Intuitive professionals are intent upon not only adopting social media but measuring the ROI therein. Common platforms (Facebook, LinkedIn, Twitter and XING) may be free or of minimal immediate expense, but time must be invested to properly engage an audience online. That time has a monetary figure attached to it, as does the quality of audience engagement, and with stricter governance of event spend, an effective social media presence increasingly needs to show ROI.
Look at the shift we’re seeing in business attitudes on the matter: 43 percent of companies have never measured the ROI of their social media activities, according to "Social Media Usage, Attitudes and Measurability," released by King Fish Media in August. That lack of ROI measurement is down significantly from survey findings less than a year earlier by Mzinga and Babson Executive Education, which found 84 percent of companies did not measure such returns (40 percent of respondents didn’t even know if they could track ROI with their social media tools). But before you jump into social media ROI, consider that there is still debate—albeit, mostly semantic—as to if and how the business value of social media can be measured in terms of ROI.
Regardless of this gray state of understanding and value provability, 80 percent of events utilize some form of social media (50 percent use Facebook and Twitter), according to a recent survey by event software provider Zerista, and even more meeting professionals are thrusting their companies and events into the social mediascape, some with careless abandon, and still others with blind faith.
You Can Measure Social Media ROI
…but you’ll have to play loose with your definition of "ROI," and maybe even settle on a more general "return." Viewing social media ROI strictly as a financial calculation leaves out true measurement of the field’s myriad intangibles. As a result, the absolute value of social media efforts cannot yet be fully recognized.
When you see greater activity for your company online after social media implementation, common sense dictates that social media efforts must be increasing sales somehow, says Samir Balwani, digital marketing speaker and strategist at PMK BNC. This is where the intangibles come into play.
"It’s kind of easy to show that [social media activity] is affecting the bottom line—an increased numbers of fans on Twitter and a more active blog would increase your bottom line unless you’re just not doing it correctly or alienating people. The hard part there is measuring ROI," Balwani said.
However, many businesses believe it can be measured accurately enough, according to Dag Holmboe, president and founder of Klurig Analytics, such that companies are incorporating it into KPIs as a way to make business decisions based on social media ROI.
"There’s been a lot of discussion as to what we actually mean by social media ROI, as there are different ways we can define the word ’return,’ especially in marketing terms," he said. "For example, you might have a marketing campaign—all you’re looking for here is a short-term return, meaning you might put US$100 into that campaign, and if you get $200 back in sales you know that’s a good investment. But you’re purely looking at the dollar value."
"A variation is long-term return—that can measure purchases or brand awareness. Here, you’re looking for some sort of nebulous return, not a dollar value so much, because that’s really tough to calculate," Holmboe said. "In measuring social media value, we try to measure the value of your social media campaign or network. In this case, we are mostly looking at the amount of money you are saving because of your social media campaign or network."
View this in terms of support costs and what savings might exist if the people on your social network answer each others’ questions rather than calling your support department. Look at the number of questions answered by your social network and the cost of an average call to your support department to gauge cost savings and/or customer service as a benefit of your social media activity.
Define All Variables
If 2010 is the year for this field of research to see strategic implementation in business, as Brian Solis, principal of new media agency FutureWorks, demanded in his influential Mashable treatise, "The Maturation of Social Media," then organizations must ensure their social media strategies define purpose and goals, as well as desired ROI and how to measure it.
Before determining any meaningful ROI, a concise social media strategy must exist as a basis for measurement. Since social media ROI is currently a blend of hard numbers and measures on intangibles, an effective strategy must include valuation of intangibles. You define your own goals and the metrics by which they’ll be evaluated. You define what success looks like.
"Any initiative in which you’re not measuring success in terms of understanding [the metrics set forth] in your strategy will fail," said Mitch Joel, vice-chair and board member of the Canadian Marketing Association and an executive for the National Advertising Benevolent Society of Quebec. "Don’t even start without looking, upfront, at what you want to measure and the reasons for doing so. The value is in understanding why you’re [engaging in social media] and making sure you’re focused on understanding who you’re connecting to."
Not understanding your own "why" leads to what Joel calls "digital Darwinism," meaning people think they’re evolved because they’re on Facebook or Twitter.
"But what they realize shortly thereafter is that real evolution comes from how you empower your community to connect to one another and how you connect more effectively through that by being more shareable and findable," he said.
With social media strategy, first answer "why" you’re doing it. If you begin with the "what," Joel suggests, you’re not likely to realize the value of social media. If you step away from the technology thinking that social media is crap, you were working with a faulty strategy.
"You might have a new blog out and want to get 20 people to comment—that’s your metric," he said. "That ROI is going to look really different if you post a video to YouTube and only care about how many people embed that video. Well, those are two very different metrics off of two very different media platforms, with very different outcomes."
Measuring these highly variable new metrics can challenge those implementing them.
"For many businesses, the case for new metrics can’t be made until we have an intrinsic understanding of how social media engagement affects us at every level," Solis wrote. "It’s not as simple as counting subscribers, followers, fans, conversation volume, reach or traffic. While the size of the corporate social graph is a reflection of our participation behavior, it is not symbolic of brand stature, resonance, loyalty or advocacy, nor is it an indicator of business performance."
To that end, borrow a page from communications expert Peter Schram and shift your perception of social media goals from a selling mindset to one intent on engaging. This effectively separates bottom-line financial achievements from social media objectives.
Measuring Intangibles
"Social media is anything and everything: it’s text, images, audio and video, publishing, collaboration, broadcasting, microbroadcasting. It’s a whole bunch of things, not one thing you measure," Joel said.
"So, if you had 13 people connect, and they had a network of 2 million people, that’s a metric," he continued. "But, if you’re not actively engaged in who those people are and adding value to those relationships to connect more you’re missing out on the bigger picture, which is the serendipity of what happens. It’s not important whether you have 20,000 or 200 followers, it’s that you, as a brand, understand who those people are and that you’re constantly and consistently adding value to that agreed upon relationship that you have."
The ramping up of dialogue last year about social media ROI and how impossible it was to calculate enticed Holmboe’s competitive spirit, best seen in his athletic pursuits in national Swedish sailboat and Frisbee events years earlier.
"I have an operational and computer science background, so I figure anything can be calculated…you just need to figure out the way to calculate it," Holmboe said. "If you consider that the value you get from your social media network has the same value that you [previously] got from a focus group, then the [cost you would have spent on another focus group] is now part of the value that comes from your social media network."
"If you take the value you get from consumer insight, then you take the savings you get from customer support," he said. "All in all, we’ve developed 80 different types of return channels. Add all of those together and you just about get to your monthly social media return value."
From that, it’s easy to get your social media ROI: you have the return value and the investment, he says.
"Now you run this through your financial ROI formula to get a percentage—that’s your social media ROI," Holmboe said. "But, you have to somehow figure out a way to measure interaction, and social media is a lot about interaction," Holmboe said.
Some companies use "buzz" to measure ROI—much like PR professionals often do it, placing value onto community and media exposure.
"That’s probably the closest way to do it right now, because you do have to assign it some value," Balwani said. "A better way, still, is to look at the number of in-bound links: the number of people writing about you and then linking to your website. There are a bunch of tools you can use for that, such as the SEOmoz Linkfinder (www.seomoz.org/link-finder)."
It is important to be extremely well-versed in search engine optimization, he says, because that data can tell a really good story of your social media activity.
"And use Google’s campaign tracker; they actually have analytics information for each of your links so you can see precisely how many people clicked on a single ad or link," Balwani said. "We can add that to Facebook and Twitter and see how many people are actually clicking through."
Problems in Quantification
The state of social media metrics is limited at the moment, and many believe it must mature to more clearly show ROI. Check out the top social media sites for a taste of the current state: the data doesn’t flow freely between platforms as there is no standard reporting from which to work. This is primarily because the presentation of data is one of the ways social media sites differentiate from one another. Additionally, these sites aren’t exactly eager to start giving away all of the data they’ve been gathering and surely hope to sell.
The need for a standard in social media measurement is essential, and some believe without the data that a standard would avail, the social media ROI discussion can’t move forward.
"Right now, I can see for a specific article on my website that I spent two hours writing, 1,000 people read it and of them six went through my website and checked out," Balwani said. "Omniture/Google Analytics allows you to create that goal funnel, so you can actually see the number of conversions that originated from that article. You can assign an ROI to writing an article versus potentially not having that article. You can’t really do that through Twitter and Facebook right now."
Frustration with the drag that various entities add to the social media ROI challenge is rampant. Balwani is especially concerned with precisely what people are measuring—concerned that it’s not what, in the end, needs to be measured.
"Everyone’s trying to measure social media ROI, but we’re only measuring indicators—no one’s measuring social media directly, they’re measuring all of these outside indicators (number of blog posts, Twitter followers, etc.) to try and get an indication of what’s going on," he said. "In general, it’s the same internationally, because no one really has a handle on a specific way to do it—it’s almost like everyone is grasping at straws together."
But Joel warns that we must not get too bogged down by the minutiae.
"We’re not talking about print advertising where everyone has the same size of paper, and we know based on how many people read the paper and pass it on, etc., how we perform," Joel said. "If you’re uploading videos to YouTube and I’m on Twitter…do you want us to have the same metrics?"
Benchmarking against traditional media when we’re looking at things like views and how many and how often pushes us back into traditional mass media metrics, rather than understanding their values, he says.
In 2009, most social media was tracked and measured based on page views and site traffic, which was fun and made everyone feel great based on the perceived value of social media activity. But simply tracking this sort of exposure just reveals general popularity of sorts.
Think about this: Does "popularity" on Twitter directly mean anything more than just a high number of followers? New research from the Hewlett-Packard Social Computer Lab has found that popularity on Twitter does not necessarily equate to a high level of influence due to the very nature of the medium: "...the correlation between popularity and influence is weaker than might be expected. This is a reflection of the fact that for information to propagate in a network, individuals need to forward it to the other members, thus having to actively engage rather than passively read it and cease to act on it." The study named @mashable as home to the highest level of influence on Twitter even though 45 accounts actually boast more followers (including those for The New York Times, CNN and, yes, Britney Spears). Social media is more about influence than direct action.
Don’t Give Up
Even though most social media goals don’t boil down to clean, hard financials, they must relate in order to secure buy-in and continued investment from key stakeholders. To garner support from the C-suite, show it the numbers.
Being able to show this ROI will be especially necessary when, in a time just post-recession, executives are asking for actual data to justify spending on social media initiatives. A Bazaarvoice and CMO Club survey on social media measurability in 2010 reported that 72 percent of chief marketing officers who did not hold social media activity accountable for sales in 2009 are doing so this year.
With 74 percent of event professionals anticipating increased social media budgets next year, according to the Zerista events and social media survey, it’s high time to prepare an overall strategy, with special attention paid to measurements and goals. One+
