By Nick Johnson - June 4th, 2010
Hi, As part of the run-up to the Corporate Social Media Summit, I've been conducting some interviews with speakers from the event. I recently had a chance to ask some questions of Don Barthomew, ...
As part of the run-up to the Corporate Social Media Summit, I've been conducting some interviews with speakers from the event.
I recently had a chance to ask some questions of Don Barthomew, VP of Digital Research at Fleishman Hillard. Fleishman are our 'International Communications Sponsor' for the Summit, and Don will be speaking on the challenging issue of ROI and social media at the event.
Q. How is ROI in social media different from traditional channels?
A. It is not different. ROI is a financial metric. ROI can only be measured in terms of revenue generated, cost savings or costs avoided. It is transactional in nature. ROI is not synonymous with results, KPIs or impact. There is ample evidence on twitter, blog posts and in blog comments that many people say ROI when they really mean value or impact.
Many of the well-intentioned but misguided attempts to rename or reinvent what ROI means in social media – return on influence and return on engagement probably getting the most play – seem to be the result of an inability to distinguish impact from ROI.
Q. How do you describe the difference between Impact and ROI
A. Social media efforts may create non-financial impact or financial impact (ROI). Engagement and Influence are examples of non-financial impact. Other non-financial impacts like increased brand awareness or purchase consideration may eventually result in ROI at a point in the future when a financial transaction or event occurs. Many social business efforts are in an investment phase. The value is largely intangible in the short-term.
Q. Is ROI the most important metric in social media?
A. ROI is not the only or perhaps even the most relevant way to define success in most social business initiatives. A key concept in measurement is to measure program objectives. The primary objectives for most social business efforts are centered on concepts like listening, engagement, participating in conversations, community-building and relationships. It is difficult and expensive to attribute financial value to these areas. To use the old saying – the ROI on these sorts of ROI studies is not good. Unless the social business program has specific objectives for revenue generation, cost savings or cost avoidance, ROI is not the most relevant metric.