Measuring Social Media ROI - It's Not A Web 2.0 Myth


Not long ago, I declared that I'm f*cking sick of the "ROI of social media" debate. The post got some attention, including a follow-up on ReadWriteWeb.

Good. It's a conversation that needs to happen.

But in past posts, I neglected two topics:

  1. A history of media metrics, thereby illuminating how much has changed and how important this is
  2. The role of agencies as guides through a web 2.0 world

Today, I rectify that with a guest post on Critical Mass' Experience Matters blog entitled Why Your Social Media ROI Is Broken– And How To Fix It. (Disclosure: I am employed by Critical Mass.)

Who Should Read This And Why

If you work in or with an agency, I recommend this post. It describes an agency's changing responsibilities to their clients - how to help clients understand social media and find success with their web 2.0 ventures.

Most importantly, I hope it gives you courage to face this moving target. Here's a description of the changing marketing world from my guest post:

We are moving from a period of raw quantitative measurement (i.e. How many unique visitors did we have?) to a qualitative period (i.e. Did our social media engagement create more trust which in turn created more sales?). Trust, loyalty, and brand advocacy aren’t intangible anymore.

Is your agency at least aware of these changes? How have they advised you regarding social media metrics?

Trash Your Crappy Web Metrics And Grow A Pair

This is not the time for timid marketers. If you aren't ready to try new things and risk your neck everyday, please allow the rest of us to move past you.

Let me put it to you straight: web analysis allows you to determine the real ROI which, in turn, allows you to see what tactics are working and which aren't.

Not the tactics that your boss likes or that tested well in focus groups - the tactics that really work.

Personally, I recommend facing these new challenges head on. It's tough, but how else will you know if you are really reaching your goals?

What About You?

I would love to hear from you on this topic. Do you measure your social media outreach? If not, what is holding you back? If you do measure social media, what are the elements that you measure? Are these personalized to your goals?

In short, how's it going out there?

Please check out Why Your Social Media ROI Is Broken– And How To Fix It and leave a comment there or here (comment section below). I look forward to hearing from you.

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When ROI Measurement And Actual Effectiveness Are Mutually Exclusive


In The 2009 Social Media Marketing and PR Benchmark Guide, MarketingSherpa explains a conundrum marketers are facing in a web 2.0 world:

What do you do when the ability to measure your return on investment (ROI) is mutually exclusive to the effectiveness of a particular campaign?

In other words, how do you sell a tactic up the chain of command that you know will work but can't provide definite numbers? Or conversely, how do you dissuade a course of action that has proven ineffective, but which your executives embrace because they understand the number of impressions or "hits" or lives interrupted by the campaign?

It's a difficult predicament, to be sure. And it appears that's the situation most marketers are facing.

Known Badness vs. Unknown Goodness

Traditional PR and marketing has never had much measurability, but it is a known entity. What was the return on investment for your PR firm to make unsolicited calls on your behalf? How many sales resulted from your Times Square advertisement? Traditional marketing has always had terrible measurability.

But, it's what your boss knows. Now, we have new technologies that can show an amazing array of ROI statistics, but they're new. They're "untested." They might fail. (Because that never happens with old media!)

Yes, I Can Back That Up

Don't believe me? Take a look at the report.

The executive summary shows that most marketers think the ability to measure ROI (also reported the second most significant barrier to social media adoption) has "nothing to do with the effectiveness of the tactic" (page 6).

In fact, MarketingSherpa goes on to say that:

"Marketers obsessed with only tracking social media results quantitatively are missing the point and may find themselves employing much less effective social media tactics for the sake of measurability."

How about you? Would you rather fail than tell your boss she's wrong?

Budgets Going...Up?

So, are marketers telling their bosses about social media? Quite possibly, yes. But marketers might not be educating their bosses as much as they need to.

MarketingSherpa reports that "social media and email are the only to tactics on which more companies are planning to increase spending than are planning to decrease spending" (page 4). This matches Forrester's recent report entitled Social Media Playtime Is Over. They report even higher numbers, saying that over 50% of marketers will increase their spending on social media in the coming year.

If you're a social media marketer and think this sounds great, think again. Just because marketers expect the amount they spend on social media to increase, that does not mean it'll be a lot. In fact, B.L. Ochman says that Forrester reports three-fourths of marketers expect to spend less than $100K on social media marketing tools.

Read the conversation B.L. includes at the end of a recent post. I think she correctly portrays a set-up for failure, where marketers are expected to spin social media gold from corporate hay, stymied by every other department in their company.

So What Do I Do?

As a social media marketer, you have the proverbial wind at your back. You must seize this opportunity, but don't forget to lobby for the resources and permission you will need later.

Personally, I recommend buying MarketingSherpa's Social Media Marketing and PR Benchmark Guide. Their research is among the best, their arguments are persuasive, and, to be honest, it's expensive enough for your boss to trust it. Or buy Forrester's report. Or another one like it. But, do something.

We have fought for so long to be taken seriously. Remember being scoffed at five years ago when you claimed Facebook would be huge and a decent marketing tool? Remember when Twitter was just a fad? You get it. You see further down the road than most people. (Strategy is part of your job, after all.)

Well, part of your job is also being an educational resource for your boss and her bosses, too. Buy them a report. Send them information from sources they trust. Hell, reserve time on their schedule and read the damn stuff to them. But make them listen.

Otherwise, you will be one of the poor marketers tasked with doing "something viral." If you hear "we need a Facebook page" and don't hear mention a strategy or goals, you are about to get screwed.

But this is your chance! We finally have the green light to participate in social media marketing in a responsible way! But leverage the resources you need (don't forget staff time!) and the backing to make it all possible.

Then, come back and let us know how it went!

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(Note: I am a MarketingSherpa affiliate which means that I make a little beer money if you buy the report. But I'd tout their work even if I wasn't. It's great stuff, period.)

B2B Marketing Consulting 2.0


This is a guest post from Rebekah Donaldson, President of Business Communications Group LLC and author of a B2B communications blog called Red On Marketing:

In early February, Cris Rominger and I published a free B2B marketing e-book called The New Rules of Outsourcing B2B Marketing: What Marketing Directors need in a B2B marketing consultant today.

The e-book is aimed at helping Marketing Directors see the standard to which they should hold us. We discuss the traits a B2B marketer needs; how to cut ROI guesswork; why B2B marketing differs from B2C… and more.

There is a forum for discussing the e-book’s ideas, and I hope you’ll weigh in.

Keyword research 2.0, too?

I’ve been thinking since the e-book came out about visibility into b2b buyers’ search behavior. I have an idea, and it’s sketched out below. What do you think -- any input?

  • To attract and engaging B2B buyers, we need to know their search behavior. Where are they searching, and with what words and phrases, for example?
  • Keyword research 1.0 shows us what B2B buyers search for in the major engines. It does not, as far as I know, show us what they type into search boxes on Twitter, LinkedIn, Technorati, Digg, ITtoolbox, or the like.
  • Business use of social media is exploding.
  • Keyword research 2.0 must account for searches within social media platforms.

It seems that, as social media grows, so grows our our blind spot.

Admittedly the volumes are nothing like searches in Google. But, depending on the particular B2B buyers, we have a big or tiny blind spot.

What I know

Note that I’m not thinking here about how social media participation influences one’s SEM results – something that folks like Oneupweb have covered.

Also, I'm not thinking about tracking mentions of one’s brand across oodles of platforms and contexts. That’s about finding instances of words and media, not patterns in search behavior.

What I don’t know

I’m thinking, specifically, about how I’d answer a client who asks:

"In Twitter, how many searches were there for ‘internet marketing’ vs ‘website marketing’ since 2007?"

"In LinkedIn, are more visitors searching for 'marketing services' or 'marketing consultants'?"

LinkedIn clearly has such stats. They have rolled out context-relevant advertising. They might help advertisers incorporate popular search terms into their ad copy, too.

But for an internet marketing consultant, those stats aren’t accessible. Are they?

What do you know?

I can think of at least two objections to my line of thinking:

  1. Keyword research 2.0 is already happening; xyz does it.
  2. Keyword research 1.0 is plenty; it’s not important to know what’s searched within social media platforms.

We’re hoping to hear feedback. Please weigh in!


My thanks to Red for this guest post! I encourage you to check out the ebook and then respond here or on their forum.

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I'm F*cking Sick Of The "ROI Of Web 2.0" Debate

I have a confession: I am f*cking sick of the "What's the ROI of web 2.0 or social media" debate.

Not that I don't think we shouldn't talk about it - we should - but I'm sick of convincing everyone that there is one at all. If done correctly, you will see a return on investment. We can debate what the metrics should be, but you will succeed if you are open, honest, and provide something of value.

So can we stop talking about the ROI of web 2.0 tools as though it were an ephemeral mist?

I see a track-record of failure for the naysayers - those who prefer to sit on the sidelines while others take chances (and get the rewards). Here are a few examples from the naysayers:

  • They didn't understand the value of blogging platforms. "Who cares about all the navel-gazers?" That was until Jason Calacanis sold Weblogs Inc. to AOL for $25M in 2005.
  • They didn't understand the value of e-commerce. "No one's going to give up their credit card information online!" These naysayers didn't have much to say about's $476M net income in 2007 though (source: Wikipedia).
  • They didn't understand the value of podcasting. "How does that relate to business?" I don't think Gary Vaynerchuk worried about that though. He created and increased his business 10 fold to the tune of $45M per year.
  • They didn't understand the value of online word of mouth. "The 30-second spot is still king!" I can imagine their surprise when the marketing team at Warner Brothers told 7 rabid Harry Potter fans/bloggers about their new theme park. The result was 350M people hearing the news, all without out-bound media relations, marketing stunts, or expensive advertising (Source: The New Rules of Viral Marketing by David Meerman Scott).
  • They didn't understand the value of social networks. "Friendster never did me any good." Then in September of 2007, Microsoft valued Facebook at $15B. With more than 50 million users and 200K joining every day, this doesn't look like a fad.
  • They didn't understand the value of Second Life or other virtual worlds. "It's just a bunch of weirdos with time to kill." But engagement speaks for itself. The Weather Channel recently developed SL attractions that engage users for an average of 30 minutes per visit. Drew Stein, CEO of Involve 3D, builders of The Weather Channel's virtual experience, had this to say: "It's not like a commercial, where maybe they watched and maybe they didn't. You're talking about a user actually paying attention, and you can time it. That's hard to replicate in any other medium" (Source: Fast Company).

So seriously, can we stop debating whether social media and web 2.0 tools have an ROI?

The question for your company is not if they have a return on investment, but how you can get that return on investment. That's the challenge for your marketing team. And if they start whining about how unnecessary or unworthy web 2.0 is, prepare to join the other nay-sayers in the gutter of business.

I'm not the only one frustrated by the debate. Geoff Livingston explains why we keep going through it:

Often, companies want to know what they will get for $xxx,000 of social media engagement. What’s the ROI?!?!? And we play the game because we have to justify corporate expenditures in this era. But somewhere the soul of social media gets lost in these discussions.

From what I gather though, the audience of this blog is fairly split between marketers who get it and marketing folks and small business owners who want to get it. Today's post is venting with the first group. In my next post, however, I will address the second group.

If you're in the second group, you feel the wave approaching. You know social media tools are a big thing but you're not quite sure how they apply to your business and how you sell it up the corporate food chain. That's fine - welcome to the discussion and good for you for having the cajones to figure it out.

My next post will give you some ideas about how to think of social media in the context of your business and provide enough web 2.0 ROI for you to sell the idea to your boss. One good way not to miss it is to subscribe.

Update: That next post I mentioned can be viewed on ReadWriteWeb: 5 Ways To Sell Social Media To Your Boss.


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ROI Of Social Media For Gen Y Audiences (And How To Convince Your Boss)

Generation Y - roughly those aged 13-29 - are among the strongest consumers and influencers. And while social media like Facebook, delicious, and Flickr have garnered media attention, many businesses are still wary of dipping a toe in the social media water.

I argue that we can gauge return on investment (or influence) for Gen Y by looking at their buying power and online behavior and therefore that it is imperative that (most) businesses participate in social media. Plus, I will give you the research to back up these assertions so you can prove it to your boss.

Flashback: Ohio

Growing up in pre-internet Ohio, I spent a good chunk of my allowance and lawn-mowing money on comic books at the local pharmacy. If they were sold out of my usual books, I was SOL until the following month. Scarcity of goods required that I go where they were (and quickly!) or I would miss out.

Fast-Forward: Today

Now, post-internet, these stories sound quaint. Given a bank account, any kid can get any comic book from anywhere in the world. So what does this have to do with social media and Generation Y?: proximity to resources.

Today, consumers expect businesses to come to them. Long gone are the lazy summer bike rides to the pharmacy - today, young people expect to be able to spend their money just about anywhere. And where are they? Online, in general, and on social media, specifically.

Maybe this shift isn't a surprise to you, but let me prove it with research (easily printable for timid bosses or humbugs).

Gen Y By The Numbers

  • Buying Power: "Among 13 to 21 year-olds alone, over $120 billion was spent in 2007...The group's income is predicted to rise through at least 2017, when it will approach $3.5 trillion." (The Harris Poll and Javelin Strategy & Research via eMarketer.)
  • Influence: "71% have influence over parental decisions about cable, DSL or dish-satellite services...62% have influence over which HDTV set and programming package to buy...70% feel their expectations and demands are far greater than their parents' for rich media experiences...and on-the-go broadband access." (Motorola via MarketingVox)
  • Online Consumption: "The group is very comfortable shopping online. One-half of consumers under age 24 made an Internet purchase between April 2007 and February 2008." (Nielsen Online via eMarketer)
  • Social: "One statistic that jumps out is that young men and women are very likely to be Joiners, with around 60% participation in social networks, more than twice the level of participation of average adults." ("Groundswell: Winning in a World Transformed by Social Technologies, Li and Bernoff, pg. 46)

Simply put, Gen Y are very powerful consumers. Plus, they are more social online than any other group. Facebook isn't a fad. You cannot bury you head in the sand and wait for a return to the good, ol' marketing funnel. That model is gone. Long live the new model.

Convincing Your Boss: Relate It To What S/he Knows And Emphasize ROI And Cost

The change is scary for everyone, but come on - this fits into an old-school model your boss will understand. S/he knows to target an audience and speak their language. S/he knows you go to where your consumer hangs out. The key to pitching a social media strategy to an old-school boss is to relate it in an old-school way.

Here's another leg up on your rivals in the company: with a social media strategy, you will have the ROI to prove success rather than just conjecture. Web metrics and communication being what it is online, it's likely that you will have more information than you can handle about your progress than less.

Finally, social media is cheap. Like, dirt cheap. I have worked in print publication and direct mail. That world is slower, less precise, and loads more expensive. Plus, if things change between the writing and the printing, you are stuck with useless package filler. Online is better.

The Gist

In other words, to convince your boss to partake in social media, speak his/her language. You do it with consumers all the time. Turn your methods inward and go for it.

Sidenote: If your boss still reacts negatively to social media, this is a useful sign that your company is not acknowledging the passing of time. Get off that sinking ship quickly!

While I have fond memories of biking to the pharmacy pre-internet, they are not memories so fond that I want to go back to them. I understand that while those times were nice, the times ahead are probably going to be nicer. Hopefully your boss will too.

Have you convinced an old-school boss to partake in social media? Feel free to suggest other tactics in the comments section. And if you like what you just read please consider signing up for email updates below.

Social Technographics: Forrester And The ROI Of Social Media

Last week, a lot of you read my guest post about the ROI (return on investment) of social media. There is no doubt that social media is changing the ways people interact online and hence, the way companies communicate with their customers. The thing that is still missing is quantifiable data about these interactions. We're in a theory stage - we know what's right because we have experienced it - but we are still waiting for proof in numbers. Forrester Research made a giant step in the right direction when they introduced social technographics.

Social technographics is an analysis of consumers' approach to social media - not just which ones they use, but understanding how they use the medium in their daily life. You can download the full report on Forrester Research's website (there is a fee) or read the book on the same topic published April 21, 2008: Groundswell: Winning in a World Transformed by Social Technologies by Charlene Li and Josh Bernoff. (There is also a ton of free goodies at the Groundswell blog.)

I sat in on a webinar last week where Charlene and Josh expounded on their work. Josh summed up the goal of this work: "Think about what you want to accomplish, not the technology." There is so much fascination about what technology can do that marketers often forget the question is what technology can do for you. The webinar came back again and again with the message to use this data to inform a strategy for your clients. (You can find the resulting Q&A published post-webinar here.)

How's It Work?

Charlene and Josh categorize web users into six sections based on the level of their activity, from Creators to Inactives. I have not seen a clear but simple ranking system like this before and I certainly hope it is accepted as an industry standard. The real value, however, comes from their detailed analysis of each category's activity.

I won't go into all of the details of their work, but they go into serious detail about each group. There are some valuable insights to be garnered from their work. But the research does not get lost in either theory or numbers - there are very specific, actionable suggestions.

What's The Catch?

There isn't one as far as I can see. Charlene and Josh set up a system and fill it with data very valuable to marketers. Forrester is one of the top organizations in online research and analytics (if not the very best), so it isn't surprising to see this level of work from them. I do, however, have two small concerns.

  • One nagging concern is the age of the data (all from Q4 2006). While this isn't grievously old, there have been trends in that time that might change the data somewhat (Facebook opening up, Twitter emerging, etc). That said, I understand the huge amount of work that goes into collecting and analyzing this amount of information, so I can't fault Forrester that much (plus, I think the underlying theories are probably unaffected).
  • The second concern is the wording of the questions. For instance, when asked whether they do the following activities at least monthly, respondents were given several choices, including "Use social networking sites" and "Watch peer-generated video." I wonder how responses would have changed if they offered examples like MySpace, Facebook, Eons, and Gather for the first question or YouTube and Google Video for the second one. (I read a report recently that mentioned a large section of people who claimed not to go online because they did not realize they were online when they logged into Hotmail or searched on Google.)

The Gist

As mentioned before, social technographics should be used to build your strategy. "Rather than pursue Social Computing technologies based on fashion, marketers need to think about how they want to engage with their customers and prospects - and create content, features, and functionality that create a path for participation." 'Nuff said.

If you're going to take seriously the new business model in a Web 2.0 world, you owe it to yourself to be equipped with the best research. As far as I can tell, this is it.

Monthly Metric: Bounce Rate

Someone lied to you if they told you statistics were boring. Website metrics show just how your audience is using your site and you ignore this data at your own peril. A bounce rate is when someone comes to your site and immediately leaves. They bounce off of your website for whatever reason. A bounce is undesirable - you want people to come and stay on your website! Bounce is the opposite of sticky.

Time vs. Pages

I had always understood bounce determined by time - that this figure was measured from people leaving a site in a certain increment (usually 2, 5, or 10 seconds). So I was surprised when I read in Website Magazine that they asserted that bounce rate "is calculated by dividing the number of total page visits by those visits that did not result in an additional page view."

This seems insignificant, but really there is a huge gap. True, both methods measure engagement - how much your visitors care and want to get involved with your website (in the case of bounce, the answer is "not much"). However, the magazine's definition is critically flawed (and I don't mean to pick on Website Magazine - many others define bounce rate the same way).

If bounce is determined by page - measuring the amount a given page is the last page viewed against the aggregate number of times that given page was the first page viewed - this does not mean the user was instantly turned off. Co-worker Mia described this page-derived metric as indicating "not an unsuccessful visit, but unsuccessful engagement."

For instance, I can search a site, take several minutes to read and digest a page's information, be satisfied, and leave. This wasn't an unpleasant visit - I got the information I was looking for - but it was unsuccessful in getting me interested in what else the site had to offer. Shame on the marketer for not including links or other content that might entice me to another page, or offering some reason to further explore that given topic. But that does not mean the content or design was flawed in some way. In this manner, I think it's clear that determining bounce rate by last page is inherently flawed.

However, the time-derived metric is incredibly handy. Robust metrics engines like WebTrends can be programmed to measure any increment of time on a given page (though you'll probably have to ask your IT guy for help - the usual default setting only measures in minutes which isn't small enough for our purposes).

So, what can I do (and what does Jesus have to do with SEO)?

This uber-geeky battle of the bounce rates might not mean much to you - you're probably interested in ways to fix high bounce rates. Let's look at some common problems that might be plaguing your website.

  1. Bad design: If your website design looks cheap, people will logically think the content is cheap as well. Make sure your design is professional - check with an expert and ask others' opinions (if you're on a tight budget, use SurveyMonkey or another free tool to send around to friends and family). One important note: there is often confusion over cheap vs. simple when it comes to design. Google is simple and it works. Sites trying to sell you pirated DVDs from China often look cheap and it doesn't work. Even useful sites like Jakob Nielson's walk the line (though he's likely proving a point about usability, so he gets a pass). Use your best judgment.
  2. Bad content: People can tell when they're on the wrong site. Maybe it wasn't what they were looking for. Or maybe your misspellings or wacky fonts or wrong information instantly turned them off.
  3. Bad site architecture: Think about this from the user's perspective. I worked with a client whose homepage (i.e. was where user's had to click whether they wanted the American or European versions of the site. They lost a fifth of all traffic due to this terrible landing page. Enable your visitors to get the right information quickly and you will have a better bounce rate.
  4. SEO: Search engines crawl certain information - title, header tags, first couple paragraphs. If you are overly clever or leave the crux of your argument at the bottom, the right audience isn't going to find it. If Jesus had been a blogger, he would have had SEO woes. The parable of the mustard seed would have brought in gardeners and horticulturists - not exactly the point of the story.


For more detailed directions, check out Avinash Kaushik's wonderful post at Occam's Razor. He skims over the time vs. page argument that I wrote about, but he delves into some great suggestions for finding out more about your traffic and improving bounce rates. I especially recommend #2 (Measure the bounce rate for your traffic sources) and #4 (Measure the bounce rate of your AdWords, AdCenter, YSM (PPC) campaigns).

Many companies, especially small business owners, think they don't have the time to properly measure metrics. The truth is that they can't afford not to.

It's logical that you need the right audience at the right time in the right place. Bounce rates are a perfect way to determine whether that's occurring. Potential business could be floating to other websites instead of yours. Don't be the metrics fool.

Chief Conversation Officer

Updated: Welcome Jaffe Juice readers! Note that my other posts regarding Join The Conversation are linked at the end of the first paragraph below. Also, if you like what you see, be sure to subscribe. Thanks!  I just finished reading Joseph Jaffe's Join The Conversation and highly recommend it. I'm a believer that the internet age largely only changed our medium of communication. We still function basically the same and this is a book that supports the need for conversation (more important that communication or dialogue) through the online channel. This sounds easy but Jaffe has many, many examples of companies that failed miserably in this regard. (You may remember Jaffe from when I mentioned his work here, here, and here.)

Conversation in business is like a fairy or Santa Claus - you want to believe in it, but when the rubber hits the road, you "know" there's nothing in it. This couldn't be further from the truth (Jaffe has examples to back up this notion too). But who would fill this function in the office? Conversation isn't on the org chart.

Jaffe suggests a Chief Conversation Officer (CCO). (Sidenote: Joseph, I tried to join the conversation at as instructed on page 102, but that page did not exist - for shame!) Here's the gist of a CCO:

"Said CCO would report to the very top and thus bypass any blinkered or biased silos. The conversation department would be populated by true generalists with expertise across marketing, advertising, internal communications, corporate communications, customer service, government, analysis, and press relations. They would be responsible for monitoring and listening to conversations, understanding and contextualizing them, responding to and catalyzing existing conversations, and, ultimately, joining them. (Jaffe 101-102)"

Later in the book, Jaffe reiterates that this is someone with a mix of attributes, somewhere between PR people (more "social media") and advertising/marketing folks (more "storytelling"). I imagine this multi-dimensional CCO would also be "somewhere in between...longing for the days of good old-fashioned storytelling, with a sprinkle of authenticity and a drizzle of ROI to boot. (Jaffe 180)"

Likewise, I would think this conversation department headed by the CCO would be something like the "black ops" team mentioned late in the book. They would be responsible for experimentation, a vital aspect of any business, and fit in to the CCO model in my opinion.

"Experimentation is best conducted by a separate team - a nimble, independent, empowered, and intense group of individuals who report straight to the top. Depending on your anticipated level of risk and your comfort level, this team could be assembled as a 'Delta Force' or 'black ops' group...unaccountable throughout but ready and prepared to pay the ultimate price upon failure. (Jaffe 252)"

Jaffe's sentiments relate to Joseph Turow, who recently wrote a terrible screed bashing all marketers in Niche Envy: Marketing Discrimination in the Digital Age (and yes, it is intentional that I am not hyperlinking the title - don't buy this book!).

Turow says "The adperson who is master of this particular form of 'conversation' [two-way contact with customers and potential customers] can expect a growing role in tomorrow's marketing world. (Turow 69-70)" He only begrudgingly acknowledges the usefullness of a marketer in touch with his/her audience and throws sarcastic quotation marks around "conversation," but the sentiment is the same. He later goes on to quote James Stengel, P&G's marketing chief:

" 'All marketing should be permission marketing,' he said, and 'all marketing should be so appealing that customers want us in their lives...and homes.' To do that, he cautioned, required creative content and 'connection points' in a variety of media and environments. (Turow 87-8)" While Turow spends most of his book bashing all marketing and inciting paranoia about the information marketers have (Old Navy knows I like blue shirts, the horror!), he is correct that direct connection between the customer and company will only become more important in the near future. What better person to be responsible for this connection than the Chief Conversation Officer?

Good For Consumers (And Businesses): Social Media Gets A Glimpse Of Measurable ROI

We recently had one of the worst weeks ever. It included (but certainly wasn't limited to) taking the car in to replace an insanely expensive hose, losing our heat during a Chicago winter, getting sideswiped by a Chicago trolley right after leaving the dealership, and the subsequent arguing with and lying from the trolley driver to the cop about how she was not involved. Needless to say, there were not a lot of bright spots in the week. But when the dealership tried to squeeze another $470 from us for a CV boot, I did a little research. and a few other sites extolled the virtue of the mechanic right down the street. He did the job in a couple of hours for $188. Amazing.

What does this all have to do with online marketing? Well, I was not surprised when I read this study from comScore. Not only are 1 in 4 internet users consulting reviews before purchasing offline, but they are willing to pay more if the service is ranked as excellent. It seem that after the year of exuberance that was all about Facebook and twitter, business is finally getting around to answering the question of how social media effects ROI.

If you have been questioning this yourself, you are not alone. I have seen at least 5 webinars in the past week and a half on this question alone: How do we determine our ROI on social media? And there are two distinct undercurrents in this discussion: 1) a low-lying anxiety on the part of marketers regarding keeping up with current trends and 2) trouble convincing an old-school CEO or other higher-up that this is of value to the company. I am a victim of the former and may blog about it in the future, but relief for the latter is beginning to emerge.

Among the best of the webinars and white papers discussing social media ROI are those from TNS Media Intelligence/Cymfony. Anyone who is trying to convince their fellow employees about the value of social media must read their white paper, Making the Case for a Social Media Strategy. (Just so you know, I'm not connected to the company at all - I just really do like their work.)

They begin by going through an evolution of digital communications and present research on what people are doing online. They then explain how social media is a blurring of communication and content (the two activities people do the most online) and give salient examples of how struggling industries (especially newspapers) are embracing social media and seeing profits skyrocket. Among the quantifiable ROIs:

  • momentum
  • influence
  • prototyping
  • direct conversion of buzz into sales
  • market feedback/testing
  • crowdsourcing
  • recommendations

And each of those quantifiable ROIs has at least one example from a major, dynamic company. Consider these:

  • Crowdsourcing: "Intuit created a community with discussion boards on their site so customers can help each other with questions...According to Business Week, this community now has over 100,000 members discussing topics across 50 subject areas." CEO Steve Bennett's 2005 annual report letter to shareholders stated, "positive word of mouth creates a durable advantage for Intuit that translates into sustained revenue and profit growth."
  • Recommendations: "Analysis of [Petco's] web traffic revealed that users that [sic] sort the list of products by customer ratings spend 41% more than users who search with other methods like popularity or price... Emails that feature customer review content receive 50% higher clickthrough rates."

Helpfully, there are also cases where social media hurt companies, but a fair review notes that it was not the tool that caused the problem, but the poor PR skills of the company. Many are not adept at responding quickly, especially to a crisis situation. These examples serve as a good warning to be prepared for what you are about to take on.

In the end, social media is just a tool. But this study and others can give you the quick-and-dirty version (with stats) to help convince your more traditional bosses. It's a scary new world but at least we're all in it together.