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| Return on investment shouldn’t be under your hat |
When a new marketing tactic enters the scene, the first question that pops up is how do we measure the return on our investment? This is a reasonable question but also shows the inconsistency of the marketing business.
When was the last time your organization asked that very same question about any of the following activities?
Using the telephone
Writing/reading/responding to emails
Time spent in planning meetings
Print ads in trade/consumer publications
Money spent on public relations
Dollars invested with graphic design firms for brochure/packaging or collateral
Website development
Radio commercials
TV ads
Customer Relationship Software
Sales calls (time in appointments/travel)
Sales meetings
You get the idea.
Why do we rush to ask for an ROI on social media when other tools and marketing activities don’t get the same kind of scrutiny? If your company spends $50,000 on smart phones for your team, how do you establish it’s ROI? If you spend $20,000 updating your website, how do you know you are getting your money worth out of these dollars spent? If you calculate you spend $30,000 on staff managing your social media activities, how do you asses the value and return? What is the metric for measuring the $100,000 bill for airline travel for your executive team? When you sign an insertion order for $400,000 of print advertising, how is that ROI determined?
The reality is that like most marketing VP’s or Directors, you have a budget that is fixed. And, you have goals that you must support and/or achieve as part of the company. As the lead marketing honcho in your firm, these judgment calls on mix and spending are the essence of measuring ROI.
The following are examples of metrics that I like to use. I think of these as simple statements that should be agreed to by your key internal stakeholders before the year starts.
Public Relations:
I want a 10 to 1 return on PR spending as measured by weighted ad value.
So if I spend $30,000 on an external agency, I want to see at least $300,000 of coverage based on the WAV metric. (Weighted ad value says that the value of space you can purchase is worth 3X the ad rate). It’s a common way to view PR coverage if it meets other communications goals. Of course you want to deliver the right message, a positive tone and quality stories in the coverage achieved.
Social Media:
I want to build relationships with 150 online business prospects (or 5,000 consumers) who are in your target and to track, over time if they become customers. Or, I want to build relationships with 35 important journalists/bloggers/online thought leaders who could write about my company and influence opinion.
It costs money to be involved with activities on Facebook, Twitter, Linkedin and other channels like Instagram, You spend money in salary and staff time to manage, engage and respond to the community. I like to set out a goal of around engagement to make sure that as a baseline, I’m at least reaching a reasonable audience.
If you work in a B2C world, your stated social media objective could be to have 500 engaged consumers who share at least 3 posts/stories to their Facebook friends with a reach of 8,000 people being exposed to your business, product or service. This goal of exposure’ helps you share your value proposition and to begin establishing your brand.
The bottom line is that a single simple clear objective for your tactics allows you to track progress. Setting the right goal for your business and strategy is very important. To understand how your investment is working, you need an easy way to measure it. Some people like to create KPI’s (key performance indicators) that go much deeper but I find that if I am spending too much time counting and measuring and not enough time doing the activity in question, it can defeat the effort. Like most things in life, you have to find a good balance.
I like simple.
One of my favorite quotes on this topic is from Gary Vaynerchuk, the social media guru who has a highly successful retail wine store called Wine Library and a social media marketing agency. Gary likes to ask, “What is the ROI on your mother”?
How can I begin to measure the value of Mom?
Thought provoking piece. Thank you for sharing your thoughts.