Back To The Future with Social Media and ROI
Category: Blog - August 10, 2010
A few years ago there was a lot of “ROI” talk in marketing consultant circles, mostly driven by clients whose jobs were on the line. Sound familiar? Even as recently as two years ago, it was challenging to point directly to business results and state with confidence that results correlated to marketing and social media efforts. Measurement felt squishy, and our access to comprehensive and smart analytics was pretty limited. We measured media impressions. Numbers of links. Sometimes, if we were really good, we measured sentiment. But in the end, these measures are very tenuous. And, they did not build a solid case for the holy grail of busniess results. Increased sales and market share was the holy grail.
Over the last few weeks it seems as though all of the marketing and social media gurus have been ferociously blogging about ROI. Brian Solis even offered a recent shot across the bow in his post from just last week ROI Doesn’t Mean Return on Ignorance
I had the opportunity to hear Solis speak on this issue at GasPedal’s Word of Mouth Marketing Supergenius (great content available via the live coverage) in July. ROI and the surrounding processes for measurement and reporting were a strong and consistent narrative across most of the speakers.
One presentation in particular, by Olivier Blanchard of Brandbuilder and available on SlideShare, stood out to me because it began by making the point that we need to realize that ROI is a business metric and not a media metric. In a humorous, but no less meaningful way, he made the point that while frequency and reach are important things to measure, they also need to be connected directly to yield. ROI is, in fact, media agnostic. Following is Blanchard’s recommendation for connecting digital and social media efforts to ROI for businesses:
- Define the objective clearly first, and then outline the tactics to achieve this objective.
- Establish a clear baseline of performance.
- Create an activity timeline that maps out your initiative, and overlay this with the baseline.
- Monitor the impact on conversations detailing the catalysts to any change that occurs and overlay this with the activity timeline.
- Measure the transactional precursors and understand the state of conversion and/or sales that existed before your initiative.
- Look at sales and revenue, and plot these on your activity and baseline graph.
- With the comprehensive timeline capturing all of this content, look for and identify patterns.
- Prove and disprove the relationships between cause and effect. Adjust and report accordingly.
His example looked something like this:
His point is that understanding of how activities are impacting or impacted over time, and from a clear baseline, begins to get us closer to measuring ROI. Ultimately, what we are driving at is the creation of financial impact for an organization. This may be manifested in increasing the net number of transacting customers and/or the average spend per transaction. You get the idea.
Blanchard makes the point that often efforts end with measuring the non-financial impact on the organization or the brand. This falls short of actually presenting any meaning to the organization and short of creating a solid value proposition. Connect to financial impact, and you connect to ROI. When you can show a relationship between cause and effect, you stand to build on the resources that are allocated your way in support of business goals.
Group Director, Digital & Social Strategy