Doug Haslam

Gischeleman: "To Create With the Mind"

By

The trouble with ROI and measurement is not that you can’t do it

Money

Flickr Photo: lalunablanca

Is it “talk about ROI” season now? I have seen several posts online lately about social media ROI, ranging from “it doesn’t exist” to “here’s how you find it.” It makes me think about my own current thinking in the space. As with many things, I fall in between the two extremes, if you can call the latter an “extreme.”

A few thoughts about the ROI question:

  • If corporate management is asking for a Return on Investment, then saying “there is no ROI” will be the end of the program.
I have seen arguments for “marketing having no real ROI” but I don’t buy it. Olivier Blanchard is more eloquent (or verbose and adamant at least) that he doesn’t buy it either, as you can read here. To claim that marketing is somehow not an investment because it is not a tangible product is silly. The real reason most social media programs do not have ROI demands put on them, is the same reason many PR, marketing, and advertising programs don’t either. The sources and results are often mysterious- because they are applied with a bird gun or they are simply not tracked. Hence we get the famous “I don’t know which half of my advertising is working” type of quotes.
The only wat to get us to do true ROI is to demand it- if you need it. 
  • A measurement program is not necessarily an ROI metric
Sometimes we just want to measure program success. That does not mean we are measuring the financial ROI. It does, however, indicate we are serious about assessing a program’s effectiveness, and making adjustments based on real data. That’s not a bad thing, but you just have to determine if it’s sufficient to determining the success of the program, and sufficient to satisfying the demands of your executive (or investor) stakeholders.
If non-ROI measurement works for you, perhaps that’s ok. Perhaps not. Are you getting what you want out of the program?
  • Social media is not magic
As I hinted at above, PR programs would just look at media clips and hope that floating the CEO’s ego would keep the agency retainers coming. Often that works, in part because the CEO wants the ego floated, in part because lots of people think PR is magic. Wave the message wand and get the front page of the business section with a glossy photo, right? Same with social media- blather on Twitter (or maybe pay for some spamming) and voila, you have 50,000 followers, which must mean something, right? Some folks are trying to change the words to make “ROI” magically work (what the heck is “Return on Influence?“).It’s not magic, so that’s why we measure what works, whether it’s figuring out what gets a response that gets people to sign up for you service, or measuring straight dollars gained from your efforts by tracking them and rubbing them against your spend (hey wait, that’s ROI).
How long will pulling unicorns out of your nether-regions satisfy the big bosses enamored of shiny? Not long. Cover your nether-regions by figuring out how to show value now before they start asking. 
  • ROI is hard for everyone, not just social media marketers
Stop feeling sorry for yourself because “ROI is hard.” When I worked at a technology research firm, we discussed creating an “ROI calculator” for certain types of enterprise technology products. What we came up against was the complexity of  true ROI, and the even deeper complexity in that all programs, all implementations, are unique.  How accurate you want to be depends on how deep you want to go. You just need to sharpen the pencil and go find the numbers that matter, down to the real expenditures and the financial outlays. Many things about social media are soft- the outcomes, the true value of services and products- but often that simply comes from not defining the goal and sticking to it. Pure measurement programs are the same way- perhaps the fact that you can be selective about what you measure and what you leave alone is unique to measurement vs ROI, but I’m not certain about that.
Stop feeling sorry for yourself. Figuring out ROI sucks for everybody, and very few people are good at it. If you figure things out even a little bit, you are ahead of 95% of your competitors (I made that number up). The same goes for non-ROI measurement programs.

Just a few thoughts on ROI from someone in the trenches. And no, I do not always see ROI figures from programs, nor am I 100% certain they are always called for (or is that just being lazy?). But it does exist and it probably should be asked for. What are your thoughts?

 

4 Responses to The trouble with ROI and measurement is not that you can’t do it

  1. Jay Baer says:

    Well said Doug. I really think the two biggest issues are people trying to measure social media ROI overall, when you need to be measuring the ROI for each piece of social media. Measure programs, not the strategy. And the other is the rampant interchange of “ROI” with “success metrics”. Not the same thing in the same way that a rectangle is not a square. ROI per se may not be necessary (or even viable) in all cases, but metrics are both necessary and viable in all cases.

  2. Lisa Thorell says:

    Oy, I wish it was just pulling unicorns out of my nether regions…But nope. That’s too easy. I find clients very tuned to specific well-published high profile expectations on ROI, eg. The Old Spice campaign whose interactive videos claimed a 107% increase in P&G Body Wash sales for the last month of the campaign. It’s clear if you get to pull out all the stops (creative and budget per Wieden Kennedy)you get a chance at ROI. But that’s a massive deep dive plunge..and most of my clients are dipping their toes only 2 inches into the water but expecting the deep dive results. It may be new media — but i am seeing old media budget limits as still applying to limit or leverage ROI in new media. By contrast – unicorns in my nether regions sounds rather pleasant.;-)

  3. Adam says:

    Great points Doug. I struggled with this as well. Coming from an SEO background I am still an old school believer in “if you can’t track it it doesn’t exist.” Still there is so much about Social Media that is not directly tied to numbers. Number of followers is not a usable metric nor is any other number that can be bought but have no true value to the client. We have found great value for our clients but it is hard work and even harder is successfully communicating that value. We work on it every day. I’m sure you struggle with this too.

  4. Doug Haslam says:

    Jay– definitely important not to confuse ROI with “success metrics”- which is why I worked hard to make that distinction.

    Lisa– the Old Spice thing is a great example– the question that tools could answer is how much of that 107% is attributable to the campaign, how much to other factors, and how much is a bit fuzzy?

    Adam – Those of us from a PR background don’t necessarily have the measurement ethos ingrained- but it has to change for that discipline as well

Leave a Reply

Your email address will not be published. Required fields are marked *


− three = 2

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>