The ROI that would be king

ElaineGantzWright’s blog is for people interested in using the Web and online marketing to drive social change. Elaine covers social media for nonprofits, philanthropy trends, online giving, cause marketing, random life musings, and more.

crown2The pursuit of social media ROI (return on investment) continues to vex me. Last week, my blog post featured some comments about its confounding elusiveness and sparked lively discussion—on and offline. It’s still a very hot topic—at conferences, webinars, cocktail parties, bunko nights, and marketing strategy meetings going on as I type.

Once again, I turn to one of my master media mentors—Clay Shirky. He says:

“A revolution does not happen when a society adopts new tools. It happens when a society adopts new behaviors.”

And I think that quote sums up the core conundrum. At the end of the day, social media is really not “a program” at all. It is a fundamental shift in the way customers, donors, constituents, and employees consume and produce information. It’s behavior—a change in the way we are in the world.

Therefore, the future of marketing is not about telling people things—but about doing things with and for people. Think about it. How do you calculate ROI on messaging coming from your target audience? How do you calculate ROI (an old media metric) in a new media environment? It’s a brave new world, indeed—where we are “creating an environment for coordination and collaboration.”

Even if you consider the question in old media terms, isn’t it like trying to figure ROI on your phone, your conference room, or your fax? Few of us really think about these things in relationship to ROI. But since it’s the Internet, there is still a certain geek mystique. We are a little squeamish and feel the need to “ROI everything”—even if it means constructing elaborate parallel expense models based on paid Google adwords or other media buys. But the truth is, social media will soon be the rule—not the exception. Cost of doing business. David Spark addresses some of these issues from a refreshing perspective on The requirement that everything fit in a discrete ROI queue is simply unrealistic and soon, anachronistic.

Perhaps, a 21st century take on this question would be Return on Engagement—taking the focus away from the justification of hard costs and considering opportunity costs. What do we sacrifice if we are not involved? What are the benefits—tangible and intangible—of spending your time monitoring and creating conversation? What business or donor involvement have you created?

Rules of Engagement

talking Still, even in the ROE context, just having a blog, Facebook account, or Twitter profile does not a social media strategy make. The fabric of social media success is woven from many threads and yarns, including compelling content, irresistible contests/quizzes, provocative video/photos, and authentic voices. You wouldn’t use just one traditional channel to market your product or organization, so it is probably not useful to think that one Twitter account or a blog post by itself can somehow produce ROI—or even ROE—overnight. Attributing a direct revenue equation to an isolated social media marketing activity simply isn’t relevant or accurate. Though weak individually, coordinated social media activities can certainly move the needle.

Engagement fosters affinity, trust, commitment—and ultimately, investment. Marketing has become equal parts science and art. Remember, creating a blog on WordPress of Blogger is free. Right now, Facebook and Twitter are free. So, social media’s costs are mostly labor, time, and creative energy. Therefore, social media success really comes down to commitment, clarity about your objectives, and getting over your fear of exposure—a horse that has already left the barn, I might add. Also, it helps if you have something to say that will interest your audience. Whether you call it—ROI, ROE, or RBI (wait, that’s baseball), here are some thoughts on how to plan, launch, and execute an effective social media plan:

• Focus on conversation, content, and benefits—not tools and technology
• Highlight intangibles
• Justify qualitative, as well as quantitative objectives.
• Compare costs of alternatives, benefits, and of not doing anything.
• Use pilot projects to test and evaluate
• Streamline data collection
• Get buy-in by using a cross-functional team or committee
• Release your fear

The pre-social media business universe was built on linear measurement. I think it’s time to consider using a different kind of yardstick—something with multiple dimensions and constant movement, something we have yet to invent. If small is the new big and free is the new economic engine, what are the new metrics? Is it time to get comfortable with a whole new level of ambiguity. What do you think?

11 thoughts on “The ROI that would be king

  1. Thank you for your comments on ROI. I totally agree with you on this subject. I too beleive that comparing money with content does not work.

    If a company asked me about how costs should be justified, I would recommend cost-bebefit as an alternative. Allthoug this mat be a weak argument, I think that comparing the costs of people, time and creativity could be justified by brand awareness.

    Also, money is a quantity argument that is difficult to measure with quality arguments, like content. And, as you state, how do one measure messages from the audience.

    One more thing that rides me. The audience in social media is not a homogeniuos mass, but individuals. That for me represents the greatest challenge.

    Once again, Thank you for this post. This gave me more arguments for not recommending ROI as a measurement standard.

    1. Thank you for your kind, insightful comments. I think this is an complex issue which deserves multi-dimensional consideration. It’s a whole new universe, and we all need to learn a new language.

  2. Great question about the ROI and good insights. This came up at a bunko night just last week. When they ask what is the ROI on social media, I think they are asking “Is this a fad, because I do not want to waste my time learning something new.”

    Really we did not have accurate ROI measurements for old media. How many people read the direct mail campaign, watched the tv commercial, or listened to the radio ad? We don’t really know.

    With we know how many people clicked on the link. With analytic we know how many people are on out site, and what they searched for to get there. I think actually the ROI can be measured with social media better than before.

  3. Elaine, as always, your insights are timely, instructive, and relevent. ROE is name of the game. I love it! Might I use it…? 🙂 Thanks for the great post!

    1. Absolutely, Andrew. I don’t think I can actually take credit for birthing the concept of Return on Engagement — but I certainly embrace it. Lots of conversation fodder as we make this social media journey! Thanks for your kind comments, fellow traveler . . .

  4. Brilliant thinking, Elaine! I particularly love the ROE in place of the ROI business model to gauge value. Keep these great ideas flowing! I am a huge fan!

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