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?’

9 Responses to “How Much Does a House Cost?”

  1. Mark Weiner November 8, 2010 at 9:29 pm #

    In the rush for simple solutions, “it depends” can be the wisest. Thanks for reinforcing the importance of this often overlooked but sagacious, reasonable and respectable response to those seeking easy answers.

  2. KayO November 9, 2010 at 11:11 am #

    Thank you for this. You’ve answered a tricky question in a very reasonable way.

  3. metricsman November 9, 2010 at 12:00 pm #

    Thanks for stopping by, Mark. After I looked up ‘sagacious’ I felt pretty good about your comment;)

    Thanks to you too, Kay.

  4. Gabriele Maidecchi November 10, 2010 at 5:40 am #

    “Too often people forget about the ‘I’ aspect of ROI”

    This is the phrase that really got to me, and I couldn’t agree more. Too often we just expect immediate reward without a comparable effort or investment, probably ’cause of the false concept of social media being free = no investment needed. It doesn’t work that way, that’s why people believe social media is useless.

  5. Diane Lennox, SAS November 10, 2010 at 8:12 am #

    Interesting conversation on this topic yesterday in Shonali Burke’s (@shonali) #measurepr biweekly Twitter chat. My takeaway – capital-I investement may not always be the right thing to measure. But if you are measuring ROI, you need to speak in real $$.

    I did disagree somewhat with the thread that the “legitimate” business value of social media remains unproven. If you rely on $$ to make your case, you’re limiting your options, particularly in B2B. It’s more important to be creative, specify your objectives (which may NOT NECESSARILY be direct revenues)and see if you got there. You can apply $$ to those objectives — cost of impressions, cost of conversions, cost of email addresses, whatever — but if you’re only looking at direct monetary returns you might be missing huge value elsewhere.

    And yes, if you don’t invest there can’t be any ROI!

  6. metricsman November 10, 2010 at 11:01 am #

    Thanks, Gabriele, I agree with your comment. Understanding if you an in an investment mode or a return mode is really important for setting and managing expectations. There are a couple of misperceptions that hurt the image of social media, one being ‘social media is free’ as you mention. Another is that social media is only understood by tatted-up young people with pierced body parts and therefore cannot be a serious business tool. The other dynamic is because of the above and the fact that it is relatively new and misunderstood, it is being held up to a higher ROI standard than other channels.We can only hope increased clarity is just around the corner.

  7. metricsman November 10, 2010 at 11:09 am #

    Hi Diane,
    Thanks for stopping by. I like your comment a lot. Deciding what is best to measure should go back to the objectives of the program or initiative. I would submit a small minority of social media/business efforts actually have ROI as the objective in the short term. (And yes, I agree that when one uses ‘ROI’ we are talking about a financial metric.) Most social efforts have objectives that should lead to measuring impact and not ROI. Are we creating exposure to content and message? Are prospects engaging with content and in conversations? Are we shaping attitudes and opinions? What are we learning about our brand from listening to social conversations? All of these are better measured with an eye toward measuring the impact these activities are having on the overall business, not the short-term ROI of such efforts.


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