How to Measure the Value of Social Media?

Recently I participated in a very timely online conversation on the topic of quantifying the success of social media. I’ve been a member of the Ad-Marketing listserv for a long time, originally started by the Morino Institute. Thanks to Mitch Arnowitz for keeping the list alive.

This is a very hot topic right now, with more PR and marketing budget dollars being dedicated to social media. Social media has rapidly achieved a level long held by PR in general. It’s generally acknowledged to be a valuable commodity, but it’s difficult to measure.

The responses to Mitch’s inquiry were very interesting. Lynn Miller of Miller Strategic Marketing talked about the value of Twitter that hard to measure quantitatively:

With regard to your list of success metrics for social media – I suggest you add a qualitative category to cover “learnings.” This could be anything from insights into consumer wants, complaints, trends, etc., to competitive insights, relationships formed, etc. One might say that you cover this under “Traction in Social Networks,” but I actually think it is quite different. Many people are so fixated on followers that they regard that as “traction,” even when they’ve LEARNED nothing from those “followers” because the encounters are so superficial.

Susan Kuhn Frost suggested not focusing too much on empirical data to support social media efforts, and shared how it has led to new relationships and opportunities for her:

Hi Mitch, I personally look at social media as relationship building, learning, and opportunity seeking. I would say that as I understand it more, I change what I do to seek a better return. So I don’t burden it with too much demand for measurable success in the beginning. I value the learning process as much as I value the results it brings. That said, I am looking essentially to create and sieze new opportunities. Conversations, visits to my blog, comments on my blog, signups to my e-mail list are all indicators that I am moving in the right direction, and as I get better I expect these indicators to go up. But I have had many “successes” that don’t follow that path, but come strictly out of individual relationships. So, my “metrics” are about relationships: — richer relationships with people I know but don’t see much, but who I now work more frequently with,– new relationships that develop online and lead to in person working relationships and opportunities, — learning from (and access to) leaders in several fields which increases my value, — building relationships with people in other countries, esp. England and Australia, whom I learn from– being more able to help others because I have access to so many people and information…

Dirk Johnson of ROI Websites was having none of it. He feels that in most cases social media can’t justify the spend and as a result will fall to budget cuts.

I think that every business is going to establish their own criteria for “success” with this. Things like event promotion and event communication fall into the productivity category, and are not really in the lead generation category. Nothing wrong with that, but if someone is at an “event”, (however that is defined, online, etc), and
tweeting, then they are already on the radar screen. Maybe I am reading that one wrong.

In the end though, it really all comes down to lead generation/sales/ROI.

A $50K per year employee typically needs to generate ten to twenty times that amount of new sales to justify their seat. That is a very tall order, in a lot of situations. Can a newly hired “social networker”, usually new to the business, generate a million bucks in new sales inside Facebook and LinkedIn and Twitter?

It might happen. If not, then they are just more overhead.

You just might be hiring a genuine slacker that views the Web and social networks as entertainment. Many of these postings are aimed directly at attracting that type of person as applicants.

Despite all the Kool-aid being drunk over this subject, this could all just evaporate as a business fad as quickly as it has come on. Mainly due to follower overload, etc. At some point, there becomes too much info to follow, and so most of us begin to ignore most of it.

Again, I know it works in certain environments, but the call for real, verifiable ROI will only get louder from now on, as the costs of doing all of this start to hit the bottom line.

Mayra Ruiz-McPherson — @marketingmisfit — talks about a “sphere of influence” (SOI) as opposed to ROI:

At the recent BlogPotomac event held a few weeks ago, someone (I think one of the speakers) shared or coined the phrase “SOI” for “Sphere of Influence” vs. “ROI” for “Return of Investment.” And I think the SOI term is actually really rather far, far more accurate, more so than ROI which implies some kind of direct monetary return which is *not* what the social web is meant to do or cause, no matter HOW much marketers or sales people or CEOs and senior execs wish it would. Social networks were primarily established for folks to communicate and share information. It is us, the marketing/PR/sales peeps, who are imposing ROI-type of expecations onto a scene that actually openly rejects being sold to.

Yes, there are definite cases where participating in the social web can lead to ROI; not negating that at all. However, the primary focus should be SOI and SOI should directly and indirectly facilitate ROI over time. Just as in real life … sales people have to establish connections, develop/build/nurture relationships and at some point … the fruit of these efforts may *or may not* materialize into sales leads. Ideally we’d love for every sales person to convert every sales lead into a revenue generating account. BUT that is not always realistic … and this scenario also applies to the social web. Not sure why folks can’t translate these every day sales-related scenarios onto the social web … seems like lots of folks believe that simply by engaging on the social scene, soon they’ll see lots of $$$ trickling in in a matter of days or weeks. Not the case. Possible??? Yes …but shouldn’t be expected just like non-virtual/real life sales/biz dev scenarios.

Based on my experiences handling social media activities for clients over the last 24 months, there is no question social media contributes to sales and revenue growth. It’s not always easy to measure, and it does take time. Mark Hausman of Strategic wrote a good post last month where he talks about quantifiable ROI as the “last mile.” We’ve had clients who could show a direct correlation between social media activity and lead generation. But we’ve also had clients who experience the value of social media in harder to quantify ways.

GovDelivery uses their widely followed Twitter stream (over 1450 followers) to provide near real-time customer support. Their excellent corporate blog has also led to media opportunities for their CEO, Scott Burns, who had become a “go-to” guy on all questions Government 2.0.

TANDBERG public sector has also used its new public sector blog to highlight the company’s leadership in government video teleconferencing. The blog focuses entirely on government video, and helped land a profile piece in this month’s Washington Technology.

David Kellogg also writes an excellent thought leadership blog on enterprise search for his company Mark Logic.

For Microsoft’s State and Local business group, what began as a YouTube channel is becoming an online community. Strategic launched The Bright Side of Government to help Microsoft collect user generated videos from state and local customers. It has become such a strong brand that it is being expanded into a full online community, with a blog, open forums and multiple social distribution channels.

Enterprise deal capture can also be supported via social media. While I can’t give specifics, Strategic has helped clients through a prioritization of key deals they are pursuing, and then an intensive social media audit of the participation patterns of the prospects. We then help our clients engage the prospects in their chosen online environment.

So is quantifying the sales benefits of social media difficult? You bet! But as you travel down the social media road towards the last mile, a lot of positive things will happen.