Anyone who has modeled ROI or IRR knows that inputs can be tweaked to get to the desired
percentage or return. That is why falling in love with a deal or program is so dangerous - you can always find a way to get to the return which justifies doing it.
That said, ROI is a necessary part of any business. I share the philosophy that if you can't
measure it, you can't manage it. Or sell it to your boss, for that matter.
A key in digital media is to understand the value drivers. The key to understanding the value drivers is to understand the partner's underlying business and business objectives. Understanding of the drivers and objectives, matched with digital channel skills, will enable the creation of a useful ROI model, based on direct or correlated data. Cursory understanding or lip service, absent an old school push campaign or click to action, will probably beget a BS ROI measurement. That is why
New Markeitng Labs' most successful client relationships are partnerships, and include inputs from executives across business lines on both sides.
It helps to follow a few simple steps with the partner:
- Meet with all stakeholders (PR, marketing-communications, IT, sales, branding, C-suite) to make sure you get the skinny on the business, the digital channel objectives, the internal politics, who controls the budget at hand and who is the digital channel's champion.
- From this hodge podge of (often conflicting) interest groups, extrapolate what success really means to the partner, and work hard to understand the partner's true objectives in on and off line marketing.
- Develop a campaign around these objectives, including a long discussion (up front) on what metrics will be tracked for success, what they will mean, and how they will be reported.
- Build a business case - up front - on these metrics which justifies, or not, the investment.
This is 2010. Enterprises are realizing that convergence is here, externally across platforms and internally across business units. The digital channel is more than banners or social, and it impacts all parts of a business. Digital is not a separate piece of the marketing pie, it is one of the ingredients. The proportion of spend dedicated to digital is going up, and so are the eyeballs on the projects. Without metrics, a partner will ultimately fail to achieve much, and the budget will disappear.
I was at a reception last week where someone told me about a social media campaign he had just run. He said he had gained x thousand Facebook followers. Then he looked at me and asked me if that was good. I had no idea. And, he didn't either. Make sure the metrics are relevant.
And, what if the data being measured shows a poor ROI? Give it ample time, then change the metric or the program. Fast. It doesn't take months to turn the digital boat around, it takes days. If it can't be assessed with any certainty, figure out why and fix it. If the answer continues not to make sense, change the team.
A recent
Babson study reported that 84% of worldwide professionals using social media tools don't measure ROI. This will change in 2010. Digital budgets are growing, and so is knowledge and accountability. I can't measure it, but I know it's true.
What are your thoughts on measuring ROI in social media?
Photo by:
Darrren Hester