If 2010 is the year for social media ROI, then I say that it is high time we think about the true measure of social media and how to measure it.  In the quest for calculating social media ROI, marketers have yet to fulfill the age old need to measure total marketing ROI. We, at Terametric, are tackling just that under the premise that social media ROI on its own is impossible to calculate because it is an integral part of the overall marketing strategy. One cannot exist without the other and therefore to try and measure the effectiveness, it must be taken as a whole.

Social media is a subset of your overall marketing strategy and therefore is impossible to measure the true value of social media without looking at the total performance of your marketing efforts – both online and offline. It is at the intersection of traditional with non-traditional media where we find the ROI.

Social Media ROI

In order to measure the true value of social media, a marketer needs to look at data from all channels (web, search, social media, blogs, email, CRM, offline, & PR) because everything that these channels generate in the way of contact with prospects and customers resonates in the social web. A tweet could show up in search results that goes to a blog post and then to a white paper download, and then to a contact us form, a few more direct Facebook interactions and then to a sales conversion. If you are not measuring all of those activities, you are not measuring the impact and influence of all channel activity in generating sales. There is no straight line between tweets and conversions although the simplistic approach of measuring it that way is all that has been attempted – until now.

One Dimensional Social Media ROI:

Social Media Investment + Social Media Return = Social Media ROI

Multi-Dimensional Total Marketing ROI:

Channel Investment + Channel Return = Total Marketing ROI

Social media forces a marketer to change its strategy so that it moves away from siloed campaigns and allow content to flow consistently from channel to channel. Without consistency through all points of contact, channel conversion drops off, sentiment and engagement is low and your overall brand suffers. This is why we’ve assembled a top ten list to put the argument that social media ROI is possible — through the measurement of all marketing activity. Without a holistic approach with SM integration into the larger marketing objectives, it is not possible.

Here are the fundamental components of measuring total marketing ROI:

1. Channel Integration: Each channel must allow content to be pushed out to the social web and attract visitors back through the channels for conversion activities (white paper downloads, event registrations, and purchasing activities – see #2 and #3). Channels include your website, blog, social networks, CRM, direct mail, offline, and so forth. Social media and marketing messaging content should be consistently displayed on all channels so that no matter where your customers and prospect, you’re messaging is reinforced.

2. Hard Conversions: Hard conversions are defined as actual sales (dollars and cents) that come through online and offline channels. CRM is at the heart of calculating this metric based on online and offline interactions in the sales process. If well integrated, overall marketing activities should map to shorter sales cycles, referrals from all channels and higher sales.

3. Soft Conversions: Soft conversions are defined as any other marketing or sales conversion that does not generate actual dollars and cents but contributes towards that end. White paper downloads, email subscriptions, Facebook “likes”, blog comments, forum subscriptions, etc. are all signs that your sales and customer support practices are healthy and you’re building social intelligence into your overall marketing.

4. Social Intelligence: Social intelligence is a measure of your ability to generate engagement, loyalty, sentiment, retention, influence, reach and rich demographics from online and offline marketing channels. If you’re measuring activity from these channels, you can get an accurate picture of how your brand is positioned in the marketplace specific to different products and industries.

5. Outbound Metrics: Outbound metrics represent metrics that are used in your channels that tracks the consistency of your messaging and user experience. These metrics are used to measure how well you construct your channels and that you have control over.

6. Inbound Metrics: Inbound metrics track the performance of your channels – how many visitors you attract from the social web and how many you convert. If your outbound metrics are tracking high, then in turn your channels will attract and convert.

7. Competitive Analysis: Without knowing how your competitors messaging is resonating in the social web, and how successful you are at competing for the hearts and minds of your prospects and customers, then all of this marketing effort is for nothing. You can craft the cleverest marketing campaign but doing so without understanding what is current, relevant and how your competitors are positioning themselves, and then you cannot truly measure the effectiveness and value of your work. All measurement should be benchmarked against the competitive online marketplace.

8. Sentiment by Channel: Luckily, with the advent of social media, there is a plethora of intelligence to mine in the way of unsolicited fodder about your brand, your products and the industry you compete within. Sentiment should be tracked on these basic levels as well as how your channels are influencing it. Sentiment on its own is good but tracking how well your channels are influencing it is better.

9. Influencers by Channel: Sentiment is generated by a whole host of individuals and some command more attention than others depending upon whether they fall into the brand, product or industry buckets and they should be weighted differently as such.

10. Social Media vs. Marketing ROI: Once you are tracking your outbound vs. inbound metrics, your total marketing ROI can be calculated on an ongoing basis (the amount you spend improving your outbound performance vs. the return you get on inbound conversions). If your social media marketing campaigns are truly cross-channel, then you’ll have highest return and you’ll be tracking the channel activity holistically to get the true value and ROI of your social media activities. Just because you tweeted up a storm, the result of that activity might have landed you high conversions through your website (subscription, purchases, etc.) and blog (participation, followers, etc.).

And there you have it all wrapped up in a nutshell! This is how it is possible to measure social media and marketing ROI. We welcome your thoughts and comments!

At Scott Kirsner’s recent Momentum Summit, Trip Advisor CEO, Stephen Kaufer was asked to play a game.  Interviewer, Antonio Rodriguez of Matrix Partners called the Game “College Money”.  Rodriguez explained that he would name a number of companies and Kaufer would say “yes” or “no” as to whether he’d bet his kids college money on that company’s success.

Yahoo – Yes
Microsoft – mmm, Yes
Facebook – Yes
Twitter – NO!

Rodriguez paused and asked again.

Twitter – Nope.
And again.
Twitter – No.

Each successive “No” seemed to be gonging death knell for everyone’s favorite microblogging site.  Kaufer seemed to cast doom on our rich, 140 character culture.   But why?  Kaufer simply smiled and shrugged and suggested that its utility would be short-lived.  Really?

It’s use among the social media set is practically ubiquitous.  Aside from its promotional value for brands (those brands which use it wisely), its capacity to empower knowledge-sharing is staggering.  The question it answers is no longer “What are you doing?” but “What do you know?”  Yet, Kaufer, a man who’s built a successful web company on the power of social engagement, suggests that he wouldn’t bet on its future.

Back in January of 2010, there were several charts and quite a bit of chatter pointing to the flatline of twitter’s growth.
It wasn’t until April 2010, however, that these charts were put in their proper perspective.  At Chirp, the annual Twitter Conference, there were some exciting revelations about the growth of twitter.  It seems that these harbingers of twitter doom hadn’t accounted for the number of people using third party apps to do their tweeting.  In fact, approximately 60% of all tweets originate in third party applications.  With that perspective, you can see that these charts don’t point to a flagging interest in twitter but rather an explosion of innovative usage.

If that weren’t answer enough, the Huffington Post published the following stats from Chirp:

• Twitter now has 105,779,710 registered users.

• New users are signing up at the rate of 300,000 per day.

• 180 million unique visitors come to the site every month.

• 75% of Twitter traffic comes from outside Twitter.com (i.e. via third party applications.)

• Twitter gets a total of 3 billion requests a day via its API.

• Twitter users are, in total, tweeting an average of 55 million tweets a day.

• Twitter’s search engine receives around 600 million search queries per day.

• Of Twitter’s active users, 37 percent use their phone to tweet.

In light of these usage statistics, we’ll have to very respectfully disagree with Mr. Kaufer on Twitter’s dim future.  It seems that our 140 character culture is here to stay, though it may evolve.  Viva la Twitter!

Photo by Pellaea

The path that ultimately led me to Terametric began as a bit of a quest. Working for years in the marketing and advertising industry, I’d fielded client and executive questions of measurement and performance hundreds of times.

In the early days we talked in terms of reach and frequency, CPM and a bit later, impressions.  We’d proudly say things like, “this TV buy will reach 60% of your target with an average frequency of 3.6.”  Or, “Our PR outreach effort yielded 687,000 impressions.”  The client’s eyes would momentarily brighten at the size of the figures and then inevitably the questions would come.

• “What’s the average number of impressions?”
• “What’s a good frequency?”
• “Is that enough reach, too much?

Those shrewd clients and executives were really asking, “What does this mean in terms of performance?”  By performance, I’m talking about the degree to which something achieves a desired result.

Enter Web 2.0, the social environment.

A new frontier opened up.  Conversations were occurring, in real-time, across communities, networks and social outposts.  People were talking.  Even more importantly, people were talking about brand experiences. Quite suddenly, the world was awash in social monitoring and measurement purveyors.

We, marketing service providers, began to say things like, “You got 726 mentions around that topic.”  Or, “Your share of voice increased by 20%.” Or even better, “Positive sentiment around your product is trending up.”  Clients and executives would be pleased that counts of various things seemed to be on the increase but inevitably, those same questions rose.

• “How many mentions is a good number?”
• “What’s an average share of voice for our industry category?”
• “What should our sentiment target be?”

They were really asking, “What do these figures mean in terms performance?”  So the quest began.  I searched high and low, reviewing and trialing this tool or that solution, trying to answer those questions.  I dog paddled through a sea of data visualizations, swam upstream through rivers of news and plunged headlong into automated sentiment trackers to no avail.

And then, I met Wendy Troupe.  She had taken a algorithm used initially to predict mutual fund performance and altered its data inputs and scoring methodology to quantify marketing performance.  She could literally measure a company’s ability to attract, engage and retain customers.  I knew this was something different.  I jumped aboard and off we went.

Fast-forward seven months and we find ourselves in our pilot client’s conference room.  Our Benchmark Assessment dashboard remains projected on the wall and there’s a moment of silence.  We’ve just delivered our report on their comprehensive and channel specific marketing performance to date.  Each channel has been scored 1-100 according to its current ability to attract, engage and retain customers.  We’ve demonstrated how to drill down, through the tool, and get at the underlying factors driving that performance.  Our tool provided a detailed roadmap at both a strategic and tactical level for improving that performance.

I braced for the questions but shouldn’t have.  We’d already answered them.  Instead, our client began to talk about prioritizing channel initiatives to achieve performance goals.  My quest, and hopefully yours, had come to an end.

Photo by the talented Kaysse

At yesterday’s Momentum Summit, I had the good fortune of finding a spot at Scott Kirsner’s table during the lunch/round-table sessions.  For the few left in New England who aren’t familiar with him, Scott Kirsner is an accomplished journalist/author with a new book,  Fans, Friends and Followers, a Boston Globe Column, Innovation Economy, and several of New England’s best start-up events to his credit.

Scott was incredibly accessible and shared some open and honest advice for start-ups looking to establish relationships with journalists.  Here are some of the highlights from that discussion (please note that these are not direct quotes, but my own summation — woe to them that misquotes a journalist!)

1. Be open!

Many start-ups border on paranoia when it comes to sharing their story during the more delicate stages of their development. They often cite proprietary or competitive concerns to justify this reticence. Yet, telling their story early and often can actually help safeguard an idea and ensure that the right people receive full credit for it.

2. Be seen!

Walking up to a reporter and introducing yourself at a local event is one of the best ways of attracting their attention. Journalists receive a flood of emails, faxes, phone calls and twitter DMs a day.  Being able to associate a face and a remembered conversation with one of those communications is often enough to separate it from the flood.

3. Be an unselfish resource!

People, particularly in start-ups, can be fantastic resources for journalists.  No one knows more about what’s going on in your category than you.  If you find an interesting fact, hear a unique story or discover a noteworthy trend, (even if it isn’t about you or your company) give a journalist the heads up.

4. Create a dialogue, not a press release!

Press releases might help your company’s SEO and can result in short published briefs/updates, but they can be a bit of a turn-off to a more in-depth journalist.  A press release is instant notification that several journalists have just received the exact same information. All of the time, money and energy spent writing and sending that release to 20 reporters would’ve been better spent by starting a meaningful dialogue with one (that actually references the information’s relevance to a reporter’s current focus).

5. Never make this call!

“Hi, this is Blank from Blank Company, I was just calling to see if you got our press release.” Yes, the reporter received it and would certainly have called you themselves, if the information had been of emergent concern or newsworthy.

Yesterday’s Momentum Summit was a great event and provided value in both speaker line-up and opportunities to connect with successful veterans in the start-up space.  Thank you to Scott Kirsner, the speakers, interviewers and all of the volunteers who made it possible.  If you missed the event, Jason Evanish of Greenhorn Connect did a great job of capturing the content in a live blog post or search #mosum on twitter.

The concept of Social Intelligence seems to be gathering some steam lately.  We first discussed the concept of Social Intelligence in our 1/25/2010 blog post called, “What the @%# is a Social Intelligence Engine”.

In this posting, we published the chart below, which pairs a company’s social media development with the tool that is most relevant to their needs.

As a company’s understanding and social media needs mature, they require an increasingly more sophisticated means of integrating social media into their marketing channel measurement mix.

Social Intelligence isn’t measuring social media in terms of social media impact alone(share of voice, conversation index, etc.)  That’s what happens in Stages 2 (monitoring) and Stage 3(Listening).  When we speak of Social Intelligence, we mean using social media and its sea of relevant customer data as a way to better measure and optimize marketing channels and total marketing performance.  We gave the name “Social Intelligence Engine” to our own tool, which is designed to do just that.

On March 12, Forrester Analyst, Zach Hofer-Shall presented a report called “Defining Social Intelligence“.  Zach talked about “monitoring” as a passive or reactive practice and the development of social intelligence as a pathway to proactive marketing optimization.  In this report, Zach defined the concept of Social Intelligence much more succinctly than us:

“Social intelligence is defined as the management and analysis of customer data from social sources, used to activate and recalibrate marketing or business programs.”

Since March, the concept of Social Intelligence has slowly begun to take hold and companies are beginning to accept the methodology’s validity — using data from social media to analyze and quantify marketing performance and dial it in accordingly.  In fact, only yesterday, global ratings firm Neilsen announced a joint venture with research giant, Mckinsey to create NM Incite, a marketing consulting group powered by social intelligence.

These developments can only be good news for us here at Terametric.  We’ve come through our initial pilot engagements and have used the learning to further refine our Social Intelligence Engine.  Stay tuned as we’ll soon begin our limited beta.  If your organization is interested in being a part of that beta and getting ahead of the Social Intelligence curve, please sign up here.

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Evolution can be defined as a process in which something passes, by degrees, to a more advanced or mature stage. Environmental forces can often act as a catalyst to evolution. Those forces create a need to leverage new traits or entirely new forms that are better suited for the environment. In much the same way, on the very threshold of Scott Kirsner’s Innovation Month in New England, SOCIALtality is revealing it’s new evolution into a more advanced and, in some ways, more mature form.

SOCIALtality’s concept was born during our founder’s work as Systems Director for Fidelity’s Strategic Advisers Group. In this role, Wendy Troupe was tasked with creating technological answers to today’s business questions. Time and time again, one core question presented itself.

How do you quantify the impact of total marketing performance? How do you know which channels drive that comprehensive impact and in what proportion?

Enter social media. It’s explosive adoption and use gave rise to a veritable sea of valuable, publicly-available data points.

As we step into New England’s Innovation Month, it’s important to reflect on social media as one of the most important prime-movers for innovation today. For many companies, the rise of social media presented both opportunity and confusion. Companies now had the ability to engage an audience rather than simply build awareness with one.  Yet, this new channel defied traditional method and measurement.

For Wendy Troupe, social media presented the answer she sought. With the right quantitative model and scoring algorithm, social media could provide the missing link that can normalize data and make marketing truly quantifiable. Wendy left Fidelity’s Strategic Advisers group to create SOCIALtality.

She christened her tool SOCIALtality to reflect social media’s prominence in her solution. Alas, due to forces at work in our environment, the name created a bit of a misnomer for us. Many confused us with the proliferation of social media monitoring tools. While Radian 6, Scoutlabs, and SM2 of all play a valuable role in helping companies understand their place in the social media landscape, we felt our tool had a very different benefit.

For social media monitoring tools, social media is both a “means” and an “end”. For SOCIALtality, social media is a large component of our “means” but, understanding total marketing performance in a way that creates a detailed roadmap to optimization is our “end”.

Our environment forced us to adapt, innovate and evolve. We’ve created a name which we feel best illustrates both our capabilities and our mission. Tera is a numerical prefix that denotes “trillion”, a reflection of the vast sea of data out there waiting to be gathered.  The word “metric” is defined as a measure for quantitative assessment.

When these words are combined they form our mission and our identity. Terametric: to create a single, meaningful measurement that quantifies performance out of a trillion, valuable data points.

On May 27th, Scott Kirsner called for the technology populace of New England to reflect on what Innovation Month means to each of us. We’ve moved our “identity evolution announcement” forward to answer that query. For Terametric, innovation is really evolution.  It’s viewing the environmental forces around you with an opportunistic eye, seeking ways to leverage those forces to create something new and ultimately more focused and meaningful.

Happy Innovation Month to all of New England and the world!

We’re in the process of designing our presence to match our new identity.  Our new site is coming soon. We hope you like our new identity, if not, let us know below.

It has been nearly three weeks since our last post at SOCIALtality.  As a lean, mean, start-up machine it’s been difficult to extricate ourselves from the whirlwind of progress.

In parallel with initial client engagements, we’ve been completing the development of our automatic, real-time tool.  Client work for companies like Netezza, a sophisticated marketer with real, multi-channel marketing capability has informed the final stages of our tool’s development to the benefit of all future clients.  As our benchmark analysis nears completion, we look forward to taking them through our findings.

In the midst of our development and client engagement work, we’ve added some new and crucial members to our growing team.  Each new team member brings with them an invaluable skillset and perspective.  Look for new team member announcements soon.

Over the last several months, our team and our understanding of enterprise marketing needs have grown.  Our initial concept of SOCIALtality has adapted and evolved to reflect the ever-changing landscape of multi-channel marketing.  In accordance with that evolution, we will soon launch the new “us”.   The new “us” will feature an identity that better reflects the “how” and “why”.  It will also feature a revitalized web presence that provides our prospects with a better sense of “us” and as a precursor to wide availability, a virtual tour of our tool.

Stay tuned for our upcoming launch announcement.  We hope you visit early and often.

I had dinner with a friend from my agency days in New Orleans last night.  We worked together as lowly Jr. Account Executives on a national beverage company’s regional efforts.  He laughingly reminded me of the day I whipped out, what later came to be known as “The Triangle of Truth”.   It was also the day, not coincidentally, when my career hung in the delicate balance of a client’s reaction.

The situation was one common to all advertising agencies.  The client needed a 48 hour turn-around on something that had to be mind-blowingly amazing but, due to budget constraints, refused to pay for either the expanded team necessary or the time-crunch premium demanded by our production vendor.

As the agency’s senior account executive and the client’s middle marketing manager argued, I scrawled the diagram above and passed it to my buddy whispering, “You can have any two but never three.”

1. It can be high-quality and fast but, it won’t be cheap
2. It can be fast and cost-efficient but, the quality will suffer
3. It can be high-quality and cost-efficient but, it’s going to take some time

What makes the story funny and potentially disastrous is that the client saw this transpire and grabbed the piece of paper.

After laughing last night about the expression of stark terror I must have worn that day, my buddy said this, “I’m afraid now that Social Media is out there, you’re Triangle of Truth is dead.”

Wait, what?

I disagree wholeheartedly.  While it’s true that many social media initiatives can be executed without big production costs or huge media spends, achieving true, high-quality, customer engagement takes time and requires significant investment.  Engagement is much harder to achieve than simple awareness.

You first have to understand where the customer conversation is occurring.  You then have to listen and monitor that conversation.  Then an engagement strategy must be carefully crafted to identify and leverage contextually relevant conversation entry points.

1. If you want to achieve engagement fast, you’re going to have to hire experts (REAL EXPERTS-see 12 Must-Read Social Media Bloggers Pt 1, 2, 3)
2. If you want to carefully manage your resource investment (both human effort and money), then engagement will take time to develop organically
3. If you try to prematurely force engagement, utilizing less than expert resources (your marketing intern that “knows Facebook”), then real customer engagement will remain ever-elusive

What happened to me, you wonder?  The client was not amused.  I received my new account assignment later that same day.

Several companies provide multi-channel measurement capabilities.  Each has a dominant channel measurement “wheelhouse” with expansion services to measure and analyze a hand full of additional channels.  The issue is that each company measures and analyzes in terms of individual channel metrics.

While that can provide an amazingly accurate picture of the performance of a single channel, it doesn’t really provide you with an intuitive way to compare that performance with other channels to truly optimize your marketing mix.  Who’s to say that an email click-thru rate of 6.7% contributes more to overall marketing performance than 250,000 impressions?

SOCIALtality uses a mix of data collected from publicly available, proprietary and social media sources to quantify the performance of each individual channel and through a proprietary algorithm, normalizes performance metrics into a common scoring system.  This allows our clients to:

1. understand channel performance individually and comprehensively
2. quickly identify under-performing channels and drill down into underlying factors
3. understand which channels contribute the most to total marketing performance
4. create an accurate marketing optimization roadmap to maximize marketing investment

The ability to quantify channel performance, accurately correlate it to marketing return and study changes in both over time allows SOCIALtality to accurately calculate a company’s marketing ROI.

Let us know if you have any questions.  I’m sure some have occurred as you’ve read through this.  Maybe you wonder about the validity of our conversion of channel-specific metrics into a common numeric scoring system?  Whatever you’re questions may be, please let us know.  We’ll do our best to answer them fully and quickly.  Fire away, friends!

I recently read an article on eMarketer titled, “Marketers Split on Whether Social Media Will Deliver Measurability”.  I thought this chart was a great illustration of the prevailing understanding of social media measurement.

Measurement is defined as the act or process of assigning numbers to phenomena according to a rule.  Counting.

If you accept this definition, than, the majority of marketing honchos seem to be doing just that.  Assigning numbers to a new phenomenon, social media, in an attempt to better understand it.  Using hits, visitors, and traffic statistics for a website to gauge the effects of a social media campaign is indeed measurement.

Company X launched a social media campaign and saw an increase in site traffic.  Excellent.  So what?  What does that really tell you?  Does it mean the campaign was effective?  Not necessarily.

How many widgets did Company X sell as a result of that increased web traffic?  Did aided and/or unaided brand awareness rise as a result of that campaign? Did customer attrition slow?  Aren’t those the questions that CEOs, CFOs and CMOs really want answered?

You could measure all day long and never answer those questions.

Quantification, on the other hand, is defined as the ability to give or assign value to an action.  Quantification bridges the gap between what measurement can offer and what the C-Suite really wants answered.  Quantification can tell you the value of web traffic increases. When you quantify the effect of your social media campaign, you’re determining its value in relation to the goals of your organization.

Why are so many measuring, when quantification is what they really want?

Social media monitoring tools have gained quick and widespread adoption.  They have all of these great, colorful data visualizations and slick charts that count things. These tools are fantastic at measuring. Yet, counting or measuring isn’t enough to inform strategic decisions.  For CMOs to substantiate performance and justify investment, they need to calculate value.  They need to QUANTIFY.

Social media monitoring tools count.  SOCIALtality quantifies.

We’d love to hear your thoughts, rants and raves on the subject of measuring versus quantifying.

Check out one of our latest posts, “3 Reasons SM Monitoring Tools Can’t Calculate ROI” for a more detailed breakdown of the limitations of monitoring tools and check out our About section for an description of our quantification solution.

If the subject of ROI challenges and quantification is one that interests you, we’ve started a great discussion group called Quantify on linkedin.  Love to add your perspective to the discussion there.