Tom

ROI for Social Media Marketing: It’s Complicated « PR-Squared [link to post]

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1. ROI is media-agnostic. The method for measuring ROI is the same regardless of the media… or the activity or exercise. With ROI, you measure the financial-impact of an activity or series of activities. It’s purely a P&L exercise in which ROI is either a cost reduction or an increase in revenue. Period. When a change in the existing strategy or tactical execution of a program also creates a change in either revenue or cost control, you’re at the start of an ROI conversation.

2. R.O.I. is a financial calculation. Things like attention, authority, participation and influence are “impacts”, not R.O.I. Do they play into the connect-the-dots process of action–>reaction–>impact–>ROI? Yes. So measuring the right things matters, but they do not in and of themselves represent ROI. Not in this or any universe.

3. The scientific method applied to business is the bulk of the process that leads to the determination of the ROI of an action (or series of actions). All things remaining the same (set up a control group to test your theory if you must), a change in the system resulting in a change in behavior resulting in a change in revenue is pretty easy to spot. Whether correlation or cause-and-effect, connecting the dots between action, reaction, impact and financial deltas isn’t hard.

4. The actual ROI calculation (money in, money out) is the last step in the connecting-the-dots process and is VERY simple. If you know how much a program has cost and you can calculate the delta in your P&L’s outcome, you’re 80% of the way there. Any first year MBA student should be able to do this.

The fact that so many “experts” don’t understand how to calculate ROI does not mean that the ROI of Social Media cannot be calculated. It can, and it is. You just can’t rely on “experts” whose background has been in questionable measurement to begin with (media and/or marketing measurement) to suddenly figure out that what they have been measuring all these years was either irrelevant, secondary to real business measurement or in some cases completely bogus. (Impressions? Really?) Statements like Dr. McAfee’s betray a lack of understanding of the process rather than validation of his uninformed opinion. Don’t fall into that trap, Todd. These people are dragging you down the wrong path with this BS. The Earth isn’t flat, I swear. ;D

Reading @TDefren – ROI for Social Media Marketing: It’s Complicated [link to post]

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Love this: “Marketing Metrics create the illusion of certainty and control. Cannabis has much the same effect.” from [link to post]

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