through possible ways to align social programs. The table shows the business functions/departments, a few possible uses of social programs in each area, the applicable business process, a few sample metrics and the basis (revenue, cost savings, cost avoidance) for creating ROI.
ROI Research Approaches
Direct Linkage – This approach is most applicable to social media promotional or e-Commerce efforts. It generally involves use of unique URLs tied to specific social networks that direct respondents to a company e-Commerce website to redeem coupons or purchase product. Using this approach, Dell generated over $2MM in incremental sales on their outlet site primarily driven by offers to their over 625K Twitter followers. Direct linkage approaches mitigate two potential problems with ROI determination – tying the offer directly to an action and isolating the impact of each marketing channel. Web analytics should provide the data necessary to determine ROI.
Staff Cost Reduction – The CRM or customer service and support functions are one of the more interesting uses of social networks. There is some early work (e.g. Forrester Research) showing how social programs may directly reduce staff necessary for customer service and support. For example, when questions can be answered by other customers and not just by the company. ROI determination involves demonstrating how social programs have reduced staffing costs and call center investment requirements. ROI may also be generated by enhanced customer loyalty resulting in higher average transaction volumes or more frequent purchases.
Correlation Modeling & Econometrics – Correlation models use statistical techniques to show the relationship between two variables of interest. For example, we may be interested in how changes in Net Promoter Score correlate with sales. The primary challenge with a correlation model is isolating the impact of social media from all the other ways – WOM, advertising, promotions, public relations – the change in the variable of interest may have occurred. The simplest approach is to collect data during times of low or no other communication activity. If multiple communications channels are in use, econometric models that attempt to statistically isolate the impact of each communication variable should be used. Econometric modeling is expensive (in the ballpark of $100K to develop a model) and is data sensitive. That is, a lot of data is generally required for the models to work properly. One also needs a lot of data (generally model designers want two or three years worth of data to isolate effects like seasonality) in order to achieve sufficiently high confidence levels in the correlation. Other challenges include data normalization and the estimation of the baseline level of sales which is defined as the sales that would occur in the absence of any promotion or marketing. For retail econometric models with established brands, the baseline sales might be around 50% of the observed volume.
I prefer models that attempt to correlate PR/SM outputs to PR/SM outcomes, and then a second correlation involving PR/SM outcomes (e.g. purchase consideration or Net Promoter) with business outcomes like sales. Here is a simplified overview of a possible modeling approach.
Econometric models have two important characteristics – they are predictive so once you develop a model, in the absence of changes in the assumptions, it may be used for forecasting without the need to generate a new model, and it provides a way to address value attribution for non-financial indicators like exposure, engagement or influence.
Exposed/Not Exposed – This form of research attempts to identify those individuals within your target audience who were exposed to programs and content, and compare their purchase intent or purchase history with a control group of audience members who were not exposed to the program and content. The ‘lift’ created within the exposed group is used to calculate ROI. The research approach involves use of primary audience research to gather the data necessary to calculate ROI. You would screen respondents for exposure to specific social programs (this is tricky from a research questionnaire perspective) using visual cues and/or descriptions, being as specific as possible. Experience shows the percentage of the potential audience exposed to a given program may be fairly low. Therefore you may need a large sample size to net enough ‘exposed’ respondents to have a statistically projectable sample. This dynamic drives higher research costs of course.
Integrated, Cross-Platform Research – By utilizing a combination of web analytics, click-tracking, digital content analysis, sales/scan data and primary research it is possible to track behavior of individuals across websites and social networks. Companies like Compete and ComScore are becoming more integrated in their offerings along these lines, combining online behavioral tracking with panel research. Early efforts have focused on using a combination of click-tracking, primary research and sales scan data to track opinion, behavior, actions and transactions. The effort undertaken by ComScore and Dunnhumby to measure MySpace advertising (see April 17 AdAge) is a great early example of the cross-platform approach to ROI determination.
We are still in the early stages of understanding ROI with social business programs. I look forward to continuing the journey with you. Thanks for reading!
(Please also see this article in this week’s IABC CW Bulletin for a discussion of social media return on investment – separating myth from methodology.)
Social Media ROI Framework
Here is a simple, five-step framework for developing a social media ROI measurement program. Remember that not all social media initiatives will result in short-term ROI generation. It is also important to comprehend the results of programs that result in non-financial value or impact. (For a quick refresher on the difference between value and ROI read this). Holistic measurement programs should be designed to track and measure non-financial impact as well as ROI.
1. Set measurable objectives aligned with business outcomes
Failure to begin with measurable objectives is probably the most common impediment to proper social media measurement. A couple of award seasons ago I was a judge for a major PR campaign competition and was appalled by the low percentage of programs that actually contained measurable objectives – about 20% or so. Your objectives should be aligned with one or more desired business outcomes. Think through all the ways in which the social business effort will contribute toward driving the overall business forward. Make sure the alignment is obvious and understood by all involved in program approval.
2. Link to and understand the requisite business process
In order to demonstrate ROI in social media it is necessary to link the results seen in social media with the relevant business processes they are addressing. Social programs to date generally relate to one or more of the following business processes:
|
Business Process |
Description |
| CRM | Crowd-sourced help, info, recommendations, customer relationships |
| Research | Competitive intelligence, insights, voice-of-customer, trends, feedback, reputation assessment, influencers |
| Marketing & Sales | Ideation, product promotion, hyper-local marketing, lead generation and closure, fund raising, testing, brand attributes |
| Communication/PR/IR | Stakeholder communication (internal and external) |
| Innovation/Product Development | Crowd-sourced ideas, problem/opportunity identification, collaboration |
For example, in a B2B company, you might try to link social media efforts with the lead generation and closure process.
For a program aimed at employee engagement, you might link social media efforts to the employee recruitment and retention business process. For an e-Commerce company you might be able to directly link to the sales process through unique URLs or click-tracking technologies.
Understanding which business processes are impacted by social networks, and how, is fundamental to understanding ROI.
3. Select communications model, research approach and key metrics
In addition to understanding the business process impacted by social programs, it is important to have a communications model to assess non-financial impact. The accepted Outputs – Outtakes – Outcomes communication model is difficult and confusing for many to understand and apply. Here is an alternative communication model that is somewhat more intuitive and in tune with social media measurement.
- Exposure – To what degree have we created exposure to content and message?
- Engagement – Who is interacting/engaging with our content? How and where?
- Influence – The degree to which exposure and engagement have influenced perceptions and attitudes of the target audience.
- Action – As a result of the social media effort, what actions if any has the target taken?”
The metrics listed are a starting point. You will note these metrics come from all three “zones of measurement” – web analytics, digital content analysis and primary audience research.
Possible ROI research approaches include:
- Correlation modeling and econometrics
- Staff cost reduction and/or cost elimination tracking
- Direct linkage via unique URLs and click-tracking
- Exposed/Not-exposed primary audience research
- Integrated cross-platform research – web analytics, content analysis, click tracking, primary research.
4. Gather and analyze data
Gather longitudinal data for the requisite business process and communications model metrics. When attempting to show statistical correlations, the amount of data you include is important because it impacts the confidence level of the results. Also, what metrics you attempt to correlate and how is crucial. For example, we might try to correlate social media brand engagement and audience influence with metrics like likelihood to recommend to a friend, likelihood to seriously consider the product or likelihood to purchase the product in the next X months. Select the metrics that are most applicable to the business process you are attempting to drive.
5. Calculate ROI and report results
We started with measurable objectives, aligned them with requisite business processes, determined our research model and approach and have gathered the data. Now we can calculate ROI and describe the value of the social business initiative. Results for key program metrics should be captured on a dashboard that may be shared with all program stakeholders are a regular basis.
(Note: Part two of this post will cover specific research approaches to determining social media ROI in more detail)
(This post is a re-purposing of a speech I gave to the FPRA/PRSA-Orlando on July 23, 2009. You can download the slides here.)
Public relations measurement is at a crossroads. Old techniques are no longer sufficient. Old metrics are no longer applicable. Old thinking must be replaced by new. The need for accountability, and to prove the value of PR and social media programs, has never been greater.
As we look to the next year, here are five things to forget and five things to learn about public relations measurement in 2010.
Things to Forget in 2010
1. Media Relations Focus
A focus on media relations fails to capture several important aspects of PR – brand, reputation, crisis, employee communication and DTC to name a few. Also, the importance of traditional media is declining. Numerous studies have shown people don’t trust what they read in the media, they trust each other. I believe it was Hauser and Katz who coined the term ‘you are what you measure’ in 1998. If measurement is focused on media relations that is how the public relations function will be judged.
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2. Outputs
The need to put PR results in a business context has never been greater. We need to be able to address the question – what are we doing to help drive the business? If you are focused on output metrics like impressions or message delivery, you will always have a hard time explaining business impact. Instead, we need to focus on outcomes and answer the question – what happened as a result of our program or coverage? Understanding outputs has primary benefit as a diagnostic tool rather than a ‘scorecard’.
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3. Impressions (and Multipliers!)
The most common PR metric today is Impressions. While it is a somewhat dubious metric for traditional media, it really loses meaning in social media where engagement not eyeballs is what we seek. Impressions also (greatly) overstate actual relevant audience. Generally only a fraction of any particular magazine or newspaper’s circulation meets your target audience demographics. And impressions merely represent an opportunity to see, they do not attempt to estimate the (small) percentage of the potential audience that actually saw your content. To compound the problems, many PR practitioners use a multiplier on impression numbers to account for pass-along readership or a mythical credibility advantage PR has over other communication tools. The simple fact is there is no factual basis (e.g. research proof) that multipliers should be used in any case.
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4. Ad Equivalency (AVEs)
There are many reasons why using ad equivalency as a proxy for PR value is not advisable. Here are five good reasons they should be avoided:
- AVE calculations vary and there are no standards. Tonality, article length, competitive mentions and other factors are handled differently.
- AVE results can be misleading. AVEs may be trending up while metrics like message communication, share of favorable positioning and share of positive press are falling.
- AVEs reduce PR to just the media dimension by only assigning a value in this area.
- AVEs only apply to traditional media. What is the AVE of a positive conversation about your company on a leading blog?
- How much is it worth for a troubled company to not appear in the Wall Street Journal? AVEs cannot address this.
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5. Return on (Engagement/Influence/etc.)
Not a day goes by on Twitter without someone declaring a new and improved metric for the acronym ROI, or stating that ROI does not apply in social networks. Wrong and wrong. Most of these folks either don’t understand ROI or don’t know how to obtain the data necessary to calculate it. There is also a lot of confusion between creating value and ROI. Generating awareness creates value, for example, but may not immediately result in demonstrable ROI.
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Things to Learn in 2010
1. Total Value of PR
The majority of current PR measurement efforts focus on marketing/sales and output metrics. The Total Value Cube is a way to visualize and think about all the potential value your PR and social media efforts deliver. Beyond marketing to include brand and reputation, beyond outputs to include engagement, influence and action, and beyond revenue generation to include cost savings and cost avoidance.
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2. A New Model for Measurement
Many public relations practitioners regularly get their Outputs confused with their Outtakes or Outcomes. Outtakes is not often used in the U.S. – it seems much more prevalent in Europe. The overall terminology is confusing and is defined in different ways by different practitioners. Further compounding the confusion is the fact audiences we present our results to rarely understand the terms and have trouble relating to them. In short, the terms are too much ‘inside baseball’.
What we need is a metrics taxonomy that is easier to understand and explain. I like this one.
Exposure – to what degree have we created exposure to content and message?
Engagement – who, how and where are people interacting/engaging with our content?
Influence – the degree to which exposure and engagement have influenced perceptions and attitudes
Action – as a result of the PR/social media effort, what actions if any has the target taken?”
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3. Three Zones of Measurement
From the left, companies or brands control, own or manage websites – corporate sites, FaceBook pages, Twitter accounts, LinkedIn pages and blogs by way of example – and create content that consumers may engage with. This zone is measured primarily by web analytics. In the middle are the actual social networks and conversations between individuals. In this zone we are interested in data sets that cannot be gathered solely using web analytics packages. How often is the brand being mentioned in conversation? What is the sentiment of the comments? How often is the brand being recommended and by whom? Content and behavior analysis, including tracking technologies, are the primary measurement tools in this zone. The third zone represents all the real-world, offline transactions that may be of interest. Did someone visit the store or attend or event? Did they buy a product? Did they recommend the brand or product to a friend over coffee? Primary audience research is necessary to address many of the questions, as well as scan or other purchase data in some cases.
Your measurement strategy should be to take a holistic, integrated approach using methodologies, tools and data from all three zones. The Holy Grail in many ways is to be able to track behavior of individuals across all three zones, cross-platform, understanding how online behavior impacts offline behavior and vice-versa.
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4. New Metrics
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5. The Difference Between Impact/Value and ROI
ROI is a form of value/impact, but not all value takes form of ROI. ROI is a financial metric – percentage of dollars returned for a given investment/cost. The dollars may be revenue generated, dollars saved or spending avoided. ROI is transactional. ROI lives on the income statement in business terms.
Value is created when people become aware of us, engage with our content or brand ambassadors, are influenced by this engagement, and take some action like recommending to a friend or buying our product. Value creation occurs over time, not at a point in time. Value creation is process-oriented. Value lives on the balance sheet.
Your investments in social media or public relations remain an investment, creating additional value if done correctly, until which time they can be linked to a business outcome transaction that results in ROI.
In yesterday’s New York Times, you may have read the article, Spinning the Web: P.R. in Silicon Valley, an interesting although not overly insightful piece. From a social media measurement perspective, two items caught my eye. The first, referring to Brian Solis, Principal of FutureWorks, about how he calculates social media audience figures:
“Instead of calculating the impressions an article gets by estimating a publication’s circulation and pass-along rate, Mr. Solis counts the number of people who tweeted about a company and their combined following, the number of retweets or clicks on links, as well as traffic from Facebook and other social networks.”
Toward the end of the article, we learn:
“By 6:30 p.m. on the day Wordnik went live, Brew’s staff calculated that 1.43 million people had seen tweets about it.”
Setting aside for a moment that the article and these sorts of audience metrics take a broadcast-oriented view of Twitter (Mr. Solis discusses the shortcomings of the NYT viewpoint here), the emerging view of audience measures for Twitter is to calculate the Followers of each person tweeting about the subject of interest, and then adding Follower numbers for each person retweeting the subject and so on. The issue here, much as it is in traditional public relations, is that the audience figure that results from these sorts of calculations grossly overstates, by one or two orders of magnitude or more, the actual “audience” for these tweets. It is a hypothetical number that assumes everyone that possibly could see a tweet has in fact seen it, and everyone who sees it is relevant to you/your brand. This is fantasy of course.
On the issue of relevant audience, here is a quick example. At the time I pulled these figures, the audited circulation of the New York Times was 4,974,000. Most PR practitioners getting a ‘hit’ in the NYT would claim this as their audience. However:
- If you were only trying to reach a C-Suite audience with your message, the actual audience reached would be 598,000 or 12% of the total circulation
- If you were trying to reach Women, your audience would be 1,937,000 or 39% of the total
- If you were trying to reach 25 – 54 year old Men, your potential audience would have been 2,930,000, or 59% of the total number.
There is a large difference between how many people theoretically can see a tweet, versus how many actually saw it/read it, versus how many of those seeing the tweet find it relevant to them, versus how many engaged with it by hitting a link or retweeting. Part of my issue with this is the language we use to report the figures. For the Brew staff to use these numbers to estimate 1.43 million people “had seen tweets about it” is wrong. If they had said 1.43 million people had an opportunity to see the tweet, it would have been more realistic, although still greatly overstating actual relevant audience.
This problem of audience inflation has already been institutionalized in public relations. The use of Impressions as an output metric does not mean a true impression in the branding sense, but rather an opportunity to see the content. To make matters worse, many PR practitioners believe Impressions should be factored by either dubious pass-along readership figures and/or use of a multiplier to account for the mythical credibility advantage PR enjoys over impressions generated from advertising. The simple fact is there is no research-supported, fact-based argument for using any adder or multiplier in public relations when calculating potential audience (here’s an IPR white paper on this subject I co-authored).
For Twitter and other social networks we lack demographics and data about tweet readership averages (i.e. what is the probability that any one tweet is actually read) that would allow for more precise audience estimates. In the absence of data, believable assumptions should be used:
- Out of all the opportunities to see, how many actually read the tweet? 10%?
- Of those reading the tweet, how many find it relevant to them (or from the other perspective, how many of the readers are in your intended target audience)? Maybe 10% again?
You can see how our audience estimate has already been reduced by a factor of 100. This may well still be overstating the actual, relevant audience. The issue here is that unrealistic and overstated audience figures have the potential to hurt credibility and call into question other data and metrics that may be more grounded in fact. Actually the more meaningful metrics pertain to engagement or outcomes rather than exposure/outputs. It is more meaningful that 40,000 visited the Wordnik website as a result of the campaign discussed in the NYT article than the overstated 1.43 million who were estimated to have seen the tweets. 40,000 is real. 1.43 million is fantasy.
Look back five years and the PR measurement field was full of challenges:
- Emphasis on media relations at the exclusion of other high-value PR activities, almost always
- Oriented toward outputs and not outcomes, consisting
- Primarily of media content analysis, with
- Little primary audience research, and
- No codified thinking on how to approach ROI determination.
Now add social media. Old metrics like Impressions lose meaning. It’s about engagement and not 
eyeballs. Consumers have broad platforms to voice opinions about your brand. Conversations are more effective than messages. So needless to say, social media measurement is a highly fluid, and rapidly evolving field. Lots of opinions, not much consensus. Here is where I believe we are at a high level.
Early efforts to measure digital and social media focused almost exclusively on web analytics. I would say the majority (80%?) of social media measurement in 2009 still focuses on web analytics, although many other forms of data and research are being used by leading organizations and practitioners.
Today, the frontier in social media measurement is evolving toward measuring the conversations and behavior patterns occurring within social networks. The third area of interest is in tracking and connecting online and offline behavior and actions. Here is a simple graphic (you may have a much better way of showing this) that shows these three primary interest areas, or zones, for social media measurement.
From the left, companies or brands control, own or manage websites – corporate sites, FaceBook pages, Twitter accounts, LinkedIn pages and blogs by way of example – and create content that consumers may engage with. This zone is measured primarily by web analytics. In the middle are the actual social networks and conversations between individuals. In this zone we are interested in data sets that cannot be gathered solely using web analytics packages. How often is the brand being mentioned in conversation? What is the sentiment of the comments? How often is the brand being recommended and by whom? Content and behavior analysis, including tracking technologies, are the primary measurement tools in this zone. The third zone represents all the real-world, offline transactions that may be of interest. Did someone visit the store or attend or event? Did they buy a product? Did they recommend the brand or product to a friend over coffee? Primary audience research is necessary to address many of the questions, as well as scan or other purchase data in some cases.
Although I have attempted to define three distinct zones of measurement necessary to address the full spectrum of social media impact and ROI, your measurement strategy should be to take a holistic, integrated approach using methodologies, tools and data from all three zones. The Holy Grail in many ways is to be able to track behavior of individuals across all three zones, cross-platform, understanding how online behavior impacts offline behavior and vice-versa. It won’t take five years to get there.
The 2009 Jack Felton Golden Ruler Award, created by the Commission on Public Relations Measurement & Evaluation, is open for entry here. Entry deadline is Aug. 15, 2009. The award recognizes superb examples of research used to support public relations practice.
The Institute for Public Relations publishes the winners as case studies on its website. Winners will receive their awards at the Summit on Measurement held in October in Portsmouth, New Hampshire (USA).
PR News is the award program’s media partner. The award is named for Jack Felton, who served as President and CEO of the Institute and was instrumental in founding the Commission.
Social media and public relations programs create value and in some cases generate demonstrable ROI. The two concepts are different in important ways. They are related like the rectangle and the square. Remember that silly distinction you learned in elementary school? A square is a rectangle, but a rectangle is not a square. ROI is a form of value, but not all value takes the form of ROI.
ROI is a financial metric – percentage of dollars returned for a given investment/cost. The dollars may be revenue generated, dollars saved or spending avoided. ROI is transactional. ROI lives on the income statement in business terms.
Value is created when people become aware of us, engage with our content or brand ambassadors, are influenced by this engagement, and take some action like recommending to a friend or buying our product. Value creation occurs over time, not at a point in time. Value creation is process-oriented. Value lives on the balance sheet.
From a sales process perspective, the ultimate value of a social media program may be in 
increasing the number of people who are likely to buy our products and services. Other programs may be designed to improve or protect corporate reputation or to build and enhance brands. Much of this value is said to be intangible. It is goodwill that becomes tangible at the point in time a transaction occurs. When buying decisions happen, your investments in marketing, brand and reputation work together. They become tangible. You can measure the ROI.
Many of the well-intentioned but misguided attempts to rename or reinvent what ROI means in social media – return on influence and return on engagement probably getting the most play – seem to be the result of an inability to distinguish value creation from ROI. We know social networks h
ave the ability to create value through customer engagement and community building. However, ROI can only be measured by their ultimate impact on downstream metrics like sales, employee retention and customer loyalty/repeat purchase.
Your investments in social media or public relations remain an investment, creating additional value if done correctly, until which time they can be linked to a business outcome transaction that results in ROI.
Trying to get, keep or increase your budget for social tools, people and programs? Estimate ROI where you can, but also try to articulate the value your programs will be creating, and how this value aligns with, and contributes toward achieving one or more desired business outcomes. Propose metrics to track and assess progress in exposure, engagement and audience influence. This is a better conversation to have than, “Let me tell you about Return on Influence…”
Make sense?
In a January post of 2009 social media predictions I wrote:
2009 will be the year when the pendulum swings from experimentation to accountability. 2009 will raise the bar on all of use to demonstrate how social media and PR programs are helping to drive desired business outcomes.
Are you are seeing the accountability bar being raised this year? In my corner of the world, the volume of conversation about social media ROI is high and accelerating. Unfortunately much of the conversation has been misinformed and misguided. It seems like every week brings another post attempting to reinvent the acronym or the meaning – ROI really means Return on Influence, or Return on Engagement is the new ROI, and on and on. There is another group of online Zen Masters who would have you believe social media ROI is old school thinking and not in tune with social media Zeitgeist. In that case, I’ll take’ Old School’ for $100, please.
Here are five things about social media ROI you should know:
- Return on Investment is a financial metric. It tells the percentage of financial return you generated for a given investment level. The financial return is usually revenue, but
may also be money you saved by making the investment or money you avoided spending in the future. Notice the common thread here – its about money. - Attempts to reinvent the acronym are counterproductive. Return on Influence/ Engagement/Whatever; do not ever get to the basic money question. Most of these attempts share two characteristics – they are confusing ‘return’ with impact/results (read Olivier Blanchard’s The BrandBuilder Blog for more on Impact/Return confusion), and/or they are making an argument that social media ROI is largely intangible, represented by relationships, engagement and community. What they are really saying, perhaps unintentionally, is ROI is often difficult to determine and I really don’t understand it. In my opinion, attempts to reinvent or circumvent ROI discussion in social media actually hurt credibility with the people writing the checks. They expect an apples-to-apples – money in and money out – discussion.
- ROI in social media has a time dimension. Value may be created in the short-term and longer-term. Social media-specific promotions are an example of easily measured
short-term ROI. Longer-term value is much more difficult to quantify. There are some similarities between social media and brand in this regard. Success in each is a process and not an event. You generally will have ongoing activities that sustain the brand/social media program and brand building events or campaigns that provide short-term spikes in awareness and engagement. Contribution to organic search results is another example of longer-term value creation with branding and social media efforts. Managing and measuring your social media effort properly requires thinking about the value you are creating in the short and longer-term. - Linkage and correlations are important. In order to demonstrate ROI in social media it is necessary to link the results seen in social media with the relevant business processes they are addressing. For example, in a B2B company, you might try to link social media efforts with the lead generation and closure process. For a program aimed at emp
loyee engagement, you might link social media efforts to the employee recruitment and retention business process. For an eCommerce company you might be able to directly link to the sales process through unique URLs or click-tracking technologies. When attempting to show statistical relationships, correlations become important. We might try to correlate social media brand engagement and audience influence with metrics like likelihood to recommend to a friend, likelihood to seriously consider the product or likelihood to purchase the product in the next X months. - All ROI studies are custom. The simple fact is you cannot buy an off-the-shelf solution to calculate the ROI of your social media effort. All ROI studies are custom. This is primarily a reflection of the unique objectives each company may have for their social media efforts. Objectives are specific and contextual, and your ROI measurement efforts will need to be as well. Attempts to develop ROI Calculators where you simply plug in several numbers and hit a button to calculate your ROI are not worth the time it takes to plug in the data. They are a one-size fits none approach to ROI. (Read this brilliant and very humorous post by The Brand Builder where he methodically skewers a recent ROI calculator attempt).
We are in the very early stages in our ability to measure the ROI of social media. Not enough cycles yet. Case studies are limited but growing. The need to demonstrate a financial return on social media investment, if not here already, will be here shortly. We have a lot of work to do. Let’s get started.
Every week there are multiple articles and posts on measuring Influence in social media. The vast majority of these focus on assessing who are the ‘Influencers’ – those analysts, pundits, micro-celebrities and visionaries whose words and actions influence others in their online communities. Influencers are an important element of your audience targeting strategy. (Here’s a great post from Todd DeFren on audiences and influencers).
Influencers are a potential social media strategy, but we should measure social media objectives to determine whether or not programs are working as planned. For that we have to turn to the other type of online influence, audience influence.
With audience influence, we want to understand what influence, if any, our social media efforts have had on audience opinions, attitudes and behaviors. Here’s a social media measurement model that shows where audience Influence fits with the other major measurement stages, Exposure, Engagement and Action.
- Exposure – to what degree have we created exposure to content and message?
- Engagement – who, how and where are people interacting/engaging with our content?
- Influence – the degree to which exposure and engagement have influenced perceptions and attitudes
- Action – as a result of the social media effort, what actions if any has the target taken?”
In the model, successful relationships with Influencers would be represented as an aspect of Engagement – i.e. Influencers have the ability to influence if and how consumers engage with brands.
To measure audience influence typically requires primary research to quantify attitudes and opinions and to assess the role, if any, social media efforts had in any attitudinal changes and subsequent behavior. Once we understand how Exposure and Engagement are impacting Influence, and whether or not Influence is motivating Action, we are well on our way to the understanding and data necessary to demonstrate the true ROI generated by social media.
In summary, determining who has influence should be part of your audience targeting strategy, determining whether or not you are creating audience influence should be part of your measurement strategy.
See it a different way?
