Tag Archives: ROI

How Much Does a House Cost?

8 Nov

I don’t come from the “there are no dumb questions” school.  For example, in an academic environment, I would define a ‘dumb question’ as one in which the answer should be easily known had the student read the assignment or attended the previous class.  There are a lot of dumb questions asked all the time and social media gets more than its share of these.  Many of them are specific to social media measurement/ROI.  For example:

  • Which has higher ROI, Twitter or Facebook?
  • What ROI should I expect from Twitter?
  • How do I measure the ROI of social media?

The flip answer to all these questions is, it depends.  All results are contextual.  Results are also specific.  While industry averages may be interesting, averages mask any real meaning for an individual brand or company.  They result in ‘one size fits none’ thinking.  Let’s go back to our house analogy and bring this to life.  The cost of a house depends on several factors:

  • Where is the house located?  You’ll need to know the city and the specific neighborhood.  You may also want to know which block the house is on within a given neighborhood.
  • How large is the house in terms of square feet?
  • How large is the lot?
  • Is the house new or previously owned?
  • In what condition is the house?
  • What is the level of finish-out?  For example, granite versus tile countertops.  High-end appliances or mid-range?
  • What are the desirable or unique features of the house?

In social media measurement we have our own list of questions to ask before attempting to answer generally stated questions about measurement and ROI:

  • What brand/company are we speaking about?  The answers for a well-established cult brand will be very different from those of a less well-established brand.  Answers for eCommerce companies will vary from those of B2B companies.  Answers will also vary by industry segment.
  • How long has the brand/company been participating in social networks?
  • How much investment in social media marketing – time and money – has the brand/company made?  What has been the level of effort?
  • What other communications channels (e.g. advertising, direct, search, public relations) are being utilized in parallel with social marketing?
  • What is our point of view on the role of social media in the marketing mix?  For example, is the role of social media primarily to drive exposure to content or is the program or initiative designed to drive conversion events through social channels?
  • What were/are the specific objectives of the program or initiative?

This last question is especially important because measurement is fundamentally about assessing performance against stated objectives.  When someone asks you how to measure something in social media your first response should always be this question – What were the specific objectives of the program or initiative?

The question of when to expect a return on social media efforts is also an interesting one.  Brands often expect an immediate ROI on social media efforts.  Social media marketing is a process not an event.  Too often people forget about the ‘I’ aspect of ROI – you usually have to make an investment in resources and time before you can drive a return.  It is wise to listen to social conversations before engaging, and build your presence and trust before trying to drive conversion events.  Listen and learn and then convert.  I would argue the majority of social media efforts today are likely in the investment phase and not the return phase.  It is somewhat unfair in these cases for the social media effort to be held to an ROI standard in the short-term.  Measuring impact rather than ROI is advised.  Perhaps we can add another question to our list of dumb social media ROI questions – ‘What ROI should we expect in the first year of our social media initiative?’

If you are one of the prescient humans who has a crystal ball that enables you to answer the ‘how much does a house cost’ question, I have another question for you, ‘how long is a string?’

You Coming to BlogWorld? Let’s Talk Social Media ROI.

13 Oct

I hope to see many of you at BlogWorld later this week.  It will be great to finally meet the many online friends I have who will be speaking or attending.  Please make a point to DM me (@Donbart) or email me (don.bartholomew@fleishman.com) if you have a few minutes to meet and talk at the show.

On Friday October 15, as part of the Social Media Business Summit, I will be on a panel speaking about social media ROI with David Alston of Radian6, Connie Bensen of Alterian and Ken Burbary of Ernst & Young.  Ken has the formidable task of being our moderator.  Here are the specifics:

Panel: Social Media & ROI

Date: Friday October 15

Time: 2:45 – 3:45

Room: Islander V3

If you cannot attend the show, you can follow along with the hashtag #BWE10.  There will probably be a few hundred folks live-tweeting the event, including me.

Safe travels.  -Don B

Public Relations Measurement 2010: Five Things to Forget & Five Things to Learn

29 Jul

(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.

__________________________________________________________

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’.

__________________________________________________________

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.

__________________________________________________________

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.

__________________________________________________________

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.

__________________________________________________________

Things to Learn in 2010

1. Total Value of PR

Microsoft PowerPoint

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.

__________________________________________________________

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.

Social Media Model.pptx

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?”

__________________________________________________________

3. Three Zones of Measurement

PRSA.FPRA.07.23.ppt-3

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.

__________________________________________________________

4. New Metrics

PRSA.FPRA.07.23.ppt-2

_________________________________________________________

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.

Measuring Influence in Social Media

4 Jun

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.

Social Media Model.pptx

  • 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?

In Social Media, Are We Looking For ROI in All The Wrong Places?

28 May

One of the hotter topics in my corner of the Twitterverse is Return on Investment (ROI).  How do you calculate the ROI of social media?  What’s the ROI of Twitter?  The questions are many, the answers too few.  There have been several blog posts on the subject (here are just three examples – Tim Ferriss, Olivier Blanchard, Zygote ), and I plan to post an overview and synthesis of some of the better ones in the near future.   One important question seems to be missing from much of the conversation, to what degree should social media be considered a cost of doing business (from a corporate/organizational viewpoint) rather than a distinct activity that must/should be justified by hard ROI?

If your customers want the option of customer service via Twitter do you really have an option long-term?  If crises are often spawned in social media, how optional is listening/monitoring if you want to protect your brand?  Increasingly, the corporate world will realize the options are all with the consumers/customers and how, how often, what and why we communicate will largely be in response to this dynamic.  When voicemail came on the scene (patented in 1983), I’m sure the ROI pencils were sharpened and presentations made.  When was the last time someone was asked to justify the cost of voice messaging or 800 numbers or email?  They are all considered part of the cost of doing business today.  In a relatively short period of time I believe many applications of social media – CRM, crisis monitoring and listening to customers/competitors/industry voices and many others – will be considered necessary, baseline activities to doing business in the 21st. century.

The ability and need to demonstrate ROI in social media should be considered contextual and dependent on specific program/initiative objectives.  If the objective is ‘listening and learning’, what’s the ROI on insight?  However, in other cases, program objectives will be to drive a specific business outcome, and demonstrating ROI will be expected and required if budgets are to follow.  Dell offering product promotions on Twitter was closed-loop and easy to calculate ROI.  HyperLocal marketing by Kogi or your local pizza shop on Twitter is measureable in incremental sales.  You can calculate the ROI on a hotel or resort offering last-minute cut-rate weekends via FaceBook.

Knowing when social media should be considered part of the cost of doing business and making this case to your company or clients may just make the ROI imperative a little less urgent and more focused in the right areas.

Thanks for reading and please comment if you agree or see it differently!

Don B

@donbart

Capturing the Total Value of Public Relations

15 Dec

Since public relations is a broad profession and may cover a wide variety of disciplines – media relations, online engagement, crisis communications, public affairs, executive counseling, brand building, events, reputation management, employee communications and financial communications to name a few – it is difficult to conceptualize the totality of value public relations and communication delivers to the organization.  For the most part, public relations measurement has focused on attempts to measure media relations value and is not really addressing the other areas very well.  When you are attempting to quantify the full value and ROI of public relations, taking the broad view paints a much richer picture.

The PR Value Cube is a tops-down conceptual framework for capturing all the ways PR is contributing value to the organization.  PR contributes value in one of three major, interrelated areas (Y-axis):

Marketing – Sales and other marketing oriented programs and metrics (e.g. lead generation) fit within this category.   The vast majority of PR measurement efforts today fall within the Marketing category.

Brand – PR contributes to building brands.  Value contribution in this area is usually more anecdotal than measured.  Experiential PR and many social media campaigns are contributing more to brand than sales or any other area.

Reputation – One of the primary overarching purposes of PR is reputation enhancement and protection, yet our contribution here again is usually measured more by ‘gut metrics’ than analytics.

acumentics-offerspptx1

Within each major area we can examine value created through Engagement, Influence and Action (X-axis).

Engagement – to what degree has exposure to PR materials, activities and events created Engagement with the intended target audience?  Are they interacting with our content, creating links, forwarding to friends, talking about the brand, etc.

Influence – the degree to which Engagement has influenced perceptions and attitudes.  Likelihood to recommend the brand to a friend and brand consideration changes are two possible examples of Influence.

Action – as a result of the public relations effort, what actions if any has the target taken?  Did they visit the web site, tell a friend, buy the product, vote for our candidate, etc.

The value itself can take one of three forms (Z-axis):

  • Revenue generation
  • Cost Savings (e.g. employee recruiting costs decline due to strong company reputation)
  • Cost Avoidance (e.g. avoiding recruiting costs because employee retention/loyalty has improved)

There is one more important consideration when thinking about the total value delivered by public relations and social media.  That is time.  PR creates value on a transactional, short-term basis (e.g. the value of 10,000 potential customers reading your article in today’s Wall Street Journal) and on a process-oriented, longer-term basis.  Brand and Reputation are both examples of longer-term value.  Both are process-oriented, and build and lose value over time, often measured in years.  The other time dimension value created by PR is what I have referred to previously as the residual value of PR.  That is the value of the created searchable and archived content created by the PR function.  The residual value may take the form of influencing organic search positioning.

That’s a lot of value for one profession!  In 2009, let’s hope CEOs, CMOs and other decision makers increasingly recognize the great value and superior ROI delivered by public relations.

Follow

Get every new post delivered to your Inbox.

Join 171 other followers