27 May
2009

A TLA that should scare Y-O-U

ROI.

How do you measure the ROI for a Tweet? How do you measure ROI for a video posted to YouTube? How do you measure ROI for a blog post?

The concept of ROI in modern public relations and corporate communications has evolved from the old standby of column inches earned * ad rate. The common belief now days is that retweets, blog comments, saves to Technorati etc… are all forms of currency.

ROI = $$$

Yes. A return on investment can only be measured in actual dollars. An increase in reach and “authority” are great. But how does the use of social media affect your or your clients’ bottom line?

Using social currency or “whuffie” or any other social metric is icing on the cake. But the cake needs to be a financial impact of the marketing or communications program. This applies to consumer goods just as much as it applies to enterprise software or discreet manufacturing. The units may change, but the affect to the bottom line is still what matters.

The concept of attributing a sale to the use of social media has become relatively easy. Marketing automation companies such as Marketo or even URL trackers such as bit.ly have made it much easier to follow a lead through the process of becoming a contact to becoming a customer.

The bottom line

As Olivier Blanchard over at The BrandBuilder reminds us “ROI is always financial.” Lots of people are beginning to pontificate on that stance. That it’s time to make some money on social media. There’s no reason for the consultants and gurus to be the onws making all the money. But nobody’s offering a solution.

Now it’s time for me to offer a solution. Instead, I am going to try and offer a mathematical problem, so bear with me.

The first item I’ll tackle is twittering a link to a product purchase form. First, let’s define some variables. X= my hourly rate, y = the amount of time in hours it took me to get to the point I can publish that tweet, z = the final cost of publishing a form. So:

(x * y) = z

Now, let’s continue. Lets try to determine the ROI of you publishing that tweet. More variables 🙂 If you have a = number of people that fill out the form and b = the cost of each unit sold and c = the number of new customers we can use the answer from above to find the ROI of that tweet campaign.

(b * c) – z = ROI

I know this is beyond over simplifying. How do RTs or word of mouth affect this calculation? I’m hoping you all can help me out with that. Can somebody check my math?

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