Tag Archives: six pixels of separation

Why are we so afraid to say “I don’t know” the ROI of social media?

Olivier Blanchard calls a spade a spade.  And he calls ROI, ROI.  I like that.  He takes to task those social media strategists who try to get around the question of measuring social media ROI with nebulous assertions about how it’s now all about “return on involvement,” or ROI is for the nerds and the number crunchers.  Many of the assertions made by so-called social media experts are so fuzzy around the edges, or just so intellectually sloppy, it’s enough to raise the “BS” antennae of even the most trusting of listeners.

Click-through rates, positive mentions, blog posts, re-tweets, celebratory customer reviews, etc. are all very nice things and important to measure, but they are not return on investment.  Return on investment is money — nothing more, nothing less. It’s the cash that comes into your business as a result of any effort above the dollars invested in that effort, as determined by material costs, man hours, overhead and other charges.  It amazes me that anyone writing, speaking or advising clients about social media for business needs to be reminded of that.

I don’t know why so many thought leaders in social media, when asked, what was the ROI, are so afraid to say, “I don’t know”?  It’s not a crime that we don’t know.  It doesn’t mean that we won’t get better at knowing.  And it doesn’t mean we have no indication of the contribution social media is making to our businesses or that we should stop doing it.  But instead they hem and haw, go off on some tangent, or otherwise attempt to circumnavigate the question.

Recently, Chris Penn asked Mitch Joel this question when he interviewed him on Marketing Over Coffee.  Now, I love Mitch.  He’s a great guy, a great thinker, blogger and speaker, produces a terrific podcast, Six Pixels of Separation, and has just published a book of the same name.  He is one of our greatest standard bearers for social media.  But when asked this question, he equivocated for 5 minutes — okay maybe I exaggerate — but it felt that long to me, and as I listened I couldn’t help thinking, “Mitch!  Just say you don’t know!”  He finally did.

Picture 3

Okay, so we know what social media ROI is, and what it isn’t, and we know we need to get better at measuring it.  To this end, Olivier Blanchard has uploaded to Slideshare a very good presentation on the basics of social media ROI called Social Media is Not Free.  It covers some fundamental thinking and data one needs to track in order to measure social media ROI.  However, I think we need to go further than what Olivier provides here, because the metrics he takes into account are virtually all within the digital space and don’t consider the  competitive environment.

Without factoring in other elements of the marketing mix, both one’s own and competitors’, it’s difficult to determine the specific role of social media in driving business success.  I can see Olivier’s design would work, perhaps, for a company whose sales, marketing and communications take place mainly on the web.  But for many other businesses, we won’t be able to get to a true measure of social media  ROI without taking into account other factors like advertising, media weights, distribution, in-store activities, promotions, events, etc. — both for our own brand and our competitors’ brands.

That’s a much more complex task than the one Olivier suggests.  (In all fairness, he does say these are the basics.)  I’m not a statistician, but it probably requires statistical and other analytical techniques that can help determine the different roles and contribution to sales that each element in the marketing mix plays.  This isn’t a new challenge.  It has always been hard to determine the precise ROI of each component of the marketing effort — even before the internet and web 2.0.

So why are we so afraid to say “I don’t know” when it comes to the ROI of social media?

Advertisements

7 Comments

Filed under Uncategorized

Should Facebook and Myspace advertise?

I was intrigued by this post today in TechCrunch suggesting that Google may consider increasing its presence in mainstream media and traditional advertising.  (Honestly, I didn’t know that Google ran any traditional advertising but there you go.)

I’ve also toyed with the thought if mainstream advertising would also make sense for the big social community brands like Facebook, Myspace, Bebo and others.  It first popped into my mind as a little joke to myself, prompted by a podcast episode a few months back by Mitch Joel (Six Pixels of Separation), in which he assessed the differences between Facebook, Myspace and Linkedin as he saw them.  I realize that for some, the notion of online communities running conventional ads may sound like blasphemy.  But is it?

For those of us who have already gotten to know these different communities, their positions within the social media universe are relatively clear.  (And I do mean relatively — as in somewhat.)  But as social media communities move out of early adaption into the mainstream, and the number of offerings increase, it will become more and more difficult to tell them apart.   Especially for the less leading-edge segments of the population who aren’t so comfortable with the space yet, or still too intimidated to take the plunge and join an online social network.

For them, an engaging message from a Facebook or MySpace, delivered in media channels and formats they are familiar with and understand, might be just the nudge they need finally to log on and find the social community that’s right for them.  And might be just what the communities need to accelerate their expansion and build loyal user bases.

Pretty radical, huh?

What do you think?  Should social media communities advertise?

Leave a comment

Filed under Uncategorized

What’s wrong with the social media “expert”?

The social media expert -- still learning?

The social media expert -- still learning.

I first became aware of this debate on an episode of C.C. Chapman’s podcast Managing the Gray.  C.C. expressed his reservation about being called a social media “expert.”  I can’t remember all the details, but I believe one of the points C.C. made was that the field of social media was so new, nobody could lay claim to the title of expert.

Shel Holtz subsequently chimed in with a different opinion.  He asked why anyone would want to hire you if you weren’t an expert?  The title didn’t necessarily mean that you knew everything about a particular topic, merely that you had acquired a good deal of knowledge to the extent that others could benefit from your “expertise.”  Through continued study, thought and action you deepened your knowledge and experience further and in so doing advanced the discipline.  On that basis, Shel concluded, C.C. absolutely deserved to call himself a social media expert and should wear that badge proudly.

Despite Shel’s logical argument, there was still something about that word that made C.C. feel uncomfortable.  Recently, another podcaster, I think it was Mitch Joel (Six Pixels of Separation) or Heidi Miller (Diary of a Shameless Self-Promoter) — sorry guys, I honestly can’t remember which one of you it was — also expressed reluctance to use the term to describe bloggers and podcasters who advise and comment on social media, saying that generally we don’t like to call ourselves that.

But why not?  Is this false modesty?  Or is there something more to it?  I’m not sure, but I gave it some thought and came up with a few reasons why some of us might still shirk at being called social media experts.

  • Social media is indeed new. There isn’t a whole lot of best (or worst) practice upon which we can base our opinions and recommendations.  What we normally think of as “expert opinion” derives from a depth and breadth of experience  on a subject that in the case of social media simply isn’t there yet.
  • Related to this is the ROI question. If we’re talking about social media in the marketing and communications context, a basic component of expertise will be defined by clients as the ability to advise them on what kind of social media initiatives will bring the best return on investment.  The parameters of social media ROI and tools for measuring have yet to be adequately defined.  Until they are, we will lack a key pillar upon which we can claim expertise.
  • The landscape changes so fast. Of course, all fields of knowledge continually develop and change, but that doesn’t stop them from having their experts.  Nevertheless, I think it’s safe to say that there are few things that evolve as quickly, as dramatically, and within such short time frames, as social media.  It’s hard just to keep up and understand the implications of these changes, much less build a foundation of knowledge and experience that one would traditionally need in order to be considered an expert.
  • You can’t be an expert in something as broad and complex as social media. In a previous life, I studied musicology.  A musicologist might be an expert on renaissance music, or ethnic music, or jazz, but he or she can’t be an expert on all aspects of music.  Social media comprises everything from communities, to corporate blogs, to consumer rating sites — and a whole lot more.  Perhaps there’s just too much to social media to say you’re an expert on the entire spectrum of it.
  • When the wisdom is in the crowd, who’s an expert? The phenomenon of the wiki and the power of the community is based on the notion that true understanding comes by listening to a range of opinions, interpretations and experiences from different individuals, rather than through the filter of expert opinion .  The wisdom of the crowd is at the heart of what makes so much of social media so potent.  What is the role of the expert in an online, interconnected world where we can learn so much that is meaningful from the experiences of many different people in situations like ours rather than from traditional experts?

What’s your take on this?  Are you comfortable being called a social media expert?  Whom do you consider to be today’s true social media experts?

1 Comment

Filed under Uncategorized

Heeding the call: Mitch Joel’s “best practice in social media” project

Last week, Mitch Joel, of Six Pixels of Separation fame, called on members of the social media blogging community to write a post about one social media best practice they especially hold in high esteem.  Mitch isn’t quite sure yet what he will do with these contributions, but the plan is eventually to edit and bring this collective wisdom together in some form on the web for the benefit of all.  If you would also like to make your voice heard, or just want further information, high tail it over to Mitch’s excellent blog at http://www.twistimage.com/blog/ for details.

One best practice I became aware of was through an interview Mitch in fact recorded a few months ago for his Six Pixels podcast with Brett Hurt, CEO and Founder of Bazaarvoice.  Bazaarvoice designs and manages product rating and review tools for e-commerce marketers and retailers.  Analysis conducted by Bazaarvoice, as well as by Forrester Research, attest to the positive effect on sales when companies enable consumers to review and talk honestly — and unedited — about their products online, even if some of those reviews aren’t positive.  While Bazaarvoice’s research relates especially to retail e-commerce websites, I learned in a couple of email exchanges and calls with the company that the same principles hold true for manufacturer websites.

Here are some of the key things Bazaarvoice has learned that point to the beneficial effect of ratings and review on sales:

  • Product reviews boost conversion rates up to 90%.
  • Consumers actually prefer to share positive comments rather than negative ones.  (I find this especially interesting, as it flies in the face of the standard maxim that an unsatisfied customer will tell 10 people about his or her bad experience while a happy customer who will only tell one person.)
  • Those who review tend to be brand enthusiasts.  Which is probably why, according to Forrester, 80% of reviews tend to be positive (as reported in Groundswell, Harvard Business Press, 2008).
  • But negative reviews also reflect positively on the marketer, as they build credibility and show the company is confident in its product.

I think an additional take on this is that ratings and reviews are in tune with the importance that online consumers place on honesty, transparency and dialogue, especially from brands and companies.  People are going to talk about a company’s products somewhere on the web anyway, so why not encourage that talk to happen where the company can hear it and even participate in the conversation.  Negative points of view, of course, also provide opportunities for directly engaging with dissatisfied consumers, identifying genuine product issues, and addressing them.

So for my money, enabling ratings and reviews of products right on the company website is definitely a social media best practice.

Leave a comment

Filed under Uncategorized