Social Media – Replacing ROI

In our previous post, Use Social Media Monitoring Tools, we listed several free tools you can use to measure your social media presence.. In this post, we take a look at replacing ROI as the be-all, end-all metric for social media.


Replacing ROI

You’ll see lots of discussion about Social Media ROI (Return On Investment). But as you know, there are lots of everyday activities that are essential to the success of your organization whose value may be hard to quantify. Online wags have asked sarcastically, “What is the ROI of putting on your pants?” Or “What is the ROI of your phone?” Or even more cheekily: “What’s the ROI of your relationship with your mom?”

Sarcasm aside, there are a great many activities in the offline world that have a tenuous connection with ROI, including one of the mightiest and most-ingrained metrics in the offline advertising world: Cost Per Thousand Impressions (CPM).

In the classic print advertising model, deciding not to measure CPM would be career suicide. CPM is the mainstay of the advertising world despite the fact that it is actually a very gross measure.

For example, to calculate the CPM for a newspaper, take the cost of an ad divided by the news­paper’s circulation in thousands. However, this assumes that everyone who gets the newspaper has seen the ad, which is preposterous.

This offline measurement has been transferred to the Web, calculating the number of impressions (in thousands) of an ad being shown in a browser and dividing it by the cost of the ad.

The problem with CPM is it doesn’t close the loop — directly linking the impression to the desir­ed behav­ior (typically a purchase). Online and offline, organizations forge links between the number of impressions and purchasing behavior in a way that involves lots of assumptions (such as that an impression has one direct effect — purchase stimulation — rather than a variety of possible effects — tell a friend, improved opinion of the product, long-term attitude change, and so on).

Online, CPM doesn’t actually make a lot of sense for another big reason: The thing that causes the impression — a blog post, a Facebook post, and to a lesser degree, a Tweet — persists. Forever. Or at least as long as there’s a Google.

This means every action you take in social media has what is termed a long tail — a declining residual effect that may continue for years.

Here’s an example: Janet Fouts, a social media coach and speaker,[1] wrote a post about Twitter manners on her blog that received 86 clicks when she tweeted about it. In her Twitter post, Fouts included a link to the blog post that was shortened using the service, which tracks the number of times people click on the shortened link. (You’ll notice we use for the links in this book!)

Fouts says:

Over the next three months, the shortened link [ . . . ] was clicked 10,383 times. That means that once the link went out, people shared it in some way. It could have appeared in an e-mail, been re-tweeted on Twitter or another microblog service, or mentioned in a blog post. Of course that 10,000 click rate doesn’t begin to tell us what [the number of views] of the Twitter post was, but if we’re guessing there was a 20 percent click-through rate, then it may have been viewed 51,915 times so far.

So instead of measuring the effectiveness of that blog post by counting the 86 initial clicks, you need to factor in the long tail of more than 50,000 viewers.

Because of the long-tail effect, one of the first things to understand about measuring social media is that it takes time to see results. Since the metrics involved with social media are in their early days, you’ll want to experiment with various social media tactics, and their associated measurements. And you’ll want to be patient, trying various measures to craft the proper KPIs for your organization.

Social media theorist Brian Solis lists[2] various attempts to replace ROI as the dominant social media metric, including:

  • Return on Engagement — The duration of time spent either in conversation or interacting with social objects, and in turn, what transpired that’s worthy of measurement
  • Return on Participation — A metric tied to measuring and valuing the time spent participating in social media through conversations or the creation of social objects
  • Return on Involvement — Similar to participation, marketers explored touchpoints for documenting states of interaction and tied metrics and potential return of each
  • Return on Attention — In the attention economy, we assess the means to seize attention, hold it, and measure the response
  • Return on Trust — A variant on measuring customer loyalty and the likelihood for referrals, a trust barometer establishes the state of trust earned in social media engagement and the prospect of generating advocacy and how it impacts future business

To Solis’ list, we’d like to add Net Promoter Score® and Online Promoter™ Score, which we cover in the next posts.

Social Media – Replacing ROI is the 41st in a series of excerpts from our book, Be a Person: the Social Operating Manual for Enterprises (itself part of a series for different audiences). At this rate it’ll be a long time before we get through all 430 pages, but luckily, if you’re impatient, the book is available in paper form at and you can save $5 using Coupon Code 62YTRFCV

See the previous posts What is Social Media?, Social Sites Defined, Why Social Media? How is Social Media Relevant to Business? First Steps Toward a Social Media Strategy, and Decide What Your Business Will Do About Social Computing, pt. 1

Next up: Using Net Promoter Score to Measure Social Media Effectiveness

[1] Measuring Social Media’s Return on Engagement by Janet Fouts:

[2] The Maturation of Social Media ROI by Brian Solis: