Hi Amy,

This was very insightful information, especially due to the fact that I am a novice tying to find my social media way. I appreciate the concepts and how you broke everything down - I still am struggling with the best methods to employ to have social media assist in generating revenue. Please forgive my ignorance, but I am a "Rookie" and just searching for the answers. Thank you for your insightful tips. I do appreciate the spirit of helping others within social media.

My Best,
@LouImbriano

Thanks for contributing. We welcome healthy discussion & feedback. The formula presented wasn’t suggested to replace Return on Investment. Social media is often very much of a brand play, especially in the beginning. If a brand doesn’t yet understand how their product/message naturally fits into the space they likely won’t be able to monetize up front. Return on Influence is an indicator as to whether efforts are making progress and you’re moving in the right direction. Sales, data acquisition and decrease in spend within other budget line items (research, customer service, etc) all need to be evaluated against, or in relation to, Return on Influence trending.

To better understand the right-hand side of the equation you may want to become more familiar with the Spark toolset as there are algorithms involved that I didn’t get into in the video. At the end of the day, we’re communicating with customers and building relationships in a social environment. By nature, both are counterintuitive to black and white measurement. However, we’ve found this concept works for us.

Olivier, thank you for taking the time to write that. I was more supporting your stance that Amy should answer your questions and explain her theories a little more. Thanks again though.

Here you go, Jake:

a) Twitter followers, Facebook fans & friends and YouTube subscribers fall into the same category. They should be in the same column. (The "reach" column, which is neither hot nor cold. It's a hard metric.)

b) Assuming that Volume and Engagement are relevant categories/columns, Frequency and Reach would apply to both.

Frequency is a measure of how often something happens. (An activity, a transaction, etc.) How often you engage = frequency of engagement/interaction.

Reach is a measure of how many people you can touch. To use Amber's own terminology, reach is the number of people who live in your ecosystem. A subset of reach is how many people within that ecosystem you actually touched or engaged with for a particular campaign. Once you realize that, you start to see how the concept of a volume column is a bit shaky: You would have to include "reach" as an element of the "volume" column even though they are basically two words describing the same thing.

But I digress.

Based on this model, I would expect frequency of interactions to show up in the engagement column: How often do you engage?

Likewise, Reach would manifest itself in the engagement column in terms of how many people were touched/reached through... engagement.


c) I think Amy meant "transactions," but I don't know. "actual activity and action" probably needs to be more clearly defined. This is her method. You would have to ask her what she means.

d) The size of an ecosystem is the definition of reach. It can't appear twice as separate elements in the same equation. ;)

e) Before we dive deeper into this, the equation needs more work, starting with the fundamental flaws I already outlined.

f) (somehow listed as a second d) If the equation is supposed to create an influence index, then it doesn't need a unit of measure. Just call it a Social Influence Index (SII) and you'll be fine. Whatever number the equation spits out is your "score". Fair enough. There is nothing scientific about it, but you can probably get away with it.

But if you are going to call it "return on X," you need a unit of measure. In real Return on investment, you distill the investment in time, human capital and other resources to $$$. The "return" on that investment therefore is calculated in $$$ as well. Money is the common unit of measure. Money is the currency. The ROI equation gives you a ratio of money invested to money earned. The same rules apply here: If this is to be a "return on influence," what unit of measure is used to calculate that ratio of return?

Without a clear unit of measure, you cannot calculate "return" on something. Basic 101 stuff.

g) (listed as e) is self-explanatory.

I hope that answers your questions. ;)

Great questions Olivier. I would also love to hear the answers. Social media measurement is fun to play with because there isn't a concrete methodology accepted by everybody, but certain basics have to be present at this point.

I recently spoke with a client that is all about measurement. They love numbers and knowing whats going on. The problem they run into is social media measurement doesn't provide them with an apples to apples comparison to their other platform's measurements. Any thoughts?

Nice work Amy!

I gather your ROI formula is an area of interest and passion for me as well. I have just posted my view on the business world of sport titled 'Business model of sport v2.0 – a refocus on controlled, bought and earned media for sports participants, consumers and fans.' on my sports industry blog http://sportssymposia.com

Only recently launched it but the notion of influence is also common with my thinking. I believe the opportunity lies in being able to align this ROI model to a specific league, club or athlete in order to demonstrate brand value for them respectively. This in turn, should become a contributing factor in the further adoption of social media across sports as the sports marketer begin to understand how to position these services and tools to their clients.

What do you think?

Nick Gonios

Amy,

Really enjoyed the video. I always find social media metrics fascinating because, like TV was back when the medium was just getting popular, it is somewhat of a Wild Wild West in the social media ROI world.

I appreciate people like yourself that offer some tangibles and I'm going to talk about it with our viewers and some of my private clients.

-D

@howlvenice: good point. It is one thing to be ignorant, but another thing to be educated on something, and not take action.

my favorite meaning for ROI is not return on investment or influence, it's risk of ignorance ...because those who ignore change and disruption, do so at their own peril.

A few questions:

a) Why do FB fans and Twitter followers fall into the volume column but YouTube subscribers fall into the engagement column? Aren't they the same thing?

b) Why do frequency and reach apply to volume but not engagement or conversions?

c) What does "actual activity and action" mean?

d) The size of your "ecosystem" = Reach. How does reach then fall into both the cold and warm columns?

e) Return on Influence = Adding 3 web analytics values to sentiment x reach (twice)? Seriously? That's your equation?

d) What unit of measure do you use? If it's a "return," what are we talking about? What does the number mean? What is it in reference to?

e) If "warm" data is "intangible and hard to measure," why is it part of your equation? Either it's soft data and thus anecdotal or it is hard data and it can be used here. You have to pick one. You can't claim that "warm" data is intangible/hard to measure and then add it to your "equation". This is not a gray area.

Look, I could go on and on poking holes in this measurement soup you keep throwing random ingredients into, but the bottom line is this:

1. Slapping random metrics together like this does not constitute serious Social Media measurement.

2. By all means keep trying, but first, focus on getting the basics straight. Ask real questions. More importantly, answer mine. If you guys are going to do this, you need to take it seriously. Your clients need real analysis. This is simply not solid methodology at all.

Most marketing types gravitate toward 'return on influence', while the CEOs want 'return on investment'.

Since the CEOs have the purse strings, guess who wins?

BTW there is BIG money to be made in teaching the marketing types how to think like the CEOs. And better still, in teaching them how to find the direct BOTTOM LINE impact of those 'influence' metrics.

IOW, sound the CEO how 'the conversation' impacts 'the wallet', and you've got something ;)

Look, you can talk about Return on Influence if you want to, and come up with some aggregate metric to try and actually measure it (whatever Return on Influence means... can you define it in quantitative terms?) but you can't skirt away from ROI.

ROI is a financial metric. A hard business metric.

The non-financial impact of an activity or program is not ROI. It's a precursor to ROI/financial impact. Examples: web traffic, social mentions, WOM, inquiries, etc.

Return on Influence sounds nice, but it is not a realistic or empirically quantifiable metric.

http://www.slideshare.net/thebrandbuilder/olivi...

Thank you for this explanation and how to break things down. It was a really good way to do it. I am relatively new to the game and am learning. So this is a great way to start explaining to people how and why they should do it. I am horrible at sales and I much would rather put people in the sales funnel then have to try and convert them.

Good ideas on things to measure. But I think ROI must always be return on investment. Measuring these other things is great and essential, but at the end of the day, it comes back to figuring out how this stuff is making businesses money. Unless they just don't care about that and they're just doing this to experiment. But I think we're getting past that phase.

Most everything that a business does that costs money (time is money) needs to show a return on investment in money somehow. Maybe not right away, but somewhere down the road, there has to be a positive ROI to continue any program. I know you mentioned that, but just wanted to reiterate that it is a must, in my opinion. Great stuff, though.

Great video.

Not sure if one should include Time Spent as part of anu engagement metrics.

Time Spent is misleading as it takes the assumption that a visitor is continuously viewing/interacting on the site during that time period when in actuality, people often have multiple tabs open and are switching back and forth (like I have while typing this note) or people simply do things like get up from the computer, get a cup of coffee and then come back.

I would use measurements like Recency or Frequency

Automated sentiment analysis does have a long way to go before it's perfected, but as long either positive or negative sentiment wins in a landslide on a particular issue - which is typically the case - then I'd say I'm cool with trusting it.

Hey Brad, You got it. Thanks for your note.

Hi Timothy. Great question. Everyone wants to know what's considered "good" and considered "not so good". We recommend that a baseline is established and you compare your ROI growth rate to other Key Performance Indicators. It's normal for your ROI to over-index against other KPIs in the beginning because you're starting from scratch. (It's hard to not make progress starting from zero.) Then, start to map out your ROI on a graph with other KPIs like retention, sales, data acquisition, etc. You will start to notice trends and if a large discrepancy is apparent you can start to evaluate each metric within your ROI formula separately. Consistent tracking and giving your efforts time to work is important. Relationships take time and social media starts out as a brand play. Hope that helps!

Hi Nick. Thanks for the feedback. The metrics within the formula will differ depending on the brand's objectives. The standard analytics are still important and most media buyers and marketing directors still rely on standard web metrics to justify budget/spend. We're not just talking about standard display ads but also natural marketing partner (sponsor) integration in a social media fashion. I previously led the digital sponsorship sales division for a progressive pro sports team and when monetizing social media comes into play, we still have a long way to go to make the case for warm metrics. Omniture and Google Analytics impressions still have a strong hold the purse strings which is why I like to combine warm and cold.

I LIKE that "ROI" (Return On Influence) term! Thanks for my Word of the Day, Amy ;-)

Thanks for making this video Amy. I'm curious how these metrics stack up against each other and what is considered a good-acceptable-poor ROI?

Very interesting video...

I use a similar system, which also considers the velocity of a tactic.

Page views x Visits though, seems archaic unless you've got ads on the page. For each blog post, for example, you should have Comments (awareness/engagement KPI) divided by page views x time spent (per visitor).

This gives you your "engagement over time" which seems to be a much more valuable indicator of whether or not people like the content.

Great video, though - I like the ideas!

-Nick Armstrong
IAmNickArmstrong.com