I’m starting a new series, called Social Media Frequently Asked Questions. It’s a collection of the top asked questions I hear over and over. I’m putting them here on my blog is a great place to help everyone quickly get educated, convince their boss, or be able to help their clients get over these hurdles, pass them around.
Social Media FAQ #3: How Do I Measure ROI?
This question often creeps up at the end of a webinar or presentation that I give. While we often sing the goodness of social media tools, (and challenges) a web strategist will have to return to the workplace, and demonstrate to their management the value of any program –especially if it’s new.
Is it possible?
In 2005-2006 we debated if this was actually possible, the argument against the ROI of blogging was as difficult as measuring humans. In fact, until we can measure the impact of a conversation between an employee and a prospect at a coffee shop, it was difficult to measure social media. For me, that all changed when Charlene posted the ROI of GM’s Fastlane blog (this was long before I even thought about working with her).
What are you trying to accomplish?
Measuring “new” media isn’t as different as measuring “old” media, the trick is to figure out what your goal is first, is it to spread a message among a community? Is it to reduce support costs? Is it to learn from your community? In each of these cases you’ll have to then assign the right attributes to measure against.
New attributes for new tools
Next, you’ll need to realize that this new media actually has some new attributes (the limited page view attribute is no longer sufficient in this dimensional world), and there are some new attributes to think about (read the white paper I co-authored with Matt Toll of Dow Jones), such as authority, interaction, velocity, attention, sentiment, and actions. You’ll notice I left out the elusive engagement word, it’s used differently by everyone in the industry that it still hasn’t taken hold.
Lastly, you’ll benchmark your programs based upon your goals and those attributes, and you’ll come to some specifics. I’m actually leaving many, many steps out, but those are the high level tasks. You’ll likely need an expert, new tools, and probably a vendor (see my full list), doing it manually is very tedious.
More resources, posts, white papers, videos
Actually, nothing I’ve said here is new, I’ve written about it time (here’s a similar post with more detail) and time over, read all my posts tagged social media measurement.
Update: A few hours later I see this timely article from Computerworld on Life after page views: Web analytics 2.0
27 Replies to “Social Media FAQ #3: How Do I Measure ROI?”
I am asked that question a lot as well. This world mixes a variety of metrics and measures, some softer and others that are more concrete. Establishing a “dashboard” view is important.
However, many don’t actually know what they are trying to accomplish. Questions around objectives are often slim on the front-end of an initiative.
That leads to a lot of back-fill on measures that may not reflect the success (or failure).
Maggie Fox pulled together some good stuff on her post here:
1. Community users remain customers 50% longer than non-community users. (AT&T, 2002)
2. 43% of support forums visits are in lieu of opening up a support case. (Cisco, 2004)
3. Community users spend 54% more than non-community users (EBay, 2006)
4. In customer support, live interaction costs 87% more per transaction on average than forums and other web self-service options. (ASP, 2002)
5. Cost per interaction in customers support averages $12 via the contact center versus $0.25 via self-service options. (Forrester, 2006)
6. Community users visit nine times more often than non-community users (McKInsey, 2000)
7. Community users have four times as many page views as non-community users (McKInsey, 2000)
8. 56% percent of online community members log in once a day or more (Annenberg, 2007)
9. Customers report good experiences in forums more than twice as often as they do via calls or mail. (Jupiter, 2006)
These are other good resources, too:
Good summary post. This is currently a hotly-debated topic in our office and across our practice, and like Michael something we’re asked regularly. Michael’s right, clients typically don’t know what they are trying to accomplish – just that they should be engaged in this nebulous ‘online space’ with some ‘Web 2.0 tools’ and it’s up to us to guide things from there – teasing out goals, trying to help them determine what would work best to meet those goals and so forth.
The measurement of ROI goes hand in hand with the measure of influence, which is still a frequently debated topic. Unfortunatley we’re often left to explain that you simply can’t use the old PR frameworks to talk about ROI or influence online, because relevence and timing (and to steal from Duncan Watts, whether or not the audience is interested.)
Determining ROI on SMM and gathering metrics is my number one goal in 2008 in SMM. I will be checking out Sam’s links too.
I agree most do not know what they are trying to accomplish and that they do know they should have web presence. My strategy is always top down. I discuss what my end result is (usually a landing page) and what my call to action should be and then work backwards from there to create a path that is sticky and portable to my landing page. Combining a few of the metrics between the widget and a tracking tag on a URL to the landing page provides informative insight. I have changed the CTA on some content when looking at the metrics and been able to increase click through, placements and impressions.
This is very helpful Jowyang..^^ Thanks a lot for sharing it with us!
I would strongly recommend every one to advertise their products and services on the internet as i believe times are changing and people spend more time on computers than reading newspapers and watching television.
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