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One of the first questions we usually are asked by potential clients involves ROI (return on investment.) It is a valid and critical question, no matter the size of the company or its marketing budget. It's the yardstick used when evaluating the success of a traditional media or marketing campaign, so why not expect the same rules to hold true for social media? How can one be sure in the changing world of the web and online marketing that their dollar will have an impact on their bottom line? Will their investment increase brand recognition, generate leads, or increase their market penetration? Unfortunately there is currently no 'silver bullet' of measurement that can demonstrably prove ROI for a social media investment. There are startups working feverishly on the problem, to be sure, but the state of affairs today requires a different approach and restatement of the problem.

This approach is based on setting and meeting a set of clearly defined objectives rather than using measurements in the traditional sense, though some of them may still be valid. Companies have to ask themselves a very simple question: "Why are we investing in social media, and what would we consider a successful result?" It seems trite, in a way, but it is critical to understanding the new meaning of ROI. It's not about return on investment anymore. It's all about defining the meaning of ROI as it applies to your business. It's all about gaining influence or leverage for your investment and measuring the return on that influence.

Influence is the key concept at the core of social media. Peer/friend opinions and reviews hold more sway than any other. Brands can be created in an instant and just as quickly destroyed when you are dealing with the economies of scale and the numbers of users involved on social networks such as Facebook and MySpace. But social media encompasses so much more. Myriad online communities exist and all are potentially valid social media outlets. Companies need to understand that by focusing only on the immediate effect on their bottom lines they may be missing the point; additionally, casting too wide a net is just as shortsighted.

One other area that companies need to understand is the new concept of 'engagement' as it applies to their social and new media strategies. What is 'engagement?' That's the million- or perhaps billion-dollar question. There is no metric for it that means the same thing to everyone. One interesting equation of sorts has been proposed by socialmedia:

E = mc^2

...which translated means:

Engagement = media buy * (creative ^ 2)

I agree in a sense. Creativity is STILL KING. You can spend millions on your media buy to get your social media product noticed. But, if it's not creative (or for you math geeks as creativity approaches 0) your engagement tanks. It's simple, but critical to understand this. True, this all depends upon your objectives. You have to put your social media assets in context: if you are looking for tons of repeat users (i.e. page views, visits, etc.) and engagement is near zero, FAIL.There are enough single-use social media apps and widgets out there that support this hypothesis that it's not worth expanding upon. If you want your clients to come back, you need to interact with them. You have to engage them to make them come back.This is critical for both growing brands and generating leads. The traditional marketing funnel is still relevant - but the rules that govern the journey from one end of it (eyeballs on your content) to the other (the buy) have changed. You have to provide content that engages them all along the way. Think of it as 'social content affinity'.

Another thing that businesses need to understand is that the content viewing model on the Web has changed. Think of it as an extension of the 80/20 rule. In the past when content was put on the web you could expect about 80% of your audience to see that content within a short period of time. If your spend was X at some specific or measured CPM you could expect some specific results based on traditional measurements. This is no longer the case with social media. Now, you can expect about 20% of your media to be viewed (if you're lucky) and over time, if you're influence and engagement are high enough, you can expect that 80% to come trickling - or ideally virally pouring - in after it's available for some time. It's not a linear graph anymore. You hope it's exponential. But it's not guaranteed. It's about creating a social media campaign that is relevant to YOUR business and your needs. No one can do it for you if you don't understand why your business is playing in the social media space in the first place and what you'll consider a successful result.


  • Develop a social media plan: 'Why are we doing this? What would we consider a social success?'
  • Make sure that plan is realistic: viral spread of apps and widgets is much harder on ALL the networks these days. Do NOT assume that it will spread just because it's there! And if you don't change it over time if needed it will die over time.
  • Define your own ROI: it's about meeting your objectives. Seriously. Tell your CEO/CFO. Make them understand this.
  • Make someone OWN your problem on YOUR end - that means on your business's end: you cannot expect someone to do everything for you and guarantee excellent results. You need to understand and manage your end of the social media strategy. It's not easy (anymore) - you are going to need to work at it to make it successful. Every social media rollout is different so what steps you need to take may be different in every case. But be aware that paying someone to slap a widget or app up on a social network for you and expecting it to get 10M users in a month is unrealistic. It's just not going to happen anymore. You are going to have to spend. Your time, your interest, and your business's money.
  • Develop metrics that matter to YOU: since there are no global ones in the current sense you need your own based on what your plan deems a successful result.
  • ITERATE, ITERATE, ITERATE: set a timed goal for reviewing your strategy; if it's not on target at the end of that time then review why, refactor, retest, and relaunch until you get it right. It's NOT ABOUT being the best, smartest, or brightest anymore. It's all about being the fastest and getting the most relevant results based on your plan and the metrics that matter to you. And do it fast. Very, very fast. Beg, borrow, and steal from the successful apps/campaigns you find that meet your needs. It's about speed now. Spending inordinate amounts of time perfecting things just slows your time to market.
  • Understand the social media lifecycle: how long do you expect your strategy to live in the wild? Lifetimes are shorter these days. You cannot expect a drop-in solultion to be relevant in a year from now. See the last point. See the fact that the top 25 Facebook applications have changed drastically in the last year. And will again. And again.
  • Cast a net that matters to you: there are a ton of social media outlets out there now. Find out where your demographic lives. If they are 50-year-old financial executives then MySpace is probably not worth investing in.

It's all about the conversation now. Be a part of it. Understand that ROI is different now and you control what it means. Define success: what returns on your marketing objectives you consider a win. This is your ROI.

Post by Cappy Popp
June 10, 2008