How does one determine the ROI of social media?

If you're using social media as a business tool, or even just considering it, this is probably one of the most head splitting questions you are asking. It also happened to be the central question of our IA08 panel "The Role of Metrics in Driving Interactive Performance".

Did we answer the question? I'm not entirely sure if we did, but the panelists (aka The Social Media Dream Team) raised a lot of really good points about the measurement of social media. The following are a few nuggets of wisdom that were shared during the conversation.

It's not just about the numbers.

Believe it or not there are important metrics that extend beyond hits, visitors, page views, downloads, etc. Sure, those types of metrics are still important...but they don't capture what is inherently powerful about social media. Measuring social media allows us to capture vital qualitative information such as:

• What people are saying about our brand and our products

• How these conversations are impacting the consideration phase of the buying process

• How we can improve our marketing performance by listening and participating in the conversation

How do you measure a conversation?

First of all, the best way to find out about what people are saying and doing is to actually participate in the conversation. Not only will this give you vital information that you can feed back into your product marketing lifecycle...it can also do wonders for your brand. Imagine how your customers' perceptions would be impacted if they knew you were actually listening to what they had to say?! It's one thing to say to a customer, "fill out this survey and we'll give you a free thingamajig." It's another thing to actually have a dialogue with the customer centered on your brand and product.

That being said, you obviously can't be everywhere at once or participate in the zillions of conversations taking place at any given time. Fortunately, there is now a wide array of tools available to help capture data from all of these conversations taking place across the web. Some of the tools mentioned by our panel include Nielsen BuzzMetrics, Cymfony,and Techrigy. (check out Dave Evans' ClickZ article for more on the subject.)

Selling the Big Boss

For better or worse, the world of business in which we live is driven by numbers. So while it's easy to extol the virtues of social media and all the glory it possesses, we still have to prove to our decision makers that our social media programs are worth funding. So I guess we're back to the original question - how do you measure the ROI of social media?

Like I said earlier, I'm not sure we really answered the question in our 45 minute panel...not directly anyway. But this is largely because the answer is different for each situation. One has to consider one's business objectives and how social media is intended to help meet those objectives. The tools exist to capture the data, both quantitative and qualitative, but it's up to us to put that information into context. Only then can we build a scorecard that makes sense.

Regardless, it's a good idea to continually educate your organization about the holistic value of a social media program, and illustrate that it's not just a sales and marketing tool...it provides value to the entire business. In fact, you may find out that the Operations folks derive the greatest benefit once they really understand the potential positive impact.

Taking the Plunge

If you're trying to figure out how to measure the ROI of social media, here are a few suggestions:

• Participate. If you aren't participating in the conversation at some level, then you won't be able to figure out what to measure.

• Listen. There's a conversation taking place about your brand whether you are listening or not, so wouldn't you rather be in the loop?

• Do your homework. Social media has actually been around for a while, but it's now barreling its way into the mainstream business consciousness. Spend the time to participate in social networks, local or web-based social media groups, and other activities centered on the social media concept.

• Ask for help. Social Media is an extremely powerful business tool, but if you don't use it correctly you can really screw things up in a hurry. There are numerous consultants and experts in the field of social media. It would probably be worth getting to know them.

What do you think?

Have some ideas to add? Did I get it right? Got a question for the panelists?

I invite you to join the conversation. After all, that's what this Social Media thing is all about, isn't it?