Archive | May, 2009

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


What Is That Hit In The (insert major publication name here) Worth? Nothing, Unless it Creates Engagement.

7 May

A few months back someone posed a question in a Linked-In discussion group wondering how much the major hit in USA Today he had just got for a client was worth.  Obviously he is not the first PR practitioner to ask this question.  Before pondering the answer, there are several questions we should address first:

  • How many people in our target audience had an opportunity to see the placement?
  • How many actually saw it?
  • Of these, how many actually read the article?
  • Of those reading it, did it change their thinking in any way?
  • Did they forward it on to others?
  • Mention it in a phone conversation with a friend?
  • Visit a website?
  • Digg it.
  • Tweet it?
  • Blog about it?
  • Buy it?…

While one must have Exposure before Engagement, much like Awareness must precede Purchase Consideration, true value creation begins at the Engagement stage.  Using old school language, value occurs with Outcomes, not Outputs.  Seems simple enough yet the majority of PR professionals are still relying on output-oriented metrics like clip counts and ad value equivalents (AVEs) to judge success.  PR pros who are savvy about social media seem to be further evolved.  They understand that true value is not in the content (an output) per se, but in the level of engagement caused by the content.

Are you looking for value in all the right or wrong places?