Social Media ROI is like an Oreo Cookie!
It would be hard to find anyone who hasn’t taken apart an Oreo cookie to eat the frosting. Some people claim that the middle of an Oreo is the best while others claim that there are no calories in the frosting which means that it doesn’t really matter. In any case, one of the slides in Oliver’s presentation resonated with me and it made me think of Oreo cookies.
There are a lot of activities that people quantify and measure when looking at the ROI of an investment – but the only 2 ones that matter are the Investment Impact and the Financial Impact. The investment relates to the limited resources of people, technology and time for the activity, and the financial impact relates to increased revenues or decreased costs.
In other words, the Investment and Financial Impacts are the cookie outsides and the non-financial action is the stuff in the middle. And just like an Oreo cookie, the stuff in the middle doesn’t really matter. At least it doesn’t matter from in a return or investment sense. Web visitors, impressions, customer complaints, positive reviews, blog posts, click-throughs, emails, Twitter followers, blog comments, etc. do not translate directly into quantifiable revenues until those actions convert into incremental sales or confirmed cost reductions. The non-financial impacts are predictors of success, but they are not success in and of themselves.
When it comes down to it, the only things that matter is how much did you spend and how much did you make.
Most importantly, Olivier says to:
- Establish a baseline – so you can measure the changes from
- Create activity timelines – so you can correlate specific actions to
- Analyze sales revenue along several dimensions – in terms of Frequency, Reach and Yield or F.R.Y. (transactions per month, net new customers, $ amount per transaction)
With that introduction, I give you Olivier Blanchard’s Basics of Social Media ROI presentation from Slideshare which he originally presented at the Social Fresh Conference in August 2009. He uses images from the 1970’s British television show, UFO Series, which makes for an interesting and amusing presentation:
You can also follow Olivier on Twitter at @theBrandBuilder.
Speaking of ROI, Maddie Grant summarized 6 other blog posts on Social Media ROI in Social Media Today this week. Here are repeats of her links:
- NTEN – The Three Dimensions of Social Media ROI
- The BrandBuilder Blog by Olivier Blanchard – Defining Social Media ROI once and for all, and understanding the action-reactive-return narrative
- Adam Cohen (A Thousand Cuts) – The Basics of Social Media ROI
- Social Computing Journal – Measuring Social Media ROI: Does size matter?
- BrandSavant – What’s Wrong With Social Media Marketing Strategy
- Jacob Morgan – The Importance of a Social Media ROI Diagnostic