They want an equivalent or comparable to page impressions (CPMs) or click through rates (CTR).
However short-sighted or crude you may feel that is, there's a reality about answering the question. Those asking it may have spent enough time with you and your presentations and pitches to 'get' what you're saying - but they've got someone looking down from high above them who hasn't had the benefit of all that direct education.
Rare is the client who has some 'experimental cash' to back their personal judgement.
So coming up with an answer helps your closest contacts persuade their bosses that there's a job that needs doing and is worth doing - ie investing in joining in conversations - becoming human in peer-to-peer networks.
Find that answer and they are happier, their boss is happier, you (ok, I mean we, get to be happier).
It seems to me that at its heart this is relatively simple, at least the questions we need answering are relatively simple.
They are about conversion rates.
And they are about the value placed on the defined action by the client/organisation.
For example, let's say for every 1000 page impressions The Company sells one Product X. The value of this to The Company is £10. So every 1000 pi you notch up is worth £10 to the client. A page impression is worth 1p.
Your media buyer will of coure be looking to buy at rather less than that.
And if for every 10 P2P recommendations of Product X The Company sells one product X, then the value of a recommendation is £1. Pay your social media agency 50p per recommendation recorded and you are laughing all the way to the bank.
And that's all there is to it.
Even when we move into where the real explosion of value in social media occurs - co-creation, we simply have to define the value of the chosen action.
How much is one idea from a 'consumer' who cares about making your products better actually worth? How much could crowd-sourcing NPD saved you? Don't forget to include the value of the free and powerful marketing you'll get from those involved in co-creating the new version of the product. And the A/B testing they'll join you in.
Subtract what you plan to share with them. You are going to share, right?
I say that's all there is to it - but peer to peer is a place of supply and demand networks - webs not chains.
So the questions can become more complex.
Consider just some of the elements of social media.
Images, videos, blog posts, blog comments, IMs, texts, email, audio, forums. In a perfect world you'd be able to place a varying price on recommendations/mentions in each of these depending on their scale and scope - and whether they are being uttered by someone followed/influenced by more people than another. And whether that persons 'influence' ebbs and flows topic by topic and moment by moment.
The variables are many. The complexity immense.
But we have to start somewhere.
For example, if a recommendation is made in social media has anyone actually calculated how many times more likely it is that a purchase follows, compared to a page impression?
Has anyone worked out the likelihood of a defined action after someone has installed a badge/app/widget on facebook etc compared with an ad being served at them?
Do you have answers? Do you have questions?
Either way, please comment below. If we get a little traction I'll take this into a wiki we can work on and share together.
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Just a few thoughts, perhaps stemming from my background in data analysis...
ReplyDeleteHow do you define a P2P recommendation in a way that can be practically captured & analysed. How do you measure the weight of that recommendation as part of the purchaser's buying decision? I guess by focussing and recording a discussion you've made a start to answering these questions, but extracting clear answers from the record as to the measure of difference will I suspect always be difficult to find. One way might be to compare similar products being marketed in otherwise identical ways except their level of social media promotion?
One area I've perceived a benefit (although still hard to quantify) is in gathering information on what features customers want in the next version of a product. Still not conclusive, as the source sample is limited to the relatively tech savvy section of the market, but undoubtedly useful as one of many sources of input.
Calculating ROI implies that you have a formula, but as you mention it is hard to come up with such a thing for social media.
ReplyDeleteWhat is possible however is to draw from empirical data to get a feel for the type of return you will obtain.
The best I have seen in this area is the essay from Xavier Comtesse on direct economy, where he looked at how companies were able to improve their productivity by involving the stakeholders in the value chain. And from his studies he came up with the concept of a "value chain 2.0", showing all the possible places where involving stakeholders can save you money while improving satisfaction.
To take an example that is close to home, one of the best thing I have seen recently is what happened with airline and self service check-in: I can now print my boarding pass at home the day before, and then the day of the flight I check my luggage in myself. The result:
- only a few attendants behind the counter
- no more long waiting in lines for check-in
- I do the work, but I am happier
There are many example like this. The key is to remove bottlenecks by providing stakeholders with the necessary information and infrastructure that will allow them to participate more efficiently.
So getting into Social Media should be about a lot more than just pushing content a different way and measure impact. It should be a strategic move into a new way of doing business that has proven to be more efficient and more satisfying for people within your business ecosystem.
So I guess my answer is that Social Media should not be an ROI discussion. If your customer does not think that way, chances are his project will fail. And if he does, it is a different sale, a strategic discussion. Management consulting services rather than marketing services.
Picking up on mdangear's phrase "I do the work", that's another example of investment, so when we consider return on investment it's not just money being invested in social media, it's effort and time.
ReplyDeleteIt's hard enough to persuade some people to invest "experimental cash", but a major media company close to the hearts of David Cushman and I is still banning Facebook at work.
Incidentally, I enjoyed an excellent presentation from Sadie Ramm at ecological household products company ECOVER yesterday. Her company is using social media to consult with users of the products in a similar way to the one suggested by Jason, above.
David - rather than starting your own wiki, why not come along to the next measurementcamp (on Wed) and use the pre-existing measurementcamp wiki?
ReplyDeletehttp://measurementcamp.wikidot.com/