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May 05, 2009

New Chart: How Accurately Can You Gauge the ROI of Social Media Tactics?

SUMMARY: Marketers are under constant pressure to measure everything they do. The result is often a default to tactics that are more easily and accurately measureable, regardless of their effectiveness. This is especially true in social media marketing which often requires qualitative measurement rather than quantitative metrics that are more familiar to online marketers.
How Accurately Measurable are Social Media Tactics?

View Chart Online

Click here to see larger, printable version of this chart

“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. This barrier is more of a perception than a reality because social media often requires qualitative measurement rather than the quantitative metrics that online marketers have become accustomed to.
There are two factors required to measure ROI or other profitability metrics – an investment cost and income returned. The more easily and directly these factors can be identified in a tactic, the more likely it is to be perceived as accurately measureable. For example, the cost of “advertising on blogs or social networks” is usually based on pay-per-click and conversion metrics, so advertisers are motivated and easily able to measure this tactic. The result is that “advertising on blogs or social networks” rated at the top of the chart above in terms of accurate measurability.
Near the other end of the spectrum, is “blogging on a company blog” where there is usually little direct cost other than staff time, thus little motivation to measure return. However, as with most PR-related tactics, there is considerable return when measured on a qualitative basis. The value is derived not from the quantity of comments in response to a blog posting, for example, but from the quality of the comments. Are the comments positive or negative in nature? Are they beneficial or detrimental to building and sustaining your brand? The ability to accurately measure the qualitative value of these interactions is possible, if not more challenging. Those who don’t include qualitative factors in the planning of their social media programs may find themselves employing much less effective tactics, simply for the sake of perceived measurability, resulting in a loss of confidence in performance.

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Comments about this Article

May 07, 2009 - caren magill of says:
Great article, however I disagree with the idea that social media has to be measured qualitatively and not quantitatively. Blogs, fan pages, forum members, group members are ning - they are all measurable in terms of volume and participation. Conversion can simply be measured by asking the question - how did you hear about us? Alternatively, tracking methods for online purchases makes this process seamless. If your customer came to you via twitter, a really great blog post, a review on another blog or clicked on your facebook ad, then there's no reason why that can't be measured. Best, Caren

May 07, 2009 - Sergio Balegno of MarketingSherpa says:
I agree, Caren, with your insight on measurability. However, the objectives for social media programs are (as of this study) far more often related to branding than direct marketing. Branding metrics tend to be qualitative - for example, the positive or negative tone of blog comments rather than the number of comments. As marketers gain knowledge of social media measurability, the more likely they will be to use social media to achieve direct marketing objectives and, as you pointed out, quantitatively measure results. Thanks for your comment, Sergio

May 08, 2009 - Steve Dodd of Muirfield Consulting says:
Great insight but still no mention of real impact measurement. We need to know how all of these translate to bottom line impact. Why is the industry not addressing accomplish this?

May 12, 2009 - Heather Dougherty of HMH / says:
Steve — There are a lot of people in the industry working on finding measurement strategies for social media. Like with many measurement activities, though, it's very specific to the organization with a few high-level 'truths' that apply across the board. So it is with social media measurement and even more so. Below are a couple resources you (& others) may find helpful. Actionable Social Media Metrics Conversion Scientist (Brian Massey/@bmassey): (look for "What is your social conversion rate?" presentation post) Web Analytics Demystified (@erictpeterson): (search 'social media' for lots of great articles)

May 31, 2009 - Kevin of e-Patient Connections Newsletter says:
This article misses the big framework. You can/should measure "return on engagement" and "return on investment" depending on the PURPOSE you are using social media for. Nobody asks for ROI of focus groups (for listening) or of press releases (for publicity) but they look at impressions, impact, etc. But if you want to sell with social media, and you can, then track ROI with click throughs and conversions.

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