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More on the ROI of Social Media: Return on Influence

I found myself using the phrase Return on Influence last week in talking to a reporter about the value of corporate blogging. I didn't invent it. Heck, there's nothing new under the sun these days. See Useful Links below. And thanks to Valeria Maltoni for the nifty graphic.

But the term "Return on Influence" bears repeating and maybe I can give another twist to the concept. Bear with me while I think out loud.

Why should the ROI on business or corporate use of social media be defined as Return on Influence rather than Return on Investment?

Why is it Return on Influence?

Short answer: because the return is soft. The benefits of incorporating social media strategies into your marketing are real (and can no longer be  ignored) but they're not normally measured in dollars. Like PR, you say? Yes and no.

Social media, which includes corporate blogging, is still so new for many marketers that it occupies a niche outside corporate PR or interactive marketing (the latter still a code phrase for online advertising or email marketing, neither of which is particularly interactive).

Second short answer (which ties in with the first)... because social media is a new phenomenon for which we are still developing metrics and measurement. There isn't agreement yet on what these metrics should be. Velocity? Engagement? Conversation index? Reach? Community? Some combination. Whatever you choose, it's hard to compute a dollar or numerical value.

I'll go into more detail on social media measurement (thanks, Jeremiah) in another post. For now, let's stick with the concept of Influence.

(BTW there are bloggers who get into lengthy discussions about the difference between PR and marketing. That's not my purpose here but feel free to check out that discussion here and here and here.)

One more time... what is Social Media?

Some folks use the term digital media as a catch-all. Others say new media. Social media has taken root as the most accepted phrase.

Social media has caught on in the past year as the phrase du jour because it neatly describes what's at the core of this phenomenon: connecting and sharing. It's the same kind of thing you do offline when you're having a good discussion with another person at a party. Note emphasis on the human.

If you're a company, a Fortune 500 or 1000 or even a good-sized SME, "connecting" may sound like a fine idea. Hey, let's connect with our customers. Let's get inside their heads and find out what they're really thinking, what they like and dislike, what they want.

Sharing, on the other hand, is a little scarier. Excuse me, you may be saying... you want us to share our products or services, or our intellectual capital with our customers? You mean offer it freely as opposed to sell it? Er, yes. That's pretty much the idea.

But no, not all of your stuff... just some of it. Companies do not need to reveal all, to strip naked on a corporate blog and spill secrets. But you do need to reveal enough information to make your customers feel like you're having a substantive two-way exchange (aka conversation) with them. And therein lies the nub of Return on Influence.

The Social Media Mindset comes first

The social media mindset means truly embracing the notion that your customers are worth listening to, that they are worthy co-creators (the two-way thing again) and that they may in fact trust and influence each other more than you can influence them.

Conclusion: Return on Influence is a two-way concept

So Return On Influence becomes, as I see it, a fluid concept. On one side, it's how much you as a company (a collection of individuals) can influence your customers' perception of your brand by sharing and listening.

On the flip side, it's how much you can get out of enabling and allowing your customers to influence you. Whether it's an idea for a new product or service (cf Dell's Ideastorm) or a new strategic direction.

'Nuff said. Thanks for letting me think aloud. I know there's more to say on this topic. Please feel free to add your thoughts below.

Useful Links on Social Media and Return on Influence

Robert Scoble on What is social media

Shel Holtz on Business Adoption of Social Media

Kami Huyse's del.icio.us links on measurement of social media

Josh Bernoff (co-author of Groundswell) on Purists vs. Corporatists

Tracking the Influence (white paper by Matt Toll and Jeremiah Owyang)

The new ROI by Paul Dunay

ROI is Social Media's New ROI by Joe Marchese

Return on Influence by Valeria Maltoni



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Posted by Debbie Weil on March 13, 2008 in Corporate Blogging , Social media | Permalink


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Steve Woodruff


The same debate has raged in other sectors, such as training, where the ability to calculate a specific dollar return is...shall we say...squishy. Some of these things simply have to be done as a matter of faith - a better trained person will generally sell better; more active interactions with customers will lead to better relationships and more sales, etc.

The Return on _____ question is a transactional mindset. Not an interactional mindset (if we might toss in a neologism)! The transactional mindset is often fixated on short-term reward for specific tasks or initiatives. Social media requires a long-term, principled view of the value of creating relationships.

Paul Chaney

I'll weigh in (per Twitter). The ROI, according to a recent study sponsored by Awareness Networks, is: Increased customer engagement; increased brand awareness & loyalty; and effective market research.

Those are the outwardly-facing returns. There are a number of benefits social media (I prefer the term Conversational Media) brings to the enterprise internally as well: Improved communication and improved knowledge management to name just two.

Great post Debbie. I appreciate your linking to so many other credible topical resources. Now, I have something to keep me occupied the rest of the day! :-)

Jeremiah Owyang

You're welcome!

Tom Hood

Right on point (as ususal)! We have been blgging now for almost a year and a half and have seen the "return on influence" you describe. Anyone who is on the sidelines about blogging and understanding web 2.0 should get in the game now or miss out on some grea opportunities. In addition to the "ROI" is the relatyionships with other thought leaders you can make. Keep up the great work Deb.

By the way, we are where we are because of Deb's coaching - thanks Deb!

Valeria Maltoni

Thank you for the link, Debbie. One great way to train the organization to feel and see the benefit of social media tools is by starting to use them internally - grassroots would be best.

Let your groups figure it out, provide counsel and the space. Many companies can use a massive infusion of marketing 101 and public relations 101 to understand that marketing communications are not done by the pound. They are not happy meals with fries and coke. They are part of a business ecosystem. So is having conversations with customers.

Tim Wilson

I agree with virtually all the points you've made, and thanks for all of the great links to more information on the subject!

However, I take issue with the "ROI in social media is return on influence." If you really think about it, that terminology really doesn't make sense. Let's talk about measuring the impact of social media initiatives, which are everything you pointed out: not standardized, soft, and, well, hard to measure.

Measuring the results -- the return -- is going to vary from company to company depending on what their social media strategy is. Tools and thinking will come along that make this easier. But, one thing that is sure is that we're not measuring the "return on influence." We're trying to measure Return On an Investment in social media. It's just that the return might not be measured in hard dollars.

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