TagROI

In Social Media, ROI = Return on Interaction + Return on Influence

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How to measure the success of Social Media has been a huge problem in this industry for quite a while. There is a consensus that the number of fans/likes on Facebook or of followers on Twitter is too weak an indicator, but the alternative metrics are still rare: No golden standard has emerged yet.

This presentation by 22squared on Return on Investment (ROI) in Social Media is the best I’ve seen in a long time. One of the few really good ones, really, as it backs up the main claims with data. Since you read this blog, the core finding won’t really be a surprise to you: Social Media engages customers and stakeholders, leads to interactions and eventually even to increased sales. (The latter part being the least important here.) It’s certainly good to have a decent study to back this up.

The key idea is to factor in non-financial benefits of Social Media engagement, too: Return on Investment = Return on interaction + Return on influence.

(via WeAreSocial)

Social Media Trends 2010: ROI, what else?

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ReadWriteWeb (RWW) titled “Experts Predict 2010 the Year for Social Media ROI“.

My gut reaction, as shared on Twitter?

We definitively need more solid figures, but you can’t measure it all. It’s about culture change in companies. #socialmedia #ROI

RWW was referring to this presentation by Dr. Taly Weiss, editor of the TrendsSpotting blog:

So besides my initial thoughts (more solid measurement of ROI, while making sure not to lose sight of the culture change aspect), there’s a lot more in this nicely compiled presentation of smart tweets. Just a few to spark your imagination: Your company will have a social media policy (@armano). A new cadre of bonafide thought leaders emerges, with almost 100% turnover from five years ago (@peterkim). By the end of the year we’ll have a new interface for status updates that looks nothing like a microblog (@johnbattelle). Real-time reviews will scare the pants off many a brand & foster a new ‘radical-beta’ mindset. “Tracking & alerting” become the new searching. Business finally admit that social media ain’t some fad for kids and B-list movie stars (all three by @mzkagan).

That’s just a few I found particularly convincing. I recommend you dig into the slides for a bit. There’s some good, juicy stuff in there.

Vaynerchuk on Social Media ROI

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Gary Vaynerchuk strikes with another awesome rant: “You Down With ROI?… Yeah You Know Me“. Are social media in trouble because of the U.S. financial crisis? Nope, it’s magazines, radio and TV who are in trouble, say Vaynerchuk. And guess who agrees: Yours truly.

Because social media have a number of clear advantages over traditional media when it comes to advertising. Says Vaynerchuk: “ROI. I am talking about Return on the Investment of your advertising dollar. Traditional media advertising is incredibly expensive and doesn’t provide nearly the rate of return you can derive from intelligent web-based marketing campaigns in 2008 and beyond.”

Not only are social media much cheaper both to produce and to advertise on, they also have more value – in their respective niches.