Posts Tagged ‘ROI’

Enough With Misusing Social Media ROI, Already

ROI-graph

I’m a little tired of abusing the term “ROI” – giving it new meanings just so they can say they’re measuring it. “Return on Interaction”… “Return on Engagement”… enough already.

Breaking news: ROI may well not matter for your social media program. (Edit: At least, not as a direct, immediate metric.)

Except this isn’t breaking news – people just don’t seem to hear it.

Here’s a definition of ROI from Wikipedia:

“Return on investment (ROI) [...] is the ratio of money gained or lost (whether realized or unrealized) on an investment relative to the amount of money invested.”

There’s even a formula:

ROI

ROI is a finanical term. It has a set definition, which carries plenty of weight in companies. However, that doesn’t mean you can always relate your programs directly to it.

For the formula to work, you need to know the cost and benefits of your program in dollar amounts. You should know the cost of your investment, but the gain may be hard to attribute (especially to a single factor). What’s the gain from improved customer service? From relationship-building? From increased employee engagement?

Sometimes you CAN identify a specific gain from your investment. Sometimes you can tie specific activity to conversions and have a specific value for those conversions. In those cases, you’re in luck – you’ve hit the communicator’s nirvana. The rest of the time, just accept it:

ROI may not be the right measurement for you.

Does that mean your program isn’t valuable? Does that mean you’ll never get executive sign-off? Does that mean it’s not worth measuring your program?

No.

It means you find appropriate ways to tie measurement back to your objectives. Those last four words are key: “back to your objectives.” Because everything should lead back to them.

As we’ve navigated through this recession, we’ve seen clients become (rightly) more and more focused on measuring outcomes, not outputs. It’s music to my ears, because this gives us the opportunity to (a) measure the heck out of a program and (b) adjust programs to ensure they achieve the right results for the client.

Those measurements don’t have to lead to a financial formula; they just have to tie back to your client’s goals. Do they want to drive sales? Address customer issues? Be perceived as leaders in their market? I could go on and on. Each of these has different end metrics, along with different proxies along the way. They’re all valuable.

So, please – enough with “return on influence” and other variations on the term “ROI.”

The fact that you’re not measuring ROI doesn’t mean you’re not measuring success or impact. In fact, it may just mean you’re measuring the right thing.

What do you think?

Update: Oliver Blanchard made an excellent point that I neglected to include here – Ultimately, all of these measures SHOULD feed back to ROI. If your company isn’t tying its activities back to that eventually, you risk both the cost of an ineffective program and the opportunity cost of missing more effective investment elsewhere. I would add that there may be intermediate steps between your program and the ROI calculation. Making-up new metrics because you can’t tie directly to ROI does nothing to help you.

(Images: Investopedia, Shutterstock)

Rethinking Blogger Relations

ROIIs blogger relations worth it? Is the ROI sufficient to justify the investment?

I’ve written a few times in the past about blogger relations, from a range of angles – from the tactic in general to the practicalities of pitching bloggers to the results from a blogger’s perspective. However, I recently got to thinking about it in a different way.

I think it’s important to continually question what we’re doing – it’s the only way we’ll continue to improve over time. With that in mind, I got to thinking about whether blogger relations is really worth the investment in time and money necessary to do it well.

A little context

Here’s the issue: most people in the social media fishbowl, including me, will advocate a take-it-slow approach to engaging in social media. My preferred approach has three broad steps:

  1. Listen
  2. Engage
  3. Develop

For this to work, you need to put in a substantial amount of time up-front. That time is spent monitoring what’s going on, identifying influencers, measuring and analyzing trends and getting to know peoples’ preferences.

From an agency perspective, that can be a considerable investment up-front before you even begin to engage.

When you do begin to engage, blogger relations best practices (take Todd Defren’s blogger relations bookmark for example) require continued time-intensive work in both pitching and engagement.

Is that investment worth it?

Sure there are the TechCrunches, the Mashables and the ReadWriteWebs. However, most bloggers don’t have those audiences. Most bloggers don’t have a tenth or even a hundredth of that audience.

Given those low audience numbers, does the investment in time required for good blogger relations give the necessary pay-off?

A few arguments

Even setting aside the impact of corporate culture, there are a few factors to consider:

  • Initial time: If you add up the time you need to invest to get to know a blogger, engage with them before pitching, then tailor a pitch to that blogger, you’re probably looking at least an hour or two per blogger, if not more. 
  • Future time: Of course, once you’ve done the groundwork, the incremental time investment will be lower for future pitches.
  • Relationships: Established relationships have greater value than immediate outreach – future issues management, for example.
  • Search engines: Online content with a positive tone can help build companies’ reputations through Google search results.
  • Long tail: Audience size can be much bigger than stated reader numbers – the long tail of online content can be large over time.
  • Research: If you offer a product or service where purchase is research-based and you’re not engaging, then people are making decisions on purchases based on everyone’s voice but your own.
  • More than pitching: Blogger relations encompases more than just proactive pitching – it can also include both reactive engagement with people who talk about your product, company or industry. I’ve argued before that customer service is public relations; nowhere is this more true than online.

Conclusion

My conclusion, perhaps unsurprisingly, is that it is worth the investment. 

One thing to remember is that traditional media relations takes time, too, if done right. Researching reporters, tailoring your pitch, etc takes time while reporters for mainstream outlets are, in my experience, less likely to write about the story than relevant bloggers may be. What’s more, the long-term effects of building relationships with relevant people (both online and offline) can be substantial.

So, yes – the time investment is substantial, but so are the benefits – better relationships, more coverage, better coverage, SEO, customer service improvements and more. Still, the required investment makes measurement and analysis of results all the more important, which is why we’re putting a lot of effort into that right now.

What do you think? Is the ROI on blogger relations worth it?

ROI: Why Social Media Will Grow

If you haven’t seen this video from Gary Vaynerchuk, well, you need to. Gary eloquently explains why advertising in traditional media is falling and why advertising in social media is growing, and will continue to grow: measurable return on investment.

Layer that on top of the methods for measuring other outcomes in social media, which we’re developing, and you’ll see why social media can be such a powerful addition to your communications and marketing mix.

Thoughts?