Social Media Breakfast on ROI

by Chris Kenton on April 14, 2009

The second San Francisco Social Media breakfast was a great success, despite the competition with Web 2.0 down the street not to mention spring vacation for many people. Jonathan Knowles flew in from Toronto to join us in a discussion on Social Media Metrics, and as always he did not disappoint. Jonathan’s rare ability to bridge the gap between marketing and finance provided a lot of wit and wisdom for marketers struggling to justify an investment in social media. There were so many worthwhile takeaways, from insights into the mindset of the CFO to suggestions on how to frame marketing metrics for social media.

We’ll have video of the breakfast from MinerPro available shortly, and you can get some snippets of the discussion from the Twitter feed. We’ll be kicking off our book discussion of Jonathan’s Vulcans, Earthlings and Marketing ROI next week.

In the meantime, I’ll set the tone for the discussion by calling out one of the key insights from Jonathan’s talk. Jonathan pointed out the fact that ROI as a specific metric is a short-term measurement of efficiency. In the CFO’s mind, any time you discuss ROI, the financial assumption is that the expense and the resulting revenue occur in the same quarter. So when marketers use the term ROI in the context of social media, they’re explicitly limiting the frame of discussion to short-term revenue generation, taking off the table any longer benefits to brand equity, improvements in customer satisfaction, and long-term reduced costs of marketing.

As Jonathan pointed out, there are three domains in which CFOs measure value: Revenue, Growth and Risk (reduction). While there are some avenues to short-term revenue from social media campaigns, primarily in retail, for the vast majority of social media efforts today the real value will be seen in longer-term Growth and Risk Reduction. When, to a CFO’s ears, marketers clumsily speak about “ROI” as a catch-all phrase for poorly defined “value”, they’re missing a critical opportunity to communicate the value of social media and to set expectations for measuring success. That simply isn’t a mistake most marketers can afford in this economic climate.

Join us for the online book discussion to dig in more deeply into this topic.

Jonathan Knowles addresses the Social Media Metrics challenge.

Jonathan Knowles addresses the Social Media Metrics challenge.

An ROI story: The metrics were thiiiiiiiis big

An ROI story: The metrics were thiiiiiiiis big

Photos: Thanks Bill Johnston!

{ 1 comment… read it below or add one }

Mira February 21, 2012 at 7:41 pm

Your hoensty is like a beacon

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