Making sense of social-media ROI with Olivier Blanchard
Olivier Blanchard is perhaps the most sought-after expert for those looking to connect the dots between social media and return-on-investment. Not only are we lucky enough to have him on our SmartBrief on Social Media Advisory Board, Olivier is sending off the Buzz 2010 Summer Series with a serious exclamation point. Before we introduce him to the association and nonprofit world here in D.C. on Wednesday, we wanted to throw some questions at him for the greater good.
The chatter around ROI seems to be as loud as ever. What would you attribute this to? Are we at a pivotal moment for business proving value for social media activities?
The chatter around social-media ROI is as strong as ever for two reasons: The first is simply because ROI [points to] one of the most important questions an organization can ask before green-lighting a social-media program: I could spend this budget somewhere else — Why should I spend it on social media? Before any other questions can be asked, you have to start with “why.”
The second is that most social-media “experts” seem incapable of a) being able to define ROI … and b) plug social media into a [profit-and-loss statement] and actual business objectives. Most [social-media marketers], having no true management background, they simply don’t understand how to tie social-media measurement and performance to business measurement and performance. This lack of business-management experience is a major problem in a field where everyone seems to have become an “expert” overnight.
As long as these so called “experts” fail to answer the ROI question, the chatter will continue. Ironically, the question can be answered in about three minutes. All it takes is someone on the social-media side of the table who understands how to plug new communications into a business from the C-suite’s perspective.
Have you noticed a recurring point where businesses and organizations decide to get serious about applying ROI to social activities? Is it based on experience, resources allocated or both?
Every organization is different. Some want to establish upfront measurement practices that include ROI from the very start. These are organizations with a specific focus or clear goals. ROI is based on accomplishing those goals. The program won’t get the go-ahead until every “t” has been crossed.
Others don’t get around to asking about ROI until 6 to 18 months after a program has begun and budgets need to be reviewed. Trust me, when 10% of your group’s budget is being cut, you start asking hard questions. Social-media programs not clearly in support of specific business objectives had better come up with a good answer when the budget hatchet starts to come down.
Typically, companies that start by identifying ROI before a social-media budget is assigned, people [are] recruited and the project is even outlined, fare better than their counterparts.
How can those who are in the trenches, but not selling product or services themselves, best justify their social efforts/hours to their bosses and peers?
By aligning their activities and objectives with key business objectives. The fastest way to ensure that your budget is renewed or validated is to show that you play a part in making the P&L positive.
Perhaps your group saves the organization money by using social media. Customer service is an example. Media buying, reach, could show some interesting cost reductions, [with social media] increasing reach while reducing relative Cost Per Impression. Perhaps your group generates not sales but leads by using [social-media] channels in insightful ways. There are dozens upon dozens of ways to ensure that your program can be shown to contribute to either reducing costs or generating revenue. What you don’t want to be is a “cost center” alone, or worse yet, the project team that can’t articulate its value to the organization. Which happens.
At Wednesday’s Buzz 2010 event here D.C., Olivier will be speaking with an association and nonprofit audience — taking a closer look at how organizations that are looking to provide customer (or member) value via social media build satisfaction into the ROI equation. Join us in person or follow the event with #buzz2010.
Image credit, Olivier Blanchard
Posted by Tweets that mention SmartBlog On Social Media » Making sense of social-media ROI with Olivier Blanchard -- Topsy.com on August 17th, 2010 at 5:05 am
[...] This post was mentioned on Twitter by Liz Strauss, Liz Strauss, SmartBrief on SocMed, Maddie Grant, Maddie Grant and others. Maddie Grant said: RT @sbosm: Making sense of #social-media #ROI with Olivier Blanchard (@thebrandbuilder) http://ow.ly/2qE5f [...]
Posted by Jon Aston on August 17th, 2010 at 5:29 am
I've heard *rumors* that Olivier has an "ROI" tattoo. I can't share the details in a public forum.
Seriously, though, the guy is an inspiration.
Eventually, people will stop buying social media snake oil. When they do, where will that leave all the "gurus"? I don't know why they don't all just pay some attention to Olivier, learn a little something, and become better consultants.
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Posted by Dave Saunders on August 17th, 2010 at 7:20 am
Kind of curious if Oliver carrier around a magical sword to anoint "experts" with his holy authority?
ROI is an essential element for any proper marketing campaign as long as any discrete social media interaction is not treated as a "campaign." That would be as foolish as asking a sales person to report the ROI of their lunch hour. Again ROI is essential, but Jedi skills with a spreadsheet make one no more qualified to be a "social media expert" than someone who actually gets results because on an ability to be social and move crowds.
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Posted by robbirgfeld on August 17th, 2010 at 8:36 am
Thanks Dave. I think you are right that spreadsheet skills make no one a social media expert. In fact, I think what Olivier does an excellent job at is providing practitioners with tools to justify and present their ability to "move crowds" so that it resonates with those who sign their checks. In a perfect world, we'd have social superstars engaging and managing community effectively– who also have the tools to show that their efforts do, in fact, impact the bottom line. Come and join us tomorrow, as Olivier's presentation is one that is not to be missed.
Posted by Wendy H on August 17th, 2010 at 11:58 am
Interesting point-of-view. We have actually started calculating ROI by equating the 'value' of our social media reach to the 'value' of a standard media buy. Traditional companies have been calculating ROI on advertising spends based on impressions delivered, so why can't we do that for social media as well? We have been able to show some of our clients the amount of money they would have to spend in paid search, banner advertising, etc. in order to get the same level of impressions or reach we get with social media. Definitely an interesting exercise!
Posted by @techguerilla on August 17th, 2010 at 1:21 pm
Wendy, while I appreciate that you're attempting to display "value", and estimate potential savings that's not ROI. There's not enough room here to get into a long drawn out discussion about determining impression value (your comment implies that one impression has the same value as another…it doesn't), banner advertising (which is a long topic unto itself), etc.
If your activity is one in which you cannot easily track a direct path to sales so as to show a true ROI you need to focus on finding ways of drawing correlations to your activities so that you can at least demonstrate an estimated value based on reasonable changes in company revenue during the timeframes of your activities after excluding as many other influencing factors as possible.
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Posted by @addoway on August 17th, 2010 at 2:34 pm
Agreed – just make sure you can accurately track your efforts on the social front during each campaign to ensure you can correlate them back to changes in your revenue. Even if they are only estimates, at least you have done the due diligence to monitor your work.
Posted by Wendy H on August 17th, 2010 at 4:34 pm
@techguerilla I think you're misinterpreting what my comment was about. In order to determine ROI, you must first find a monetary value to what you're doing in marketing. Then you can take your revenue (or whatever $$ conversion you have) and divide that by your marketing cost (aka value). Since social media doesn't technically 'cost' anything (and again…I'm simplifying this for the sake of blog commenting) you have to attribute a value to it somehow.
Posted by @techguerilla on August 17th, 2010 at 5:21 pm
Everything has a cost. A very real, definable, cost. http://www.techguerilla.com/social-media-isnt-fre… Tracking costs is easy, tracking the returns are hard.
From your comment:
"We have actually started calculating ROI by equating the 'value' of our social media reach to the 'value' of a standard media buy" – There is no way to equate those two numbers accurately without having already determined the ROI of each, so using them to try and calculate an ROI isn't possible. And since that's the foundation of your follow-on equation…
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Posted by Companies still don’t get social media ROI, but do it anyway « Mario Sundar on August 17th, 2010 at 10:47 pm
[...] And, looks like the scariest part is that most companies aren’t even getting to the ROI part until months after instituting a social media program: Others don’t get around to asking about ROI until 6 to 18 months after a program has begun and budgets need to be reviewed. Trust me, when 10% of your group’s budget is being cut, you start asking hard questions. Social-media programs not clearly in support of specific business objectives had better come up with a good answer when the budget hatchet starts to come down. (via Olivier’s interview on Smartblog on Social Media) [...]
Posted by Christina Royster on August 18th, 2010 at 8:01 am
I work for Vision Multimedia Technologies, LLC and our social media solution, SocialToaster, provides each of our clients with the ability to measure ROI – no guess work. SocialToaster allows supporters to automatically drive traffic to your website via their social network accounts while providing advanced real-time marketing analytics. Our social analytics feature full end-to-end tracking from link promotion through to lead-capture and revenue generation. I encourage you to go to SocialToaster.com for more info.
Posted by Katie Kail on August 18th, 2010 at 11:01 am
Social Buying platform providers like eWinWin give businesses complete post-deal metrics so they can create an ROI on their group deal. These metrics answers such questions as: How many people saw my group deal? How many purchased? How many shared my deal?
Posted by ecairn on August 19th, 2010 at 11:42 am
Yes it's a big big debate. One key aspect is to measure with common sense. I see brands accumulating followers/fans and putting a number value on each of them. That's really questionable in my mind. First of all and it was well said by Augie Ray: “A mass of followers that ‘like’ the brand but never return to the fan page is far less valuable than a handful of followers who frequently share brand updates with friends.”
Social media measure are in the realm of engagement and attention which are notions that the industry is trying to understand so common sense should be used a lot when putting out measures of success and $ value.
Laurent
Posted by Recommended deck Olivier Blanchard’s BUZZ 2010 « Fredzimny's CCCCC's on August 22nd, 2010 at 12:28 am
[...] Making sense of social-media ROI with Olivier Blanchard (smartblogs.com) [...]
Posted by How do you define social-media ROI? « FCEdge Powerful Marketing Communications on October 5th, 2010 at 5:07 am
[...] How do you define social-media ROI? Most so-called experts in social-media marketing struggle to come up with a convincing definition of return on investment or even relate their social-media campaigns to tangible business objectives, says Olivier Blanchard. It’s vital that social-media professionals cut through the chatter and come up with quantifiable metrics for grading their campaigns’ success, Blanchard argues. “This lack of business-management experience is a major problem in a field where everyone seems to have become an ‘expert’ overnight,” he complains. SmartBrief/SmartBlog on Social Media [...]
Posted by Isn’t Facebook and Twitter Enough? « Measure Your Way to Success Online on October 13th, 2010 at 6:38 am
[...] enough. ROI expert Olivier Blanchard suggests that many organizations make the mistake of studying social media ROI (return on investment) up to 6 to 18 months after a online activity has begun. Businesses that [...]
Posted by Your Numbers Have Words « Measure Your Way to Success Online on November 2nd, 2010 at 11:14 am
[...] boss that your social media efforts are worth the trouble. According to social media ROI expert, Olivier Blanchard, make sure your activities correlate with your corporate objectives to ensure your budget is [...]
Posted by MeasurePR: The BrandBuilder Edition | Waxing UnLyrical on November 3rd, 2010 at 3:02 am
[...] couple of months ago, Olivier was quoted in SmartBrief on ROI as saying: “There are dozens upon dozens of ways to ensure that your program can be shown to [...]
Posted by Michael Stewart on February 7th, 2011 at 12:07 pm
Olivier Blanchard has long been one of the few experienced businessmen in the Social Media space. What is crucial to understand, and the point he makes very well in this post, is that professional business acumen in significant real world businesses is the glue that holds true Social Media success together. As is far too often the case, Social Media experts claim that ROI cannot be satisfactorily quantified, but at the same time they have never been responsible for a substantially profitable business, have no understanding of Return on Investment in normal business financials and are essentially ambassadors without portfolio. There are countless ways to navigate through Social Media ROI, with empirically based tools, techniques and experience, but before that task is begun it is first crucial to ensure that you have C-Level executives on the Social Media side of the table. Two apples and an orange in a basket do not make a professional Fruit Basket worthy of your business and customers, and a Twitter page does not make a Social Media expert. I have always respected Mr. Blanchard's opinion, and have often sympathized with his frustrations stemming from the many unqualified individuals who make Social Media their vocation, and I hope he continues to set the record straight.
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