Hi Dave,

Great points. I tend to agree with Joe above that while the ROI formula continues to play a role as intended in many organizations and business, the concept has grown beyond the proper use, as has the definition.

For government, it’s results-based management and measurement. As you note, how are your activities tied to objectives (at any level,) have “appropriate” indicators been identified (biggest misstep in my opinion) and do you have the capacity to properly measure.

Social media in gov’t is being sold as ‘easy’ which makes it all the more important for us to properly measure, or be able to communicate some ‘return.’

Whether people are calling it a return, a result or a measurement, let’s not dismiss the effort.

@mjmclean

I do see where you’re coming from in that, taken too far, the ROI focus just gets in the way of getting things done, but on the other hand, I think it’s worth focusing on heavily while moving along with ones’ Social Media iniativies.

Furthermore, while we’re not there yet, the ability to positivley correlate Social Media iniatives with ROI continues to improve. Have you seen the work Radian6 has done with Webtrends yet? Even if you’re not familiar with the Web Analytics space, get them to demo you– it’s enlightening in the sense that you can see the online measurement world coming together, and since different aspects of the online measurement world are obsessed with ROI, the links are largely already there– allowing for the two to be tied together.

It may never be perfect, but particularly if your online properties sell products or offer support, ROI is increasingly evident via social channels. What’s more, if you do check the demo I mentioned, you can see the immense potential. In effect, you can tell what/whom people were reading when they came to your properties– purchased, converted on another goal etc.

By using those standards as a base and improving on them via your social media initatives, you should expect to see a positive correlation of some sort on your measurement side.

Having said all of that– you’re right. There is and will ALWAYS be an element of faith and aspects of Social Media that cannot be strictly related to the financial aspects of an organization. In an ideal world people will take a balanced perspective– prove what you can, celebrate your successes/avoid your prior mistakes, and, in the meantime, understand that just because some iniatives don’t show up on a balance sheet, they can still matter. I just hope that neither side throws the baby out with the bathwater so to speak.

So glad you wrote this post. When we do seminars for entrepreneurs and small business owners on social media one of the questions we hear the most is “how am I supposed to find time to use social media when I need to work on my business?” and we always say using social media IS working on your business. Just because you can’t measure ROI like you can using other marketing methods doesn’t mean it isn’t useful and beneficial for your business.

Thanks!!

It’s simple: Why would you measure “new media” with old methods of measurement? Social media requires measurement with a 21st century lens. Is there another way to define goal attainment?

As much as we might hate the term ROI, and sometimes have difficulty applying it to PR in general and social media in particular, we’re going to have to find a way to address this issue, as it represents a reality that we can’t escape, no matter how hard we’d like to. Basically, because it doesn’t come down to us.

The challenge is that we are trying to justify investment in social media to companies who have to think in terms of return on investment, in the sense of “if I have to convince upper management or my shareholders that it was wise to invest $X in this campaign, I have to be able to get back to them at the end of the day with a measure of success and a confirmation that it was indeed a worthwhile investment.”

Social media represents much more than new tools – it represents a new mindset, and things like long tail, niche markets, ‘Free’ models etc. I feel it’ll be awhile before business is ready to invest heavily in a proposal that isn’t particularly measurable.

Meanwhile, we can do what is possible and continue to explain the new social media context in our dealings with clients.

Enough with social media ROI already … maybe … but only when the client is ready to listen. At the end of the day, he’s paying the cheques and wants to know that the campaign he’s signed off on and paid for brought in an appropriate return.

So how are we going to meet this need?

If ROI was the only measurement of value then no one would bother getting health insurance.

ROI is a term that is kicked around and has been abused. I do agree that ROI is difficult to measure and challenging to explain the numbers in certain instance. Social media is probably one of those instances where ROI numbers get thrown around as if they were gospel. I worked for a company early one in my career where every IT dollar proposed, whether expense or capital, was put through the grinder to dissect its impact on our bottom line. What I learned is that for the more fuzzy cases, you really had to dig deep and involve a number of organizations/people to come up with meaningful numbers…and sometimes those numbers were tied to other factors such as brand strategies, expected behavioral changes, etc. In other words, the ROI was not standalone but depended on a number of other factors.
So IMHO, ROI is difficult to measure in social media but a multidisciplinary approach might tease out some meaningful numbers.

Dave – my apologies. We actually agree entirely. Perhaps more of our focus should be spent on defining the differences between measurement and ROI – there are plenty!

Dave, this is discussion is fantastic! ROI is only a form of measurement and important only if it is important the the user. The key message here, is that Measurement is key. Whatever measurement matters to those who care. I do believe ROI is an important one as it provides the easiest way to calculate tangible business value. But other forms of measurement are needed to get there. I guess what annoys most are those who say “Social Media” cannot be measured (and there are lots of those). IMO that’s where our industry’s “Snake Oil” reputation comes from in the eyes of many corporate executive decision makers.

I should probably read everyone else’s comments before flapping my big mouth, but I got excited. Hah.

People ask me how FreshBooks measures the time we spend on Twitter pretty often. And the best answer is often another question: Do you measure the time you spend talking to a client or customer on the phone? What’s the ROI on sending an e-mail to someone?

We’ve made the decision to use social media as another customer service tool. It’s not hard to see we have a strong brand in many online spaces. It’s also not hard to see without us being there, our brand wouldn’t be as strong as it is.

Thanks for making the stand to talk about this. Not enough people do.

Dave,

As usual, you certainly have stimulated some great discussion! I think the key point has to do with establishing clear and measurable goals that ultimately correlate to business performance. Successful initiatives (both in social media and elsewhere) have this in common.

Thanks to you and Alex for pointing out the Radian6 integration with Webtrends. Obviously, there is a long way to go in integrating social media with the online measurement/ analytics world, but we are excited about the first steps.

Warren Sukernek
Director of Content Marketing
Radian6
@warrenss