So Andrew Mueller (@andrewmueller) pointed me to this Social Media R.O.I. calculator thing yesterday, and I have to admit that I was pretty psyched at first that someone had figured out how to create what I thought was… well, impossible to create in a table/equation type format.
That was until I started actually looking at it and realized that it makes absolutely no sense whatsoever.
Watch the video for the full explanation (and the kind version of this post):
Here is the link to the calculator: http://www.dragonsearchmarketing.com/social-media-roi-calculator.htm
First of all, let me let you in on some truth about the “how” of R.O.I. measurement that will probably disappoint you: As far as I can tell, there really is no way to calculate Social Media R.O.I. through an equation or a cost-accounting type table. It just doesn’t work that way. I know it isn’t what you want to hear, but I am not one to blow smoke or sell you sunshine and daisies on a cloudy day.
In order to do it right, you have to take timelines into consideration: When a campaign or program started and ended in relation to deltas (changes) in sales and other metrics. You have to separate spikes from trends. You have to measure the impact of all media and all channels in order to isolate sticky elements from ineffective ones. You have to be able to look at the impact of special offers and promotions separately from the impact of your social media activities alone. It is a multi-phased and multi-layered process. Kind of like pealing the layers of an onion while looking at each layer’s tangential relationship to (overlaid) timelines for a variety of activities. Not difficult, (and certainly not as difficult as it sounds) but much more involved and complex than a cookie-cutter equation on a spreadsheet.
I know everyone wants that magic pill, that miracle R.O.I. calculator that fits on just one page (fill in the blanks and watch Excel do its magic), but it isn’t that simple. If it were, ad agencies and PR firms would have figured it out long ago. And while it is tempting to want to believe that such an equation or calculator exists, it doesn’t.
Not that it will stop masses of Social Media and measurement “gurus” from trying to sell you their own particular flavor of “proven, secret” measurement snake-oil. Be forewarned because they are starting to come out of the woodwork and this whole R.O.I. thing is about to become a monumental clusterf**k if we don’t start calling people out on their BS right away.
Getting into the R.O.I. Calculator: Section 1 – The setup
So anyway… since Social Media R.O.I. can’t be calculated in one single step, the very notion of this calculator is flawed from the start. But then it gets worse: All you have to do is take a look at some of the elements of this “calculator” equation to smell the pungent and all too familiar aroma of BS. Check out these screenshots:
(above) Not a bad start. We have some cost accounting there, some setup and training costs… Good wholesome stuff to start with. But it doesn’t take long for the calculator to start getting into cost per click and incoming traffic… Which might belong in the calculator somewhere… but front and center like this? Not likely… unless whomever crafted it happens to come from a web analytics background. (You tend to first want to measure what you know.)
The danger in this is that less than five lines into this calculator, we already find ourselves prey to an old-school web analytics mentality that has absolutely nothing to do with Social Media.
Mark my words: The tendency to turn solely to web analytics specialists to measure the impact of Social Media is going to be a monumental mistake made by most businesses that engage in Social Media in the coming year. And sadly, it is inevitable: Business folks making these decisions don’t understand that the social web is the Seine river, not all of Paris.
Just like IT managers shouldn’t be the de-facto bloggers for their companies, web analytics people shouldn’t be measuring R.O.I. just because the tools are digital.
But back to this post and the calculator: Is traffic to a site really the most important metric to focus on? And based on this calculator, are we to infer that our Social Media strategy to attract customers begins with pay-per-click banners and Google Ads? Seriously?
As an aside, “cost of incoming traffic” might be a better title for the bottom section than “value of incoming traffic.” Just a thought.
But that’s nothing. It gets much worse:
Getting into the R.O.I. Calculator – Section 2: The dollar value of stories and WOM (Huh?)
(Above): I don’t need to dive too deeply into the nonsense on display in the above screenshot. It kind of speaks for itself – with the help of my little red comments. Quantity of stories? Value of stories? What? Um… What stories? and how do you assign arbitrary value to a story? Even if this were relevant to Social Media and conversations in some way (which it isn’t), someone please explain to me how one calculates the value of a story.
Or the value of puppies?
Or the value of sock-flinging?
The worst are yet to come (my favorites): “Word of Mouth Value” and “Word of Mouth Value Gross”. I can’t even come up with anything smart to say about this. How do you assign a dollar value to WOM exactly? Oh, never mind.
And then we get into focus groups. Seriously. Focus groups? In a Social Media R.O.I. calculator?
I swear on my front yard’s emerald lushness, this thing is real. I did not make this up.
But hang on, it isn’t over:
Getting into the R.O.I. Calculator – Section 3: We’re already out of ideas so let’s just make **it up!
(Above): The third and final section of the Social Media R.O.I. calculator looks at the cost of employee engagement, right? Yet the three elements of this cost accounting fiasco ask for estimates. Not hard numbers, but estimates. As in a questionnaire to circulate around the office asking people to estimate how much time they spend using Social Media.
Not hard numbers, but guesses. To calculate R.O.I. Seriously.
Not only that, but this is it. Calculation over. Hit submit and you’re done.
Are you kidding me?
Are you kidding me.
But wait, there’s still more – The calculator comes with a digest of what you’ve actually calculated, in context:
(Above): The benefit analysis spreadsheet (priceless). The four elements listed are “Advertising value,” “PR value,” WOM Value” and focus group equivalence value.
Take a close look at that table. Read every word. Get into the thinking behind it (if you can). Now answer these simple questions:
1. What does any of this have to do with Social Media, engaging in conversations, building relationships with customers, building value, managing a brand’s online reputation, or increasing brand relevance – for starters? How is any actual engagement measured?
2. What is this actually measuring, aside from estimated labor costs, pay-per-clicks and… focus group substitutes? (I can’t figure it out.)
3. In what universe does this actually calculate R.O.I. of… anything?
4. Were transactions or sales ever mentioned? Social Mention, maybe? Conversions? Loyalty indicators?
5. Would you like that giant bag of bulls**t sent to you pre-paid or C.O.D.?
One final word about Social Media and Professional Responsibility:
Note that this calculator was developed by two pretty smart and well respected people in the New Media world, and I am sure they meant well, but this is the kind of thing that companies really need to watch out for: Well-packaged nonsense that just doesn’t work.
At all.
Not even in make-believe land.
Which leads me to my last point: This is the real world, people. Where the stakes are: If you screw companies out of hefty consulting fees and they follow your made-up advice, they lose money and people end up losing their jobs. Real people with real families who depend on them. Because of you. So if you lie about what you can and can’t do, shame on you for being part of the problem instead of being part of the solution, and for preying on open-minded execs who stick their necks out to try to do something cool for a change. Shame. Really.
So… Social Media “experts” and measurement “gurus” or whatever you like to call yourselves this week… Stop with the bulls**t. If you don’t know how to calculate Social Media’s impact or its R.O.I., don’t just make something up. Admit that you don’t know how to do it, and go talk to someone who does know so they can help you. If not for your own sake, for the sake of the companies who PAY you to be their trusted advisors and need your “expert” help. It is the professional (and the ethical) thing to do. Don’t just take the cash and make it up as you go. Come on.
Okay, rant over for now. Have a great weekend. We’ll continue this discussion next week, and my videos probably won’t be so very nice. 😉
Brand Building and Online Marketing Blog 
Olivier, thank you for this breakdown of precisely what is wrong with all of the elements in this tool. Also, thank you for making me laugh first thing in the morning. 🙂
We don’t need you to be nice & pleasant. We need you to keep highlighting where our social media thinking has gone off-track. What you are doing the past two weeks is really invaluable – I can’t measure it, but if you eradicate some faulty thinking and prevent some money from being wasted on flawed consulting or corporate social programs, or you guide a social media director into thinking harder when planning and cause the prevention of bad decisions, or you help consultants like myself narrow down and hone in on the services they expertise in… wow. Then you’ve done something amazing by taking the time out of your busy schedule to put this together. I sincerely hope everyone who touches social media marketing in any way will see your articles and videos.
I’ll be the first in line to buy your book, at any price. 🙂
Another excellent post in the ROI series. The calculator actually does one thing right that virtually nobody else does: it calculates the cost of the social media program.
I can’t count the number of SM “experts” who have told me that the great thing about social media is that it’s “free.” No. It’s not.
Human capital carries an extraordinary cost. Especially if you engage the company CEO and other executives in the program. Even if their cost were calculated solely as their fully burdened hourly payroll expense, their total participation expense would be in the tens of thousands of dollars. Those are real dollars that the company is spending.
Content generation is not free. Even a single Tweet has a cost. The single biggest hurdle I’m encountering with a current SM project is the pushback from the client centered around staff involvement in the SM process. “Why can’t it be like traditional marketing, where we sit back and watch someone else send out messages on our behalf?”
Despite the lack of real value of the upper half of the calculator, at least they took a cut at actually calculating the true employee involvement costs. And there’s real value in that.
LOL. I love it when I hear SM consultants say that Social Media is free.
About “free” social media :
“When Consumers Help, Ads Are Free”.
NYT says so : http://bit.ly/2IW2Jo
Certainly not “free, as in “free beer'” (lessig)
so maybe free as in : “Free Software (…) meaning that it respects your freedom” (gnu)
Mmmh. Doubt it 😉
Another excellent post in the ROI series. The calculator actually does one thing right that virtually nobody else does: it calculates the cost of the social media program.
I can’t count the number of SM “experts” who have told me that the great thing about social media is that it’s “free.” No. It’s not.
Human capital carries an extraordinary cost. Especially if you engage the company CEO and other executives in the program. Even if their cost were calculated solely as their fully burdened hourly payroll expense, their total participation expense would be in the tens of thousands of dollars. Those are real dollars that the company is spending.
Content generation is not free. Even a single Tweet has a cost. The single biggest hurdle I’m encountering with a current SM project is the pushback from the client centered around staff involvement in the SM process. “Why can’t it be like traditional marketing, where we sit back and watch someone else send out messages on our behalf?”
Despite the lack of real value of the upper half of the calculator, at least they took a cut at actually calculating the true employee involvement costs. And there’s real value in that.
What’s also interesting about their calculator is what is not included: not a single mention of a sale made or a client signed because of SM activity. You know, the kind of activity that generates actual revenue.
I’m certain that when the CEO asks me to validate the ROI on a SM program the answer he’s looking for will involve revenue. Real dollars that actually show up on a bank balance.
A quick check to see if your ROI is real:
If your banker will accept your return as collateral on a loan, it’s real. I’ve yet to meet the banker who will loan me money because I just realized $50,000 of focus group value.
Oliver,
This is a great post. I think that everyone in our industry is pretty sick of people trying to dupe small business owners and uninformed executives by trying to make something from nothing when it comes to social media.
You and I must be on the same wavelength this week, because I just wrote an article based on the PC World post “Beware the Social Media Charlatans” – basically blasting the so-called “social media gurus” for not really having a clue.
I think eventually some clarity will come from this chaos, but as with the beginning years of any new industry, it’s going to take some time to separate the good from the bad.
Andy, your article/post was one of a series of articles I’ve read recently that drove me to this topic. 😉
The general absence of solid answers from the “Social Media Consultant” community since the beginning of this “Social Media” gold rush in the last year has validated the growing skepticism about the legitimacy of SM’s value to the business world. And while many Social Media “experts” are quick to blow it off and take an us vs. them (or New Media vs. old media) stance, a better reaction would be to stop, listen, and not use the “well they just don’t get it” brush-off excuse anymore. SM “professionals” need to either address these questions or find another line of work. 🙂
Good observation on this thing calculating the cost of doing social media, John. Curious to see Olivier’s take on that.
As a user experience person, I had a huge problem with the claim that anything done via social media is akin to a focus group. For one thing, I don’t place as high a value on focus groups as some marketers do because I know that what users/customers SAY is different than what they DO. If I had a dollar for everytime a user complimented or gushed over an application, while desperately trying to figure out how to find navigation or do a simple task (their actions don’t lie), I’d have enough money to at least take a long tropical vacation.
The short-spurt and anonymous nature of many forms of social media do not equate to knowing the people you’re interviewing (in a focus group or uxp study) and spending one-on-one time with them, drawing out of them what their issues are. The closest you could come to getting focus-group kinds of results is by utilizing a blog or dedicated discussion board with comments AND with a psychologically savvy person engaging people in conversations, and most companies either don’t have a corporate blog at all (what a waste of an opportunity!!!) or they don’t allow comments and use it as a glorified PR post if they do.
Kris, I appreciate your comments always on target and always insightful.
Interesting that you should take on the issue of social media as focus groups. As you probably know, focus groups were originally used to focus the research not be the research. Somewhere along the way they got lost and are often used as the research. In addition to the problems that you mention, people act differently when they are in a group then when they are not and this skews the results. As you say, it is a very tricky thing to read a focus group.
Interestingly, looking back at the original use of a focus group, to identify areas that need further research, I can see how social media may at times provide clues.
Andrew, thanks so much. I am more opinionated than educated about focus groups, I’m not afraid to admit. I have led loose versions of them (though in my own style and not the formal interpretation of how to do it) and been a participant. When in Houston, I signed up to be a focus group participant with a research firm partly to learn about them and determine whether or not that is a tool I felt the software companies I worked with should use. I determined it was not… and with the conversations we all routinely have about transparency and authenticity, I really feel that way today.
I see where you’re coming from on social media intelligence being used to guide the research and think that is an awesome way to make use of the additional insights we can get by interacting with people online – whether in the short-spurt setting of Twitter, or from longer blog comment discussions. What a great selling point for adding social media programs to the corporate mix also. Thanks for that nugget of information. 🙂
Yeah, whatever the original idea behind focus groups may have been, the reality of focus groups now is nowhere near it. Between purpose, questions asked and group dynamics, focus groups today are a complete disaster: Used for the wrong thing, handled in the wrong way, and with little regard to the fact that people behave differently in small groups than they would on their own. Hierarchies form almost instantly. Social stigmas, fears and alignments take over and taint both opinions and responses. It’s a shame.
Focus groups should be as much (if not more) about ideas than about opinions. Sadly, they are used to “test the water” before launching product rather than as a product ideation and development process.
I’m speechless…
Ok, not completely.
Looking at it closely, the authors clearly come from a web and traditional marketing background.
The currency they work with is:
1. page views,
2. (mainstream) press stories,
3. mentions on high profile (read mainstream) blogs, and
4. a little customer insight
So essentially they are reducing SM value to the old activities they are familiar with:
1. Internet advertising
2. PR
3. more PR
4. focus group work (shudder)
They place the biggest “value” on page views. I thought we learned our lessons when the bubble burst in 2000; eyeballs don’t pay the bills.
Great breakdown, Olivier! I had a good laugh.
I went to the original blogpost, though no one had left a comment so far. I didn’t feel it was my place to highlight the problems. It probably is your place though.
http://dragonsearchmarketing.com/blog/social-media-roi-calculator
Eric, thanks for the post.
You’re right about everything except one: It is everyone’s place to highlight the problem. You very eloquently outlined the cause of the problem – you know what you are talking about. Your opinion is as valid and your voice just as loud as mine. Don’t be afraid to speak out when you see something like this. 😉
The more we shine a light on stuff like this, the better off everyone will be.
Olivier, glad to see you take this calculator (and the b–lsh-t) head on. The problem with calculators is put garbage in, you get garbage out.
On the topic of social media being “free” – recently went to a social media focused panel discussion where one of said panelists (from one of the top creative firms in the country) gave a social media example of client work (one of the top three fast food chains in the country) and responded to a question of ROI (to said social media effort by said top creative firm working on behalf of said top fast food chain). Answer given…”er, 350 million free impressions.” Yeah, bet you can buy a whole lotta fries with that.
Olivier, Thanks for the elaborate chemical analysis of snake oil!
When I originally saw this ROI measurement calculator (a link in a tweet) I thought whew, what BS, this is not ROI! In fact, trying to sell it as a way to measure ROI of social media efforts discredits the actual value of those efforts. It will never allow you to win over all the members of the sales molecule. It is much more likely feed disagreement within the group.
I was intrigued by your last few posts and really gave a lot of thought about if and how Social Media efforts could be directly tied to revenue events (holding all other variables a constant). Of course we can’t do this but the exercise in thinking about it allowed me to more clearly understand what can be done. For one thing we can get and idea by charting revenue events against a social media effort timeline. This will allow us to see a generalized effect on Revenue. I think you touch upon this in you video. We can also measure sentiment and correlate change in sentiment to specific social media efforts. This starts to get exciting.
I read about how Dell sold $1M of product through Twitter. Dell has shown that social media channels can be used to as a marketing platform and for these specific campaigns can be set up in a way that can be measured. But this is internet marketing and distinct from Social Media relationship efforts.
So when we boil it all down, it is clear that Corporate Social Media efforts executed properly can have huge lasting effects on brand sentiment, but in terms of ROI, we will at best be able to see general correlations, hence Social media efforts can certainly be measured but not in terms of traditional ROI and it is BS to represent it as such.
I saw this ROI calculator and I can tell you that it is the same as dozens others I have seen vendors and consultants use. They all imply that ROI is a frozen calculation that can be done once and get it over with. As you said, this is not the case.
Well written, well analyzed – and I must applaud you on taking the time to go through this. I am quite certain that some other people that found this on the web have used it to justify their deployments.
Which means that you will get a lot more work in about 6-9 months from now when they return to the web for the real way to do it and find your blog.
So what do you suggest use to calculate Impact or ROI?
I will be getting to that soon, but essentially, you need to combine a series of measuring tools and technologies with a multi-tiered methodology that first measures, then combines, then analyzes, and then calculates.
Thank you for doing my job for me. I was approached by someone who had done a similarly ridiculous social media ROI calculator, and have been waiting till I had an hour to kill in an airport before I blogged about all that was wrong with it. You’ve don’t the job for me.
My point to this other pseudo scientist is that you HAVE to deliver numbers to management that are grounded in research and data or risk losing whatever credibility you have left.. And other than the raw costs element of this kind of nonsence, there is no research to back up any of the assumptions.
So thank you for allowing me to take the weekend off. Keep up the good work!
You crack me up, Katie. 😀
Please blog about that other calculator. You and I have different audiences, so the more stories about nonsense like this we can share with people, the faster we can put this kind of bogus crackerjack box measurement BS behind us and get to real programs that deliver real results. 😉
I’d love to see the other calculator too, Katie. It’s VERY hard to imagine it being more inappropriately contrived than this one is, but knowing what it is people *think* they are supposed to be selling helps us all correct misguided assumptions with clients and prospects.
As always, a brilliant and useful post about what NOT to do. I read it with trepidation to begin with, thinking ‘Please God don’t let him mention something that I’m currently doing to measure my SM activities’. But thankfully you haven’t and I still feel pretty confident I’m doing ok. So some Social Media Experts are getting it right … oh wait a minute, I’m not a Social Media Expert (and would never dream of calling myself that!). Like most of us out there, I’m still learning and the day I stop saying that is the day I should throw it all in.
Really looking forward to posts on what we SHOULD be doing and, like Kris, I have an Olivier Blanchard shaped space on my bookshelf just waiting to be filled.
😀
I was commenting on Dan Schawbel’s newest blog post how you shouldn’t label yourself as a “social media expert” when someone replied to mine comment linking me to the calculator. First thought was holy crap how did I miss this? Then after looking for into it, I took a sigh of relief realizing that it is completely unusable.
While it may not be the answer, I will still give them credit for trying, knowing that all of us would attack it. It is the first step in the quest for the Holy Grail of social media ROI. Whoever comes up with the solution/answer can be dubbed The Social Media Expert and should probably win a Nobel Prize.
Lets the games begin!
I gave them credit for trying too… But they could have tried a little harder. Kind of like showing up to a meeting completely unprepared: You don’t get a whole lot of points for just showing up and throwing something together that makes no sense. 😉 I’m nice that way, but aside from having good manners, BS is still BS. Know what I mean? I expect better from people as smart as these two. This was NOT their “A game.”
I just hope they aren’t planning to sell that calculator to actual clients. That would be bad.
Loved this! I just posted a comment on the blog where the ROI calculator page invites feedback. I linked to your post and invited them to respond.
There were four comments ahead of mine, three of which were glowing with praise. And the other one asked a simplistic question. No one had pointed out the emperor isn’t wearing any clothes.
“The Emperor’s New Clothes” analogy is one that I visit daily, Ted. 😀
Hi Olivier, et alia;
A not entirely undeserved drubbing of the SM ROI calculator. But in defense of the effort, I’m not sure than any particular formula for calculating ROI is going to fit ALL organizations. And not all organizations are going to benefit from Social Media, and those that do, not at all in the same ways.
The initial intent of this particular calculator was to provide a perspective based on a particular organization’s current PR and marketing spending. Thus, things like the cost/value of focus groups or existing PR is pertinent. If an organization is not already spending on these activities, then it would be best to NOT include those line items in the calculation.
Anyone doing an ROI calculation for an organization is going to need to dig into what THAT organization’s metrics should be.
While you found the section on PR to be nonsense, if your organization is engaged in a PR effort, then it is NOT unreasonable to assign values to stories based on preexisting COST for getting stories out there. True, that doesn’t measure the value of those same stories, except in terms of a pre-existing cost which has already been accepted by the organization. Ditto for the PPC costs.
What I’d really like to compile, in regards to this, is a library of the various costs that can be considered, as well as a compendium of the social capital benefits – all things worth considering for many organizations.
At any rate, while your criticism is a bit harsh, I appreciate your candor, and look forward to your own thoughts on the subject.
Ric, a bad tool is a bad tool. A tennis racket with no handle and no strings won’t work. That’s what this calculator was. ;D
While I applaud the effort, I can’t condone a deeply flawed first-draft being published as an actual solution. Sorry. That’s just ridiculous. Especially when the authors don’t seem to understand the difference between cost and value. The value of “X” is not its cost. Particularly, the impact value of “X” is not its cost.
I hear ya on the “harsh” thing. I agree: I was harsh. Because we all need to be harsh. Call it tough love. The more obnoxiously nonsensical a calculator of this type is, the harsher I will be in my analysis. (This one was particularly awful.) ;D
I’ve got a pass to the rooftop pool I’ll sell to you along with this ROI calculator for $15 bucks! Great post … trying to tie an intangible value (as of now) to a real world metric is plain silly. I’ve recently started to think of metrics that would be useful to follow (and completely unrelated to ROI) particularly in the event marketing space. I don’t come from a marketing (where I think social media fits in) background, but I bet they face a lot of validation questions when they ask for their budgets. I’m interested in what metrics could create a clearer view of what your social media is producing for you. Maybe metrics around engagement rates, or sharing rates.
Last point on ROI, you’d need a lot more data across many campaigns with lots of history to actually tie these social media metrics to real world, tangible parameters that could drive a decent ROI calculations. Have you thought about how to do this?
Is it the rooftop pool at downtown L.A.’s Standard Hotel? 😀
Your last paragraph: Absolutely, and yes. 🙂
I have an extra credit assignment to find a point in time where social media effected a business and I have to be able to say how much it effected the business (in a qualitative amount). Can anyone help me with this?
Olivier, good post. A couple questions for you and perhaps the other posters here. I was wondering to what extent you feel the “calculator” is wrong versus incomplete. The calculator obviously only captures a part of the value of social media efforts. And really, what it seems to be primarily measuring is cost shavings/cost shifts versus true ROI.
Just taking the focus groups line item as an example, replacing a series of physical focus groups with an online advisory or ambassador community could help a company attain similar or better insights at a lower cost. Imagine if this effort costs $120,000 to get input from 400 people. Good focus groups should generally have around 8 people, so to get input from 400 would require what, 50 focus groups? If a focus group of this size costs (averaging in profile development, screeners, question development, user experience lab, etc.) $5,000 per session, then the online, social media-enabled version accomplishes *roughly* the same goal of gathering insights from 400 people at a cost savings of $130,000. That feels like a fairly “real” number.
However, this is not a measure of ROI. This is a measure of cost savings based on “changing channels” from physical to online social. There are a host of other benefits that the above hypothetical advisory community would provide the company above and beyond the cost savings. To me, it then feels like there is a continuum of measurable social media business impact. On one side are relatively easy to measure items like the above cost savings example. On the opposite side of the continuum would be things like brand perception (those 400 people hopefully now view the company as a better listener and more interested/concerned with their customers), and how much word of mouth spread those 400 participants created. Not to mention the fact that the unique aspects of the social environment allow for a perpetual focus group.
So, bringing it back to the calculator, which elements do you feel qualify as real cost savings, which significant pieces are missing, and what pieces are just plain wrong?
@ David, I worked on a project that added social media elements to a “traditional” site experience. After launch, we saw about a 250% increase in site-to-retailer conversions. The site “paid for itself” in about 8 months.
Now, the trick here is that the social media pieces that we added were only one part of the overall redesign. We built a first-of-its-kind configurator/competitive comparison engine, some rockin’ creative concepts, and significant user experience enhancements as well. So it would be disingenuous to say that the social media elements alone resulted in a triple-digit conversion lift. It might be important for your assignment to note that social media is often best as part of a marketing effort.
I was looking at that same calculator just minutes before arriving.
Had the exact same reaction.
A similar example;
Cell Phone ROI calculator…
Cost of phone
Setup costs of mobile account
Number of quality calls
value of quality calls
time spent per quality call
etc. It just doesn’t work like that.
Its a process that contributes to branding, and to some degree having metrics make sense. But at the same time, not everything is measurable.
Okay, as if I didn’t think you were cool already, this post is the best thing I’ve read in ages. THANK you for having some perspective. Favorite part of the post?
Or the value of puppies?
Or the value of sock-flinging?
Seriously—I know deep in my heart there is a “social media expert” who has tried to put a value on a sock-flinging puppy. I know it.
Yeah.
Well… first, thank you! 😀
But yeah. I am just baffled by the depth of either utter bullshit or stupidity (or both) I run into on a weekly basis when it comes to this topic. And from otherwise well respected consultants, even. That’s the really scary part. How can people with business backgrounds, people who advise Fortune 500 companies, people who write best-selling business books fail so miserably when it comes to a topic so simple, so basic that even my kids get it? (And they’re not even in college yet.)
Terrifying.
While trying to work out the ROI for a compaign, I have realised that it is difficult to have “one formula” to calculate ROI for social media! I am not even sure we need one! For a start, the metrics will be different – and by trying to fit all metrics in some abtracts ones, we risk loosing some vital information. Every compaign will be different in costs and returns, as the objectives and goals will be different…
Say the goal is to increase sales by 5%…one needs to start with the existing sales figure…and compare continuously with the new compaign ones!…why would we need a static formula to do that?
I suspect it is all down to SM consultants trying to make their jobs easy and quick!
correct me if am wrong…I do by no means to be an Social Media expert…but thought this is common sense!
You’re correct: Calculating Social Media R.O.I. isn’t as cookie-cutter as some consultants would like you to believe. Every company is different, and company goals, tactics, tools, capabilities and velocity are different. I have found that focusing on the process of creating an R.O.I. methodology for each company (and each campaign and program, even) works a lot better. Using a process to create a bespoke ROI calculation methodology in this way is flexible and adaptable, while trying to use a “calculator” or macro formula is rigid and not at all adaptable.
Sometimes, NOT being a Social Media expert is actually a good thing. 😉
Wow, marvelous blog format! How long have you been blogging for? you made blogging look easy. The overall look of your website is excellent, as well as the content!
I agree that a fixed calculator is just a fun gimmick and not to be taken seriously. Each business needs to work out a bespoke set of KPIs that are important to them to measure their success. Fun piece though thanks Richard!
This website was… how do I say it? Relevant!! Finally I have found something which helped me.
Thanks!