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Measuring ROI of social media
Giving a presentation in a couple of weeks and am curious for other perspectives.
Anyone done any work with this? I'm look for a very analytic approach that is based on numbers and formulas. It should be delivered via a spread sheet, not a power point. I'm basing my work on the financial field of intangible asset valuation. Looking at things like replacement-cost, capital markets, royalty rights, etc. type of brand valuations.
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3 Answers
Marcus, are you trying to measure ROI or value? For me, ROI is tied directly to sales. However, value is a taking the intangible (metrics, conversions, etc.) and assigning it a dollar amount that adds to the overall equity of the company. If you're talking ROI in terms of how I try to classify it, I wrote a short blog post about it here: http://blog.sharedvue.com/2010/08/showing-roi-for-your-social-media-activities/
Josh, no doubt, to have ROI you need to have revenue. If you can't model revenue in what you are doing you aren't talking about ROI. That is why I find so little use in many of the main stream efforts I've seen in this direction. The term ROI is being used way to liberally. I like what you've laid in your approach from an indirect perspective, and really love what Tamara Mendelsohn over at Eventbrite is doing from a direct perspective (http://bit.ly/d8g8Rf)
Thanks, Marcus. And I think you are 100% right about Eventbright. They have a great fix on their marketplace and rolling out their own conversion calculation metrics is genius. I feel like that may be the approach companies need to take as they come into the "new media" realm.
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