Social Media Metrics

One of the biggest concerns about the growth of social media is its impact on marketing metrics. How do you measure influence? How do you measure engagement? How do you measure the ROI of a blog, or a wiki, or a forum? There are a number of facets of this discussion that are worth pulling apart and clarifying for debate.

First and foremost, the struggle over defining online performance metrics significantly transcends social media. This is a challenge that is more accurately located in the broader category of advancing Web technology. As Tom Hespos points out in a great article on "The Death of the Page View" , technologies that have no implicit connection to social media, like AJAX and Flash, are causing significant disruption to accepted Web metrics like the page view. Web publishers are already struggling over the definition of new metrics for reach and engagement because the ways in which information is published is making older metrics obsolete. Social media as a set of technology tools is simply an extension of this issue, while social media as a social communications trend--the changing ways in which influence is shaped and transmitted--is amplifying the challenge. Simply stated, we need new measures of communication flow that are rooted in the way new technology works--and we have a long way to go. But you won't skirt the issue by avoiding engagement with social media.

The lack of robust metrics makes a lot of marketers gun shy. If you can't demonstrate clear ROI, how can you justify the budget? I don't want to be flippant about this, but I think marketers need to bring a little balance to the justifiable demand for performance accountability. We do need to be accountable, and we do need to show that we've thoroughly vetted the investments we're making. But when you're in a competitive market that demands innovation, you have to get in the trenches to help innovation along, instead of just throwing up knee-jerk stop signs to every project that doesn't come with a business case tied up in a neat bow. It makes me think of a prehistoric fish in a receding inland sea saying to an amphibian "so, what's the business case for legs?"

The best approach I've seen from a marketing group that needs some space to innovate is to allocate a percentage of their budget--let's say from 2 to 10 percent--to emerging marketing programs. Boards that are spouting wisdom about innovative cultures can put their money where their mouth is by sanctioning a small percentage of the budget for programs that may not have a clear cut metric for ROI. Having a dedicated budget then puts a greater focus on how programs are selected, and how performance against business objects should be measured rather than just a slavish devotion to fitting innovative programs into an expected ROI mold.

And that brings us to another significant problem in the typical discussion over metrics. I say this so many times I think it'll wind up on my gravestone: You can be incredibly efficient at doing the wrong things. The vast majority of program metrics are internally focused--they only tell you whether or not your proceeding efficiently. They don't tell you whether you're going in the right direction. Campaign metrics? Market share? Very important. But are you winning the right customers? Are you pursuing the right markets? How much revenue are you leaving on the table--or wasting on marketing programs that won't increase your market share? What's missing is a wider frame of marketing metrics that account for your performance within a competitive set of businesses. Victor Cook is the visionary who's been hammering on this idea for 40 years, and recently published a book that provides a framework for externally focused metrics. I extensively reviewed his book online, and he's recently launched a blog to discuss marketing finance.

Finally, social media is a very thrifty way to fail. There are so many small programs leveraging cheap or even open source technology, that the "i" in ROI is very small compared to any marketing program that involves traditional media. I launched my marketing tech news blog MarketingRev at a total cost of $175 and 40 hours of my own labor, including design, programming and hosting costs for a year. The ROI was astronomical with my first speaking, and just accelerates with consulting referrals, and emerging technology partnerships for my agency. But the payoff in the way that blog keeps me informed and fully engaged in my market would be worth the investment even if I didn't make a dime in revenue.

Performance metrics are an important reality for marketers to understand and embrace--but that also means having a balanced perspective. If the only lens you have for looking at marketing programs is a simplistic formula for ROI, you'll have another important metric to face up to in the future: opportunity cost.       

Comments

[John Dawson]

Those marketeers only looking at ROI are in the minority - the question is whether they are the lesser of two evils when many don't look at all!

ROI measurement in the 2.0 channels is especially challenging for the industry as the metrics available to track usage are rarely enough to give geniune insight. That's the beauty of the experimentation fund idea. When we did some research on this at my previous employer, we found that it was especially popular with high performance businesses (see this publication from The Marketing Society - http://www.marketing-society.org.uk/downloads/awards/2007/MeasuringUp_MarketingMeasurementExcellence.pdf).

However at some point you do need to be sure that you're moving the needle. When that point comes differs from business to business.

[Chris Kenton]

Hi John--

Thanks for the comment. I'd love to see that article, but the link got cut off. Would you mind reposting? Thanks.

There are some great strides being made in metrics for one of the main components of Web 2.0 technology--RSS--but not too many marketers are aware of it. I know SimpleFeed serves up every RSS feed with a unique URL code, which allows granular tracking of subscriptions and click throughs from the feed. Companies like Sears are integrating RSS into their Web programs and tracking just like their Web campaigns. So there is a lot of awareness among developers that metrics are critical, though there's still a lot of work to be done.

You're absolutely right: you do have to focus on moving the needle. And I think smart innovation is an investment in being able to continue moving the needle.

Thanks for posting.

/chris

[Carol]

Hi Chris,
I like the idea of an innovation fund within marketing. This has been a long standing practice in many product development groups as way to foster raw innovation. A potential benefit of a fund like this is employee engagement and retention. Like most people, good marketers like to try new things in their jobs and to stay abreast of trends. In addition to setting aside specific funds, marketing groups might want to give different employees the opportunity to be involved in deploying those funds and experimenting with new media and strategies.

I think it's key for any marketing endeavor to have a goal - and it seems justifiable to me to have learning and employee engagement as goal, as well as metrics like visitor engagement, referrals, repeat visitors, etc. While these might not be hard ROI, they help us gauge if the activity we are engaging in is achieving what we hoped (we also often learn we are measuring the wrong things). One other potential benefit marketers might consider is that they will be ahead of their competitors with new media by experimenting before it really takes off. With a small investment, they have an opportunity to learn and be more effective. Although I should also point out that the trailblazers generally help everyone be more effective as some of their learning is dispersed to the rest of the market (through agencies, word of mouth, and so on). Marketers need to consider the amount of investment to make in these areas, weighed against the benefits, but "hard ROI" doesn't have to the only answer.

We just held a seminar on measuring Web 2.0 http://www.clickzevents.com/ev1/index.html
and I would be happy to share some of the information and slides from the event if it would be helpful for readers (not intended to be a plug for Unica -- the information is educational rather than promotional)

[Chris Kenton]

Hi Carol--

You expanded the innovation fund concept much more articulately than I could. So many companies are talking about innovation, and this is one area where innovation can be very cheap, and the outcome very quick. If you fail, you fail quickly and move on, but smarter. I started MarketingRev with an idea and less than $200 in investment. At that level, who cares about a break even point?

I think the key--like it is in so many things--is to just take a step forward and try something. Don't let analysis and grand speculative planning take the place of real exploration.

Thanks for the slides, I'll take a look.

/chris

[john kottcamp]

I fully agree with the idea of an innovation fund for marketing. In fact I’d take it one step further and throw out the idea of creating innovation centers to explore new methodologies, channels. In the technology sector this is becoming common practice.
At my company, Ascentium, our technology group has partnered together with Microsoft and several others to create and fund an innovation center in Portland, OR, at Portland State University. Its stated purpose is to “foster the use of innovative software solutions in our local economies. Students, professional developers, architects, IT professionals, and researchers can learn about the latest software solutions created by developers throughout the Northwest.” I see no reason why different organizations, agencies, leading companies and organizations like MarketingSherpa or the AMA, shouldn’t consider making small joint investments to find new marketing solutions the way technologists can come together to find new software solutions.
If anyone is interested in the idea, contact me and we can see if we can make it fly.

[Chris Kenton]

John--

That's a fantastic idea, and exactly the kind of venture I'd be interested in helping get off the ground--and a know a great many people who would be enthusiastic about participating. Thanks for an inspiring idea, I'll drop you an email.

/chris

[Dimano Marketing]

Great article and comments. We have been posting about the importance of marketing metrics and recommended several additional resources that maybe helpful. You cna check them out at:

http://dimanomarketing.wordpress.com/tag/marketing-metrics/

Thanks again for the insights. -The Dimano Marketing Team

[Marc Meyer]

Chris, A year later this still resonates! Although does ROI still matter when some SM campaigns cost nest to nothing? The investment I suppose could be construed as sweat equity...

Marc

[Robert Lonn]

Impressive article. Thank you very much for this information