We have literally bludgeoned the poor social media ROI horse to death recently. There’s a lot of sage discussion that’s happened around the topic, but it all seems to boil down to a few things, an ROI credo of sorts:
1. We agree that having some kind of gauge for success is critical if you’re to learn anything from your efforts.
2. We embrace the fact that purely quantitative metrics are inadequate and many obsolete, and we recognize the need for better ways to articulate the value of relationships on a human level.
3. We know that there is no one-size-fits-all calculation for the success or failure of social media in business.
4. We all want a way to demonstrate and articulate that our instincts about social media’s value are correct, and to validate its place in the business and our traditional communications world.
I think we’re a bit too enamored of the ROI phrase to begin with. We jump all over it, eager to quantify and analyze and scrutinize and justify. It’s a comfortable place for us marketing types, cuddled up with our spreadsheets and faceless numbers. And I’m beginning to fear that it’s a crutch for those that are fearful of taking action.
I have news for you. We aren’t going to figure all of this out neatly in time to take action without risk of failure. In fact, the time to take action is now. It’s yesterday.
If we’re waiting for a tidy definition for ROI before we’re comfortable taking steps in a new direction, the train will have left the proverbial station. Have we always known and carefully calculated the potential success of something – especially in communications – before we do it? Do we ever have the capacity in a business sense to take something on faith, or at the very least on an educated guess? Can barriers be broken if we wait until all the details are neatly in a row?
Moreover, ROI is something that you calculate after the investment has been made. It’s looking back at your efforts, and determining what you got out of them. The definition of “got” can be any number of things. Why are we so hell bent on making it fit one specific idea of what works? And can we not be content to do our best to plan ahead, but be bold enough to move forward and DO? Not having all the answers is not an excuse to be inert.
I’m not at all against doing your due diligence and planning your social media endeavors as best you can. I’m not at all against the idea that measuring your success somehow is exceedingly valuable critical, and I’m all for having an idea of how you define success (because otherwise there’s no way to know whether or not you’ve achieved it. And this part gets missed. A lot.).
But, please. Let’s not undermine our own work by spending hours on end spinning our wheels in the quest for the perfect, airtight explanation for the elusive ROI. Let’s be smart. Use common sense. Be willing to take calculated risks in the name of improving our status quo. (If you remember, we did this with email and websites too, long before we were certain about what ultimate value they would bring. Now they’re indispensable.) Perhaps we’ll even manage to distill better definitions of return on whatever if we’re actually looking back on real, tangible experiences and examples of what worked, and what didn’t.
Let’s put our minds to work and show the value of what we’re doing through something completely radical: our actions.
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The issue here is that everyone’s been diagnosing the horse’s dentures from the wrong end.
I wrote a post recently (http://occamsrazr.com/2008/11/26/freedom-security-and-dollars/) that deals with how using a common medium of exchange we can easily calculate beneficial deals, but at the cost of losing our sensitivity to good barter deals. In essence, we’ve lost our appreciation for estimation, and the fuzzy. Since we so instinctively translate every transaction into dollars, we tend to use that as the Golden Measure, even though the translation to currency is no better than a Golden Fleece.
The PR and marketing people are the WORST-suited to solve the ROI equation. It ought to be outsourced to the economists. Let them do a big study of campaigns that worked and didn’t, and those that included social media effectively and ineffectively.
Regression analysis is the instrument that allows people to scientifically determine exactly which factors mattered the most. “But some things can’t be measured!” Yes, they can. You just have to dig a little further to find the correlations. Build up enough correlations and you can define some general rules for success, and can target them as waypoint objectives.
As it stands today, we’re all alchemists hung up on our individual formulae, and desperately trying to find success stories that bolster our theory. We’ve got the body of work out there now, let’s put it to some real analysis and see what the successful campaigns had in common.
I have faith in the power of Social Media. I don’t have faith in our abilities to prove why it works and better understand it. People DID get better with leeches and primitive barbers, even when the barbers were horribly confused with theories about Bodily Humours.
I meant what I said about the horse. We really are just staring at a bunch of…
The issue here is that everyone’s been diagnosing the horse’s dentures from the wrong end.
I wrote a post recently (http://occamsrazr.com/2008/11/26/freedom-security-and-dollars/) that deals with how using a common medium of exchange we can easily calculate beneficial deals, but at the cost of losing our sensitivity to good barter deals. In essence, we’ve lost our appreciation for estimation, and the fuzzy. Since we so instinctively translate every transaction into dollars, we tend to use that as the Golden Measure, even though the translation to currency is no better than a Golden Fleece.
The PR and marketing people are the WORST-suited to solve the ROI equation. It ought to be outsourced to the economists. Let them do a big study of campaigns that worked and didn’t, and those that included social media effectively and ineffectively.
Regression analysis is the instrument that allows people to scientifically determine exactly which factors mattered the most. “But some things can’t be measured!” Yes, they can. You just have to dig a little further to find the correlations. Build up enough correlations and you can define some general rules for success, and can target them as waypoint objectives.
As it stands today, we’re all alchemists hung up on our individual formulae, and desperately trying to find success stories that bolster our theory. We’ve got the body of work out there now, let’s put it to some real analysis and see what the successful campaigns had in common.
I have faith in the power of Social Media. I don’t have faith in our abilities to prove why it works and better understand it. People DID get better with leeches and primitive barbers, even when the barbers were horribly confused with theories about Bodily Humours.
I meant what I said about the horse. We really are just staring at a bunch of…
…and for the record, I am actually agreeing with Amber. I’m merely suggesting a solution that many will not like, because it threatens their “secret sauce.”
…and for the record, I am actually agreeing with Amber. I’m merely suggesting a solution that many will not like, because it threatens their “secret sauce.”
If there ever is a report by economists, I want it. But in the meantime, let’s harness the power of social media by making smart choices about 1. time invested and 2. money invested. It is a risk, as Amber states, so let’s find ways to experiment and share the wealth with one another. Those of us who have created opportunity through this channel know it pays back, but it is an elusive channel…like karma.
Jeannie Walterss last blog post..Black Friday Blackout
If there ever is a report by economists, I want it. But in the meantime, let’s harness the power of social media by making smart choices about 1. time invested and 2. money invested. It is a risk, as Amber states, so let’s find ways to experiment and share the wealth with one another. Those of us who have created opportunity through this channel know it pays back, but it is an elusive channel…like karma.
Jeannie Walterss last blog post..Black Friday Blackout
I think the problem goes back to we marketers needing to do a better job of explaining HOW and WHY a company can benefit from using social media. We are so hellbent on ‘finding the ROI’, but I think the key is in getting the buy-in, not defining the ROI.
Dell readily admits that they cannot give you a hard ROI on their social media efforts. They cannot draw a straight line from their blogging and Twittering, to their company’s bottom line. But they KNOW their efforts are working, and they have gotten Michael Dell to BUY IN on what they are doing.
I think this goes back (and I am as guilty of this as anyone) to many of us in this space wanting to be ‘vindicated’. We want to find PROOF that our theories are correct. I think we need to invest more time in teaching, and less time in worrying about being right.
mack colliers last blog post..The Viral Garden’s Top 25 Marketing & Social Media Blogs – Week 130
I think the problem goes back to we marketers needing to do a better job of explaining HOW and WHY a company can benefit from using social media. We are so hellbent on ‘finding the ROI’, but I think the key is in getting the buy-in, not defining the ROI.
Dell readily admits that they cannot give you a hard ROI on their social media efforts. They cannot draw a straight line from their blogging and Twittering, to their company’s bottom line. But they KNOW their efforts are working, and they have gotten Michael Dell to BUY IN on what they are doing.
I think this goes back (and I am as guilty of this as anyone) to many of us in this space wanting to be ‘vindicated’. We want to find PROOF that our theories are correct. I think we need to invest more time in teaching, and less time in worrying about being right.
mack colliers last blog post..The Viral Garden’s Top 25 Marketing & Social Media Blogs – Week 130
Exactly, Mack. Do what you do well, and let the math nerds with the real tools help nail down the whys and wherefores.
Teach the right behavior, and it will pay off. It’s the evolution of the medicine man to the licensed doctor. The medicine man had a LOT of wisdom and bedside manner, even if he didn’t always know why that certain root was effective, or couldn’t spell analgesic.
Mind you, I’m talking about medicine men… NOT faith healers.
Exactly, Mack. Do what you do well, and let the math nerds with the real tools help nail down the whys and wherefores.
Teach the right behavior, and it will pay off. It’s the evolution of the medicine man to the licensed doctor. The medicine man had a LOT of wisdom and bedside manner, even if he didn’t always know why that certain root was effective, or couldn’t spell analgesic.
Mind you, I’m talking about medicine men… NOT faith healers.
Right on, Amber, as usual. It’s amazing to me, even as a social media newbie, how much TALK there has been on measuring something that, more than anything else out there, requires DOING for it to work.
We’re approaching something new with old views and tools. Perhaps in addition to economists we should also reach out to sociologists, community organizers, anthropologists and such like, to help us evaluate success in creating (sense of) community, in generating engagement, in cultivating relationships.
We seek discrete numbers to evaluate social media, maybe there’s more to it. I may be totally off, but I propose starting with stories, which lend themselves well to recording action and which is how humans communicate; for example, “I did this and then that happened, which then led to something else…” Accumulate stories for each effort, weave them into a narrative, and then aggregate the narratives into a web of discourse.
Right on, Amber, as usual. It’s amazing to me, even as a social media newbie, how much TALK there has been on measuring something that, more than anything else out there, requires DOING for it to work.
We’re approaching something new with old views and tools. Perhaps in addition to economists we should also reach out to sociologists, community organizers, anthropologists and such like, to help us evaluate success in creating (sense of) community, in generating engagement, in cultivating relationships.
We seek discrete numbers to evaluate social media, maybe there’s more to it. I may be totally off, but I propose starting with stories, which lend themselves well to recording action and which is how humans communicate; for example, “I did this and then that happened, which then led to something else…” Accumulate stories for each effort, weave them into a narrative, and then aggregate the narratives into a web of discourse.
Amber,
ROI doesn’t need to be defined or redefined. It was defined decades ago and is taught in business schools. ROI = gains – investment costs ÷ investment costs and it is meansured in dollars returned. What you really are talking about is a Value Reference Model (VRM), which measures the “got,” the intrangibles that you talk about above.
My point: Every C-level executive and MBA has been taught these things, as have most entrepreneurs. As one who has been both an executive and has started three businesses, I urge everyone to learn these definitions and how to measure correctly, if you want to grow in your business career or you want your business to grow.
Ideas matter and so do terms such as ROI and Value, because despite risk, they give us a way to measure, to self-correct and to succeed.
Lewis Greens last blog post..Let Us Begin by First Loving Ourselves
Amber,
ROI doesn’t need to be defined or redefined. It was defined decades ago and is taught in business schools. ROI = gains – investment costs ÷ investment costs and it is meansured in dollars returned. What you really are talking about is a Value Reference Model (VRM), which measures the “got,” the intrangibles that you talk about above.
My point: Every C-level executive and MBA has been taught these things, as have most entrepreneurs. As one who has been both an executive and has started three businesses, I urge everyone to learn these definitions and how to measure correctly, if you want to grow in your business career or you want your business to grow.
Ideas matter and so do terms such as ROI and Value, because despite risk, they give us a way to measure, to self-correct and to succeed.
Lewis Greens last blog post..Let Us Begin by First Loving Ourselves
There’s a reason PR ROI to this day hasn’t been figured out & is still a major discussion point in that industry. It will be the same with social media.
Just to clarify, my MP post and the planning that I suggested was based on PR planning (not marketing) and was more intented to show that companies need to have at the very least a plan to map out their goals/objectives. Otherwise how can the marketers, PR, customer service, etc. folks even begin to show that social media is indeed valuable and does move the needle (one only needs to look at Dell’s customer service rating improvements for evidence). And what the “ROI” is, well that’s just semantics and can only be defined by the company…it could be Return on Involvement (Dell/Comcast) or Return on Influence (Zappos) or Return on whatever…
(BTW, I agree with Ike, let an economist at it. I am tired of fighting the ROI battle and my math & micro/macroeconomic skills just aren’t that honed).
The irony is that most companies can’t even prove ROI for traditional marketing and yet they want proof-positive of ROI for social media before they even get started. Okay, yes, let me look into my crystal ball for one moment…
I agree with you Amber, it’s a crutch for being fearful of taking action or being wrong (isn’t that why most companies don’t plan?!).
Beth Hartes last blog post..Is Social Media scalable?
There’s a reason PR ROI to this day hasn’t been figured out & is still a major discussion point in that industry. It will be the same with social media.
Just to clarify, my MP post and the planning that I suggested was based on PR planning (not marketing) and was more intented to show that companies need to have at the very least a plan to map out their goals/objectives. Otherwise how can the marketers, PR, customer service, etc. folks even begin to show that social media is indeed valuable and does move the needle (one only needs to look at Dell’s customer service rating improvements for evidence). And what the “ROI” is, well that’s just semantics and can only be defined by the company…it could be Return on Involvement (Dell/Comcast) or Return on Influence (Zappos) or Return on whatever…
(BTW, I agree with Ike, let an economist at it. I am tired of fighting the ROI battle and my math & micro/macroeconomic skills just aren’t that honed).
The irony is that most companies can’t even prove ROI for traditional marketing and yet they want proof-positive of ROI for social media before they even get started. Okay, yes, let me look into my crystal ball for one moment…
I agree with you Amber, it’s a crutch for being fearful of taking action or being wrong (isn’t that why most companies don’t plan?!).
Beth Hartes last blog post..Is Social Media scalable?
Right on, Amber. And thank you Lewis for making that distinction; there’s a major difference between the two that we as marketers need to keep in mind for any kind of project.
As always, we want to package this phenomenon in order to follow the “guidelines” we all been taught for decades. We need to understand that this new term, “following”, what it really means is “listening”.
Want to package it anyway? Drop a code with a sales offer and “follow” its results. Thanks Amber!
Paul L’Acostas last blog post..Managing is such a dinosaur
Right on, Amber. And thank you Lewis for making that distinction; there’s a major difference between the two that we as marketers need to keep in mind for any kind of project.
As always, we want to package this phenomenon in order to follow the “guidelines” we all been taught for decades. We need to understand that this new term, “following”, what it really means is “listening”.
Want to package it anyway? Drop a code with a sales offer and “follow” its results. Thanks Amber!
Paul L’Acostas last blog post..Managing is such a dinosaur
“And what the “ROI” is, well that’s just semantics and can only be defined by the company…it could be Return on Involvement (Dell/Comcast) or Return on Influence (Zappos) or Return on whatever…”
Agree completely, Beth. Can Comcast ‘prove’ the ROI on Frank Elliason spending all day on Twitter? I dunno, but they are apparently quite pleased with what he is accomplishing there. Each company has to determine the worth of their SM efforts in terms that they are comfortable with.
mack colliers last blog post..Being a farmer versus beating a dead horse
“And what the “ROI” is, well that’s just semantics and can only be defined by the company…it could be Return on Involvement (Dell/Comcast) or Return on Influence (Zappos) or Return on whatever…”
Agree completely, Beth. Can Comcast ‘prove’ the ROI on Frank Elliason spending all day on Twitter? I dunno, but they are apparently quite pleased with what he is accomplishing there. Each company has to determine the worth of their SM efforts in terms that they are comfortable with.
mack colliers last blog post..Being a farmer versus beating a dead horse
Spot on Amber. Thanks for raising this critically important issue.
There is no direct ROI but because most people are conservative in business terms they are waiting for someone else to take the first step and jump in the water to prove there is a ROI for social media
What are the measurements for evidence of effective communication?
Is it for example a survey of a businesses blog readers who say they now feel they are being listened to as a result of meaningful engagement and they feel hence they can now trust the person. This is an example of how your social media efforts will work in my opinion.
This all goes back to how we communicate as a society and social, media can help us re learn communication skills of a civilized and caring society which to a degree have been lost due to excessive greed for example. My analysis applies to businesses much because society and business are intertwined.
How can you get a metric analysis of a communication app? You cant.There is a lot os debate here in Ireland about social media ROI and a there an in-suing scramble for metric analysis as justification for investment which is really starting to bug me. They are missing the point.
We need more social media exponents.
Recommendations, that are built on trust and level of competence can also be a measurement of a social media campaign that works.
Social media can offer us a wonderful opportunity in business by reaffirming the values of honesty and trust
Spot on Amber. Thanks for raising this critically important issue.
There is no direct ROI but because most people are conservative in business terms they are waiting for someone else to take the first step and jump in the water to prove there is a ROI for social media
What are the measurements for evidence of effective communication?
Is it for example a survey of a businesses blog readers who say they now feel they are being listened to as a result of meaningful engagement and they feel hence they can now trust the person. This is an example of how your social media efforts will work in my opinion.
This all goes back to how we communicate as a society and social, media can help us re learn communication skills of a civilized and caring society which to a degree have been lost due to excessive greed for example. My analysis applies to businesses much because society and business are intertwined.
How can you get a metric analysis of a communication app? You cant.There is a lot os debate here in Ireland about social media ROI and a there an in-suing scramble for metric analysis as justification for investment which is really starting to bug me. They are missing the point.
We need more social media exponents.
Recommendations, that are built on trust and level of competence can also be a measurement of a social media campaign that works.
Social media can offer us a wonderful opportunity in business by reaffirming the values of honesty and trust
@Lewis Your technical definition of ROI is absolutely right. And I’m sure there are plenty of business book definitions of all these terms. (I didn’t go to business school, so I can’t comment on that). But I think you’re missing my point.
*Whatever* you call this – and I’m talking ROI because that’s the term everyone is hung up on – I’m about sick to death of the idea that we have to definitely prove something is going to work before we do it. No one in the history of business has ever done that 100% of the time.
If we’re going to evolve the way we DO business, we ought to evolve the way we evaluate it. We are stagnant because we’re afraid, and we’re hiding behind analysis to justify not taking action. And that’s just about the worst business decision of all.
Brainpower founder Marshall McLuhan wrote : “We confront this new situation with an enormous backlog of outdated mental and psychological responses…our most impressive words and thoughts betray us — they refer only to the past, not to the present…the past went that-a-way. When faced with a totally new situation we tend always to attach ourselves to the objects to the flavor of the most recent past. We look at the present through a rear-view mirror. We march backwards into the future.” So we hurtle through rapid change, awash in collaborative learning, assembling the world mind. We experience the joy of finding what we are looking for, it’s us. The thrill of creative genius lies in discovering and embracing ways to bring us from where we are to where we want to be. @benstock
Brainpower founder Marshall McLuhan wrote : “We confront this new situation with an enormous backlog of outdated mental and psychological responses…our most impressive words and thoughts betray us — they refer only to the past, not to the present…the past went that-a-way. When faced with a totally new situation we tend always to attach ourselves to the objects to the flavor of the most recent past. We look at the present through a rear-view mirror. We march backwards into the future.” So we hurtle through rapid change, awash in collaborative learning, assembling the world mind. We experience the joy of finding what we are looking for, it’s us. The thrill of creative genius lies in discovering and embracing ways to bring us from where we are to where we want to be. @benstock
There arent stats, metrics call it what you like on ROI for social media but that should not be a justification for not taking part.
How do you find a plumber to fix a burst pipe in your kitchen? You can ask a friend, colleague associate to recommend someone that is reliable, trustworthy and does a good job.
Trust is not a ROI metric
If businesses listen to the argument for a need for ROI stats before engaging in social media then they are burying their heads in the sand and guess what ….the train will leave without them.
Mike Kellys last blog post..Business Blogging and Social Media Consultancy
There arent stats, metrics call it what you like on ROI for social media but that should not be a justification for not taking part.
How do you find a plumber to fix a burst pipe in your kitchen? You can ask a friend, colleague associate to recommend someone that is reliable, trustworthy and does a good job.
Trust is not a ROI metric
If businesses listen to the argument for a need for ROI stats before engaging in social media then they are burying their heads in the sand and guess what ….the train will leave without them.
Mike Kellys last blog post..Business Blogging and Social Media Consultancy
Here is my ROI on social media:
“What was the ROI of putting your pants on this morning? You don’t know? Then, why did you do it?”
Do the social media, create a benchmark before, measure during.
Here is my ROI on social media:
“What was the ROI of putting your pants on this morning? You don’t know? Then, why did you do it?”
Do the social media, create a benchmark before, measure during.
I love what you men are usually up too. Such clever work and reporting! Keep up the great functions guys I’ve additional you guys to my blogroll, Cheers.
I love what you men are usually up too. Such clever work and reporting! Keep up the great functions guys I’ve additional you guys to my blogroll, Cheers.