The ROI question on SM?

So now we have a number of clients for whom we are doing various different levels of social marketing work.  We're listening, evaluating, posting content, getting it to migrate, counseling on blogging and tweeting.  YEA!

But there's a nagging question that they are asking and I'm frankly asking myself. 

How do to truly measure a return on the social marketing investment?

Admitting you don't know the easy answer to a question on a blog read by your clients is a risk, I know.  But I want to be able to help them understand and adopt.  In the end it always comes down to money, how it is spent and what they get in return.

It is a similar question that is frequently asked of us in our traditional public relations practice.  We are not advertisers.  We can't guarantee media placements.  We can't guarantee the media placements we get will say exactly what we want them to say.  But we do know the value of the "third-party endorsement" and how that can drive credibility and traffic, so we develop some goals based on number of placements and even the dreaded number of impressions and the ultra-dreaded "ad-value equivalent" and do our best and keep mostly all of our PR clients pretty happy.

My sense is in social marketing the ROI question is even squishier to answer.  Here's how I have seen others try to confront it:

1. At the very least it will help you manage your reputation as you can see what is being said about you or your company and engage in the conversation.
2. Your competition is doing it so if you are not then you are just surrendering this valuable new space to them.

3. By creating confusing charts with metrics that most folks can't understand with cost per acquisition blah, blah, blah, etc.

At the end of the day, I'm left with creating goals similar to a traditional media relations campaign and try to track the number of people coming to and interacting with the various social media platforms AND what you do on an ongoing basis to engage them.  Sprinkle in some of the magic that happens when people start talking about what they saw or read to other people and there I can begin to explain to clients and set some goals.

That being said, if someone put a gun to my head and said I had to explain what kind of ROI they will get if they spent $10,000 on a social marketing campaign, my first instinct likely would be to say, "pull."

I would love some comments, insights, feedback on the question, "How can you truly measure and set some easy to explain and track benchmarks for social marketing campaigns.  Thanks and HELP!!!

Comments

[Chuck Hemann]

Jon - a truly fascinating conundrum, and I sense you are not alone in your frustration. Sure, there is an element of "squishiness" to any measurement process - traditional media or not. if you are struggling with this, as it seems like you are, I'd encourage you to check out David Alston's eMetrics presentation that's posted on slideshare -

http://www.slideshare.net/davidalston/awareness-to-action-draft-emetrics-toronto-david-alston-radian6

[Trina Willard]

Jon - this is an intriguing question. As a measurement consultant, I'm tempted to throw it back to you and ask whether your clients' goals for social media efforts are substantially different than the goals for traditional ones, or simply an extention of them. There are many possibilities to measure, as you have mentioned, depending upon the client's intent: controlling the message, number or quality of endorsements, traffic (as an indicator of awareness), perceived credibility, etc. Once that is sorted out, your ROI calculation should rely on measures that are relevant to those goals. It will also be critical to collect baseline data so you can assess the desired changes, especially for new social media initiatives. Given that general feedback, there are two measurable possibilities from my perspective that you have not yet mentioned: (1)Is your organization reaching the same or expanded target audience more efficiently using social media (time savings)? and (2) Can social media efforts more effectively engage a wider range of staff as proxy-marketers, thereby expanding your marketing capacity and perhaps reaping other organizational benefits? I will be interested to see how your direction develops on this.

[Daniel Durazo]

Hey Jon,

Great post. I'll jump on Trina's bandwagon. I think social media's value is derived through its ability to reach the "right" people. Social media has taken off because it has the ability to segment audiences like never before. I can join only the LinkedIn groups that interest me, I can listen to social radio podcasts and I can read blogs like yours that include topics I'm interested in. Everything else I ignore. I think that social media results should be measured purely by its success in reaching pre-defined target audiences.

[Lorna]

Hi Jon,
I just read The Groundswell (http://tinyurl.com/2tb2gj) written by Charlene Li and Josh Bernoff and it talks about Web 2.0 and using the tools people are connecting with to reach them.
From what I understand, putting out viral videos like the Southwest Airlines (http://tinyurl.com/dga6tw) is a tactic for punching through the noise, for generating awareness. But it's what you do with that increased visibility that's more important. Blendtec (http://tinyurl.com/yk6rku) made a series of videos for its $399 blender in which the CEO blended an iPhone, golfballs, marbles, etc into just in the blender. This campaign, which cost $50, caught fire and soon the CEO was on the Today Show and the Tonight Show.
There are various ways you can tap into the people online- for research, to increase awareness, for product development even. Each stage has its own measurement tools as described by Li and Bernoff. But most importantly you have to stick with the people you attract and use the momentum to build your brand, sell your product and profit. This, of course, calls for strategic planning with an end goal of where you want your customers to be along with measurable objectives for getting there. Number of views, Web site traffic, "friends", blog subjects, etc. are all ways to quantify that your social marketing is working, but retention of those customers - the true relationships you form with them and maintain for continued conversation are going to be the bigger success.

[Spingirl]

Jon - great post addressing an on-going conundrum. I totally agree with Trina, and want to add a new dimension. How about customer service? Social media can put you face to face with your customers and others who interact with your brand. There is great in the direct feedback. In my opinion, monitoring that feedback (sentiment) and mitigating issues that arise is of huge value and the same ROI calcs as used in customer service can be applied...

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