TRAACKR

This morning, I attended Boston’s Social Media Breakfast 10 where Brian from Hubspot, Matt from Visible Measures and Andy from HBS each presented their point of view on ways to measure the ROI of social media.

Aside from the framing of the issue that unnecessarily restricted the definition of social media (how is blogging not social media?!?), the talks were quite interesting.

The highlight of the session (that may well have corresponded with caffeine finally kicking in) was a quote by Bob Kaplan relayed by Andy McAfee who was answering a question about measuring the ROI of technology and the answer of the Accounting Hall-of-famer (yes there is such a thing) was simply: “you can’t do it.”

His point of view is quite straight-forward really: one can’t apply reliable ROI calculations to very complex and ill-defined environments. This of course applies to Social Media as well and is a lesson for us all: don’t overreach.

Does it mean that we should give up on measurements, and that Visible Measures, or Traackr for that matter, shouldn’t be in business? Quite the opposite.

Andy made it clear in his talk that the cost side of ROI ought to always be tracked diligently.

I would add that the opportunity side (aka revenue), though largely qualitative at the beginning needs to be followed with equal, if not greater, attention. There are two reasons for this: first, by tracking performance over time, you will get reliable trending information very quickly, second, by observing a variety of performance metrics you will end up being able to close the loop and calculate an ROI.

As an example, Traackr has started following the impact that Amazon reviewers have on the sales rank of the products they write reviews on. We can discern clear performance patterns and build reliable ROI calculations around this because we operate in a controlled environment (here Amazon) and have a set of historical data to work from – and btw these Amazon reviews also belong in social media.

The issue that Andy McAfee and Bob Kaplan are highlighting is that this data is not available beforehand thus can’t drive an investment decision and that it will ultimately take the leap of faith of a business leader to make it.

If you’re the one doing the convincing, remind your boss that they most likely have their job today because someone made such a decision before. The fact that your company is in existence is all the proof you need.

Tags: hubspot, roi, smb10, social media, socialmedia, visible measures

This entry was posted on Wednesday, November 12th, 2008 at 5:09 pm and is filed under Opinion. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.