ROI in social media - where are we at?

The ROI within social media has long been a bone of contention, and seems likely to become ever more so, with the equally lightning spread of both social media use and savage budget cuts. In a tightening economy, businesses have to make sure that they’re getting more return on their marketing investment. 

‘Inability to measure ROI’ was named by marketers as one of the most significant barriers to the adoption of social media tactics by their organization from a poll quoted by MarketingSherpa.

So why should your company be in the social media arena?

1. To engage your audience: it’s where your audience are, and shapes how they think.
2. To generate referrals - A customer is worth far more than their initial spend with your company: you need to factor in future purchases and the influence they may have through social media.
3. To stay competitive: 44% of the Inc 500 reported social media was very important to their business/marketing strategy in 2008.

• - Social media sites: Unique Visitors, Cost per unique visitor, Page views, Visits, Return Visits, Interaction rate, Time spent, Video installs, Relevant actions taken.
• - Blogs: Conversation size (no. of sites, links and reach of a conversation whose content includes conversation phrases relevant to the client), Site relevance (Conversation density, Author credibility, Content freshness and relevance)
• - Widgets and Social Media Applications – Installs (no. Applications), Active Users, Audience Profile, Unique User Reach, Growth, Influence, Installs – (no. installed per User)

However, according to Augie Ray, “Perhaps one of the most concerning aspects of this report is that a reader might get the idea that every action is equal. The report suggests that "Comments posted" are worth measuring, but it says nothing whatsoever about sentiment within those comments. In the entire report, the following words do not appear even a single time: "Sentiment," "Attitude," "Rating," "Positive," and "Net Promoter Score."  Check out his post on The Customer Collective to see his ‘dimensions’ by which clients should analyse a blog’s suitability for their brand.

I'm still wrestling with the social media metrics though, and nothing I see above has really told me about anything other than new media versions of traditional media campaigns: where to place your ad, sponsored widget or sponsored conversation, and how to judge its effectiveness.  How about real social media, finding out how your forum is contributing to your reduction in online support, how customer reviews are affecting sales path, whether your 30 second TV spot crowdsourced in an innovative UGC campaign really made your audience feel engaged?  It’s really not all about online advertising anymore. It’s about what else is happening in the social networks, very likely somewhere your company isn’t.

But you’ve got to measure something to know if what’s working and how ...

The ubiquitous Jeremiah Owyang provided an excellent guide on how to measure your social media programme as far back as 2006. (Don’t let that put you off though: it’s still completely relevant.) He starts off with the basics: if you haven’t got a goal, then you can’t measure against it. Then build in measurement of this before you launch – not as an afterthought; as part of the process.

He guards against trying to measure it all – it can lead to ‘Analysis Paralysis’ (and don’t we know it)

Importantly, he exhorts us to monitor alerts as they happen, “A negative meme, an exploding battery could shatter your brand: are you watching in real time?” and finally, he helpfully provides a list of attributes to measure:

• - Activity (Web Analytics of blog or site)
• - Tone (Sentiment)
• - Velocity (Spread over time, URLs, Trackbacks)
• - Attention (Duration on site)
• - Participation (comments, trackbacks)
• - Many qualitative attributes (comments, what did they say, what did they mean)

So where does that all leave the ROI question?

Divided, I’d say, into three main camps.

The Deniers: What, really, is this obsession with ROI? This is the group who are most resistant to any attempt to measure social media; possibly because past attempts have been so clumsy and obviously missing the point.

The Definers: Never mind the community stuff. Just give me the click through rate. Please. IAB’s new metrics were made for this group. They are the ones who’ll be the best audience for the new definitions, and are likely to be hugely comforted by a large benchmark and a level playing field upon which to chalk it.

The Dedicated: It’s not a perfect science, and it’s a lot of work. But we’re getting there. This group are realising the importance of using every available system of measurement we have: web analytics, buzz monitoring, community management listening – the whole gamut – to try to bring in as near to a 360 degree picture of people’s reactions to and interactions with, a brand, as is currently possible.

I’ll leave you with this opinion from MetricsMan:  a really useful resource on all matters social media and PR ROI:

“ROI is a financial metric – percentage of dollars returned for a given investment/cost.  The dollars may be revenue generated, dollars saved or spending avoided.  ROI is transactional.  ROI lives on the income statement in business terms.

Value is created when people become aware of us, engage with our content or brand ambassadors, are influenced by this engagement, and take some action like recommending to a friend or buying our product.  Value creation occurs over time, not at a point in time.  Value creation is process-oriented.  Value lives on the balance sheet.

From a sales process perspective, the ultimate value of a social media program may be in increasing the number of people who are likely to buy our products and services.  Other programs may be designed to improve or protect corporate reputation or to build and enhance brands.  Much of this value is said to be intangible.  It is goodwill that becomes tangible at the point in time a transaction occurs.   When buying decisions happen, your investments in marketing, brand and reputation work together.  They become tangible.  You can measure the ROI.

Many of the well-intentioned but misguided attempts to rename or reinvent what ROI means in social media – return on influence and return on engagement probably getting the most play – seem to be the result of an inability to distinguish value creation from ROI."

The difficulties facing Digital Britain

The government’s advocacy of self regulation in Chapter 7, Digital Security and Safety of the Digital Britain report, out yesterday, is the only practical option available in applying content safeguards. The Internet Watch Foundation, which plays a pivotal role in implementing these standards (and has done a great job in the UK) will see its remit expanded across Europe as the government works with EU bodies to create a pan-European body based on the IWF. This is a very welcome announcement, and the first step in international collaboration to keep children safe in an online environment that knows no borders.

The issue of funding for the IWF is interesting. The report calls for the IWF to ensure that an adequate funding model is developed to allow it to continue its role within online protection. If funding dries up, a huge part of the work it does will be under threat. The government has said it will consider intervention to find funding from industry, if necessary.

Also in the report, the UK Council for Child Internet Safety is tasked with developing a strategy to include: “better regulation in the form, wherever possible, of voluntary codes of practice that industry can sign up to; and better information and education where the role of Government, law enforcement, schools and children’s services will be key.”

It’s not yet clear how this will work in practice. The report states that four working groups will be set up to apply standards in four areas: “industry standards, video games, public awareness and better education”.  Video games will adopt the new Pan European Game Information system (PEGI), which meets all the criteria set out by Tanya Byron in the ‘Safer Children in a Digital World’ report.  But the sale of video games, sold on an individual basis to children or adults, is easier to control, in the same way that film classification works. What is much harder is to control the content in an online environment (such as a virtual world, or an MMOG – massively multiplayer online game) where users upload their own content. Classification will need to adapt continually to changing online behaviour.

The report does reference areas that are within control. Better access to advice for parents, for example, on online safety and content filters is a good place to start. But children have a way of getting round these filters – changing language, code words and so on. And it does require parents to be involved, and more savvy than their children, as pan-European research from the recent EU Kids Online Final Report highlighted.

There is a responsibility on the part of the providers of social networks to filter inappropriate content, but who takes responsibility for user-created networks? If the basis of PEGI is to be applied to online games and virtual worlds, who will check that content adheres to content classification codes? Moderation can address this, of course, with a combination of human and automated systems. But again, how will this classification evolve and keep up with online trends? And who will create the moderation standards to ensure that consistency is applied across all online content?

The report acknowledges that these are difficult areas, and it will take a huge collaboration between the various online bodies, government and industry to come up with solutions.  In many ways, the report on Digital Security and Safety raises at least as many questions as it answers, but it's a significant step in the right direction.

Creating a sense of community in brand marketing campaigns

In a social media event that we hosted with Genius Rocket and Kickapps in New York recently, there was much discussion around how brand marketing can adapt to be more interactive with consumers, and create a sense of community within an advertising campaign.  It provoked some interesting debate. These days, consumers are completely visible to brands – they are often accessible to talk to individually over Twitter or through social media, for example. But at the same time, they have complete control over their own environment – creating and viewing content on demand and on their own terms. Injecting a sense of community – of belonging – that will engage consumers with a brand is the golden bullet of brand marketing. But it can be hard to achieve. Of course, if you are creating a long-term campaign, you can create complete projects that include physical events, virtual worlds, online communities and so on, that bring consumers together to interact with you and with each other. This takes significant time and money to do effectively. (Red Bull is a brand that does this well, with its associations with F1 and the Red Bull air race underpinning its ‘Red Bull gives you wings’ advertising slogan. Its music academy is also a good example of creating a branded community around a specific interest.) If you have a shorter campaign life - which might be led by a brand advertising campaign - then injecting a sense of community to that campaign is a bigger challenge. There are two ways that companies do it:

1. By creating a community that is itself the brand campaign (Cesar’s ‘I Promise’ campaign did this, creating a website where pet owners could make promises to their pets).
2. By creating a community around the campaign, such as the much-talked-about and utterly brilliant ‘Compare the Market / Compare the Meerkat’ campaign, developed by VCCP.