Expert 1, whose title is "Social Media Strategist" at a computer and peripheral manufacturer, said (with words excerpted and edited to preserve anonymity):
"... on the public relations side, we use share of voice. We're able to show how our social media efforts affect that. Fortunately a lot of social media has really good search engine optimization results, so we've had a lot of good success there as well with specific keywords and topics.
Web 2.0 tools are pretty cheap. So one of the things I try to quantify is, 'How much money are we saving doing something in a new way versus doing it the traditional way?' We're able to cut out a fair amount of agency expenses. Getting a handheld camera, shooting a video, and posting it to a blog can have a lot more reach than hiring an agency and spending hundreds of thousands of dollars to produce a five-minute clip.
all some executives care about is hard-line sales. And if that's what you need to know - how does a customer making a comment on a blog drive more sales- that executive is probably is not ready to have the conversation yet about social media."
Translation: I don't really know, but I have quite a few Web metrics. Besides, if you have to ask, you obviously don't get it. Anyway, I'm saving the company money -- this last comment being made likely before taking their own salary and benefits into account.
Expert #2, whose title is "Manager, Web & Social Media Marketing" at another of the better-known high tech companies, said:
"Social media is a type of word-of-mouth marketing. So the best way to measure is to look at share of voice online. That's one of the biggest measurements that we're looking at.
For example, we did a push for a tournament for an online game that we created, and we got more than 35 press and blog hits about it. The amount that we would've had to pay for banner ads or email campaigns to get that same coverage of the promotion would've been high. That's where you can really see the cost benefits and the ROI."
Hmmm... sounds like the old PR measurement strategy of quantifying the value of the exposure you received as if it were paid media. Unfortunately, unless you actually reduced your media budget by at least some substantial portion of this amount in favor of relying on the social media buzz, then you saved nothing and gained nothing truly incremental. ROI is likely negative.
Expert #3, "Social Media Strategist" at another tech firm, answered:
"It's tough. How do you assign a value to a conversation? As an industry, we're working on it. At [our firm], it's even more difficult because we're an ingredient brand and we don't sell directly to the consumer. We're trying to assign value to different actions that happen in the marketplace or in the social media landscape, such as posting a blog comment or joining a community."
Translation: It's difficult, and we don't know yet.
Thank you, #3, for being honest and not trying to "spin" social media as something that's too subtle or complex for us financially oriented types to grasp. We grasp it, but we're looking for evidence of impact on value creation. Not just the number of blog post responses, or the share-of-voice in the online world, but actual correlations to incremental customer acquisition, retention, and purchase behavior. Show me the model of what you think will happen, how you'll try to measure it, and what the implications would be if your assumptions were right. Then show me that you've methodically assessed the risks of being wrong (even if they are negligible).
Social media has attributes that are truly unique in the evolution of marketing. It has revolutionary potential. And it needs lots more development to mature. But we marketers don't do ourselves any favors by trying to disconnect it from financial value just because it's hard to make the links. Maybe we should take a page from how our companies decide to invest in R&D -- with clarity of purpose, explicit assumptions, and rigorous experimentation in escalating risk scenarios. In the end, that will accelerate corporate adoption of social media much faster. So rather than trying to spin the tangential metrics, help those of us grounded in the P&L to "get it." Remember, if we don't "get it," neither will you -- budget, that is.