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Last week I posted some tips for brands wishing to engage with their customers via social media. It would appear to have been well received and I hope it helped provoke some thought around this subject.

One tip which received a lot of attention was "Forget ROI" and because this appeared to be a hot topic of interest, I thought I'd offer a little more detail and context around this and provide some further thought of how a return (in some shape or size) could be measured and then used to build a business case. I hope it helps.

Social media and ROI is not a match made in Heaven.

Investment in this area is straight forward to measure and can take the form of time, resource and money. Standard stuff.  But what type of return can be expected? What is return? Typically, "return" is a monetary number in a spreadsheet, which everyone understands hence it receives a lot of focus. It's the payback from all the investment made.

However, social media is not about achieving sales. I can hear the finance and sales people shouting "What! That's madness!" Social media, for brands, should be about providing meaningful and valuable information to their target audience; coupled with providing the ability for anyone to interact directly with the brand.

Be social; have a chat; be helpful...no ulterior motive. In the brand engagement journey, brands can use social media platforms to create awareness and interest; brand advocates can also provide the real and more meaningful endorsements within social media and those people interested can then make up their own minds.

So the return from social media on its own is increased activity, conversation and buzz, hopefully in a positive manner. No £££s or $$$ or €€€ in sight. Oh dear. This activity can be measured with such tools as Radian6, Brandwatch, free buzz monitoring tools, and I'd thoroughly recommend www.addictomatic.com

However, there is of course, a bigger picture to consider.

  • How does the increase in "buzz" online impact the Natural Search rankings and click throughs?
  • How many new Natural Search results relating to the activity appear?
  • Does my Paid Search see an uplift?
  • How about the site referrals to my website?
  • Are these coming from social media land?
  • How many more back links to my site have appeared?
  • Has brand search term volume increased?
  • Is there a match in keyword buzz activity and keyword searches?
  • How viral has my social media become? (Who else is referring to it?)
  • What is the authority, reach and sentiment of this viral activity?
  • How many "fans" "followers" "friends" "views" etc. do I have?
  • Is there an increase in unique visitors to my site directly?
  • Have conversions increased?
  • What is the timing associated with all this?

Ok...there is more time and expertise (more investment) needed to collate and analyse the data, and from several sources. However, the effort to do this will help justify (even to the laggards) the reasons for the investment, and if done well it could justify further investment.

Synchronising measurement is essential. Looking at the increase in buzz , the keywords and phrases being used; where it is happening and when it happens will allow you to correlate this information with the on site web analytics data. If the search terms leading to increase unique visitor activity (Natural & Paid) are the same as the terms used in the buzz and activity happening off site; and these occur at the same time...there's a strong case for the social media cause. Should this then lead to increased conversions, then the return could potentially make it onto that spreadsheet. Did we see a raised eyebrow from an accountant there?

I always like to look at the return of not getting involved. It could be seen as a zero return, which is pretty poor. I'd argue it was worse than that. In fact, it could very well be a negative return as you can guarantee your competitors will be "having a go".

 Karl Havard is Managing Director of Propellernet

Karl Havard

Published 10 December, 2008 by Karl Havard

Karl Havard is a trainer and contributor to Econsultancy. You can follow him on Twitter and connect via LinkedIn.

21 more posts from this author

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David Alston

Great article Ken. I love how you tied it up in the end "I always like to look at the return of not getting involved. It could be seen as a zero return". This was the theme I spoke on just last week in Toronto - I had called it - what's the Return on Ignoring (ROI). At first when you said that social media investment could and should not be measured in terms of sales I was going to disagree but you pulled it together at the end by stating that relationships gained through social media could eventually mean sales if that's the path that was organically determined. Sometimes you can accelerate this by "listening to the point of need" - meaning if someone needs help with something and is publicly stating this in social media you could reach out and offer to help - which could turn into a sale if what you were selling fulfilled that need. But their a many reasons to listen and engage - I've thought of at least 20 - and this would only be one of them.

Great article. Thanks for adding to the discussion on ROI. Oh, and thanks for the Radian6 mention as well (one of the twenty reasons in my books is also for just saying "thanks")

Cheers.
David

almost 8 years ago

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Joe Hall

Once again, excellent work Karl!

almost 8 years ago

Doug Kessler

Doug Kessler, Director at VelocitySmall Business Multi-user

Good analysis and I do agree.
But while not getting involved has zero ROI, it also has zero cost.

Getting involved has costs in terms of time and a bit of risk (getting it wrong or under-resourcing it and looking bad).

Since the metrics are still pretty soft, it's hard to know just how much time and energy to give social media.  The Buzz is indeed a buzz, but there's a lot of spade work that has to happen before the Buzz is audible.

It still feels like an experiment.  I love experiments.

almost 8 years ago

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Michael Hafner

I like the clear view on ROI and the definition of value.

But I definitely do not think that we should exclude the possibility of selling via Social Media

over 7 years ago

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Carson

A agree Doug - there is a big cost if it is done wrong.  Time devoted to it cannot have a maximum but it can have a minimum.  A lot of the time is used to read and listen for things to chime in on.

over 7 years ago

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Professional SEO Firm

Great article. Thanks for adding to the discussion on ROI. Can you explain here that ROI & social media is same thing or different.

over 7 years ago

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Bob Kaufman

I always like to look at the return of not getting involved. It could be seen as a zero return, which is pretty poor. I'd argue it was worse than that. In fact, it could very well be a negative return as you can guarantee your competitors will be "having a go".

I would not completely agree.

Time is the most precious resource most of us have, and it has an opportunity cost. You need to compare the return on your time from working on social media versus the return from working on other, known profitable activities.

Now, if you're a social media consultant, any time spent on social media is fruitful, especially if it's billable. But if you're a business executive, time spent on social media needs to be weighed against other great uses of your time, like improving product quality, customer service, or other things which may have a greater return, both in terms of profitability and word of mouth.

over 7 years ago

Karl Havard

Karl Havard, Chief Strategy Officer at Econsultancy Guest Access TRAININGSmall Business Multi-user

Hi Bob, thanks for the comment. Time is definitely one of the most precious commodities we have, and hence in business it should be devoted to the activities that provide the best possible return. To be able to select what these activities are, you always need to be in the "helicopter" having a look down on the big picture, allowing for continual evaluation of the effectiveness of all the integral parts...of which social media may be one of them.

My specific point, which you have honed in on, should be able to play a part in all the areas you mention. Using the social web to provide an enhanced customer service, for me, is far more powerful than trying to market via social media. Likewise, soliciting feedback on product quality can be achieved very effectively using the social web. 

I'd argue that "social media" is not another channel, it is in fact word of mouth/conversation about anything and everything, and it is taking place on the web. This obviously means the reach can become instantly global and visible by thousands of people. Therefore, I believe it is a more "horizontal" medium; conversation on the web.

I believe brands can reduce their overhead (time and cost) and just listen and observe conversation taking place...a more passive approach. A lot of this can be automated for no cost at all and it will keep a business informed of any activity, whether it be product or service related; positive, neutral or negative. Being aware of what is happening is essential.

Not being aware is where the negative ROI comes in. You can pay nothing and listen; or pay nothing and do nothing, the latter won't help your business and any negativity could escalate without your knowledge. I hope that makes sense and provides some more context.

over 7 years ago

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Bob Kaufman

If I understand correctly, the point you are making is that social media tools are a business input, a technology that management can choose to adopt or not to adopt. You are saying that not adopting a technology when it is more efficient than current ways of doing business will result over time in lower effectiveness and higher cost. That is the negative return compared to the peer set who does adopt new technology.

I would buy that. It’s a good explanation. Then the question becomes, “What is the cost of adopting versus the return?” I think there’s a hidden cost which a lot of us overlook, and that is the psychological switching cost, if you will, for a non-technology oriented executive to get their arms around all this stuff. It’s not just learning the tools, it’s understanding the culture and the new rules of the game. It’s intimidating and potentially very time-consuming.

Do you have any thoughts on how to decrease that cost? Could you come up with a list of the top 5 lowest cost / highest return things a completely non-technology savvy executive could do to understand social media and see its value?

over 7 years ago

Karl Havard

Karl Havard, Chief Strategy Officer at Econsultancy Guest Access TRAININGSmall Business Multi-user

Bob, I will give your question some serious thought. Over the last 6 months or so I've worked with a number of companies/brands where a selection of senior exec's are used to operating in a certain way. It has become habitual and there is definitely a psychological switching process to go through, but only if the desire is there.

I'll ponder some more on this and get back to you. Not sure this is the best forum; maybe a separate blog post? Happy to discuss directly with you if you click my profiles details next to the comment, you should find a number of ways. If I don't hear directly, I'll come back to this post.

Thanks again for the question

over 7 years ago

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