Proving the ROI of social media

by Robin Grant in News on 20 October 2009 at 16:13 Google+

As I’ve mentioned before, measuring the ROI of social media on a campaign level is pretty tricky and as Sandrine pointed out a couple of weeks ago, companies may need to take a long term view in order to fully reap the benefits of social media.

However, in theory, working out the ROI of a social media programme is easy (assuming you’re measuring it over a long enough time period), as Olivier Blanchard shows us in this presentation:

Of course, there’s a lot more more to it in practice (even without resorting to econometrics, which is of course why our consultancy services may come in handy):

In step 3 (slides 44-46), you should also consider measuring other things like:
- Customer retention/loyalty (to understand why this is important, have a read of Chris Stephenson’s overview or his entire paper on the subject)
- Net Promoter Score (see Paul Marsden’s study around NPS and how advocacy drives growth)
- Brand equity (Andrew Sharp sharp gives a good overview of why you should be thinking about this).
In steps 6 & 7 (slides 54-55) it’s possible there will be a significant lag between your efforts in social media and their potential effects so try to take this into account when looking for them

tagged: advocacy, Andrew Sharp, brand equity, Chris Stephenson, customer loyalty, measurement, Net Promoter Score, Olivier Blanchard, Paul Marsden, presentations, ROI, social media

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EdL

Any thoughts on the potential lag between investment and ROI?
SocialSteve

Great job capturing reality on a topic so many have debated.

Social Steve
http://www.digitisedculture.com djlazarides

Sums it all up – Brilliant!

Dan
martinehunter

Brilliant illustration. The light came on for me with the examples of non-financial impact. It's so easy to get excited about comments and unique visitors. Benchmarking is key also. You must know your stats when you began. After a year of active inbound marketing we've received more sales calls recently with no discernible source. We're attributing it to our social media, but can't pinpoint it to one source. I'm benchmarking going forward. Thanks for the clarity.
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http://theoriginaljr.com contactjr

This is great. Page 33 says it all “Non-financial impact is not ROI (yet)”

Hopefully, the ability to put forth a credible perspective on ROI of social marketing will be what separates the wheat from the chaff amongst the various “social media experts” and “social media consultants” out there…

@contactjr
http://www.facebook.com/profile.php?id=654356748 facebook-654356748

Hey Robin – I went to a great talk by Marshall Manson from Edleman and he discussed how it may be impossible, or at least unwise, to attached certain meanings to every social metric we have. He suggested that sometimes it may simple be enough to demonstrate that there has been a positive outcome (more visitors, more page hits, more comments) but that it wasn't necessarily worth trying to relate these to direct financial gains. It's a really interesting situation the more I think about it – the buzz is Social Media, clients all want it and agencies all want to provide it. Yet there are few solid examples of direct product/brand gains being attributable to Social Media (simply due to Social Media never being delivered in isolation of other channels). I really would love to see a glimpse of 5 to 10 years time.
http://www.facebook.com/profile.php?id=654356748 facebook-654356748

Hey Robin – I went to a great talk by Marshall Manson from Edleman and he discussed how it may be impossible, or at least unwise, to attached certain meanings to every social metric we have. He suggested that sometimes it may simple be enough to demonstrate that there has been a positive outcome (more visitors, more page hits, more comments) but that it wasn't necessarily worth trying to relate these to direct financial gains. It's a really interesting situation the more I think about it – the buzz is Social Media, clients all want it and agencies all want to provide it. Yet there are few solid examples of direct product/brand gains being attributable to Social Media (simply due to Social Media never being delivered in isolation of other channels). I really would love to see a glimpse of 5 to 10 years time.
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