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?

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“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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