I saw David Meer­man Scott speak as well at SO Cal Action Sports group and liked what he said about ROI. It makes sense. BUT I still think mar­ket­ing and adver­tis­ing world has changed and for the bet­ter. Now we have more effec­tive ways of track­ing our spend. Don;t you agree?

Thanks for this write-up David.

Here’s what we should mea­sure:
How many peo­ple are exposed to your ideas? (& how can you get more?)
Where do you appear in the Google search results? (& how can you do bet­ter?)
What are blog­gers say­ing about you? (& can you work with them?)
How many peo­ple are eager to do busi­ness with you? (& can you get more?)

Espree:

Yes, you’re right, and both David Meer­man Scott and I agree with you. Of course you should mea­sure your suc­cess. In fact, you should always be test­ing and refin­ing based on test results.

But what I and Scott argue is that wait­ing for ROI results shouldn’t be a mea­sure­ment to deter­mine your engage­ment in social media.

David, you wrote, “do you know of one per­son who engaged in social media because they cal­cu­lated a pos­i­tive ROI first?”

While it may be true that the early adopters of social media didn’t embrace it with a com­pre­hen­sive under­stand­ing of ROI, I would be sur­prised if many, if not most, of them didn’t antic­i­pate that it (cre­at­ing closer, more pos­i­tive rela­tion­ships with their customers/potential cus­tomers) would have a pos­i­tive effect on their sales.

Notice I said “sales” not “sales leads” — I don’t think CPM is a par­tic­u­larly good way of mea­sur­ing ROI any­way. For me and for most areas of a busi­ness (and, indeed, accord­ing the orig­i­nal def­i­n­i­tion of ROI), “Return” refers to cash — either rev­enue gained or cost saved. If we start mea­sur­ing a Return in terms of CPM or page views or eye­balls or feel good fac­tors then we have an imbal­anced equa­tion. On one side we have Invest­ment, which is a real cash (sys­tems paid for, per­son hours spent, etc) out­lay and on the other side we have non-cash “events” to which we can attempt to assign mon­e­tary value but those assign­ments will be at best arbi­trary and impre­cise and at worst mis­lead­ing and very wrong.

I sup­pose I’m not actu­ally dis­agree­ing with you or David Meer­man Scott. None of us is happy with the cur­rent land­scape when it comes to social media ROI mea­sure­ment. We need to either tie social media efforts to real num­bers or avoid attempts to mea­sure SM ROI alto­gether. Maybe PRSaraE­vans mea­sures it bet­ter as Return on Engagement.

Hi David

You’re touch­ing on one of the key issue dis­cussed in SMM: ROI, Met­rics. About 1% of the over­all con­ver­sa­tions tak­ing place in the +1000 SMM blog­gers I fol­low is about exactly that (1% doesn’t seem much but believe me, it is ;-)). And from what I see, the issue is yet to be resolved
The issue exists because social media often requires qual­i­ta­tive mea­sure­ment rather than the quan­ti­ta­tive met­rics that online mar­keters have become accus­tomed to. And, sur­veys have shown recently most mar­keters are just start­ing to embrace SM (accord­ing to the March 2009 sur­vey by Michael Stelzner).
On the other hand, smart mar­ket­ing execs know where their best leads have come from in the past. Typ­i­cally this is not from adver­tis­ing, nor from direct mail, or events, but where leads have been referred from those movers and shak­ers in a par­tic­u­lar mar­ket­place.
These are the peo­ple lis­tened to by prospec­tive cus­tomers because they’re respected, trusted and usu­ally pretty inde­pen­dent.
These leads enter the pipeline in the first place because the sales or busi­ness exec has a rela­tion­ship with one of these influ­encers, or is in some way net­worked to them.
So here’s a qual­i­ta­tive met­ric that would help mea­sure suc­cess in social media: How many and how strong are the con­nec­tions (linkedin, face­book, twitter…other social net­work) between a com­pany sales/marketing/exec team with those influ­encers?
By the way, eCairn helps com­pany fig­ure that out, amongst other things ;-)

Great write up, David.

The ROI ques­tion used to scare peo­ple away or keep peo­ple from act­ing or from build­ing their social media prac­tices into the big­ger plans — they just did it.

Those like you who dove into using social media, thank­fully they kept mov­ing ahead. I’d say that the work done to date has proven ROI, oth­er­wise you wouldn’t see so many more con­fer­ences, so many Social Media experts being sought after and so many ROI “tools” and “ser­vices” build­ing momen­tum and inter­est from com­pa­nies and organizations.

Where I work inside Intel, our cul­ture is evolv­ing from an over­rul­ing engi­neer­ing approach to a more col­lec­tive, approach. To suc­ceed in this new disspersed approach, those early adopters are say­ing “yes, we need to show ROI.” But it takes lots of work, time and exper­tise to show ROI.

My take: those who are par­tic­i­pat­ing online ought to focus on par­tic­i­pat­ing and putting their lessons learned, best known meth­ods and desires for improve­ment into every new plan or project, Then the per­son who asks “what’s the ROI” can take at least some respon­si­bi­ity to resource or do the work needed to mea­sure selected ROI.

Only once the ques­tion­ers are par­tic­i­pat­ing in the process will these social, online efforts inte­grate, strengthen and grow. That’s ROI! That’s what I see today.

Mea­sur­ing results on Social Media is defined dif­fer­ently for each orga­ni­za­tion, hence the nature of ambi­gu­ity right now in mar­ket­ing with such medi­ums. Social media acts as a com­po­nent to the mar­ket­ing strat­egy as a whole, online or off. Fac­tor­ing in the poten­tial suc­cess fac­tors should be more focused around ROE — return on engage­ment, more than any­thing else. Cal­cu­lat­ing the cor­re­spond­ing results to the other tac­tics in your strat­egy can be more tied to ROI directly.

There is a big pic­ture ele­ment miss­ing in many of this eMar­ket­ing cam­paigns. The impor­tance of being where your cus­tomers are is foun­da­tional, but how often was direct cam­paigns mea­sur­able based upon per­for­mance in the first place. Tying these ele­ments together can and will gen­er­ate tremen­dous prof­itable results.

Great arti­cle. ROI is far to short­sighted –even in trad media. Research lies and is biased to who­ever is sell­ing the media to you at the time.
RE David Meerman-Scott mea­sures YES but not across the board. You still need to look at the busi­ness case.
Google search is OK for some indus­tries and geo­graphic loca­tions, not all jobs. eg events that time out and have a short lead time work really well in SM buty don’t work well on Google or tool­bar searches. Google is get­ting too clut­tered and over­run with SEO junk that doesn’t reflect user expe­ri­ence and engage­ment online.

Court­ney Lam­bert
twitter.com/@cjlambert
http://thunderclap.co.nz
cjlambertlive.blogspot.com

[…] don’t mea­sure the ROI for every sin­gle pur­chase you make. Read my pre­vi­ous arti­cle, “Social media suc­cess doesn’t begin with ROI,” and make sure you also read the very wise com­ments. And here are 15 sug­gested ways you can […]

[…] Social media suc­cess doesn’t start with ROI — After appear­ing on a panel with David Meer­man Scott at the Dow Jones in Palo Alto, this sub­ject kept com­ing up. Make sure you read the com­ments. Really good debate. […]