Archive | June, 2009

Do you know Jack about PR measurement?

15 Jun

The 2009 Jack Felton Golden Ruler Award, created by the Commission on Public Relations Measurement & Evaluation, is open for entry hereEntry 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.

The Difference Between Value and ROI

12 Jun

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 Cash_registerincreasing 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 hpiggy-websaveave 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?

Five Things You Should Know About Social Media ROI

8 Jun

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:

  1. 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, butdollar-sign.jpg (JPEG Image, 520x731 pixels) - Scaled (85%) 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.
  2. 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.
  3. 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 measuredsand.jpg (JPEG Image, 300x400 pixels) 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.
  4. 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 empchain-links.jpg (JPEG Image, 245x328 pixels)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.
  5. 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.

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?