Are we making money yet? – a lesson in Social Media ROI

Are we making money yet? – a lesson in Social Media ROI
Heather Rubesch - Thu Nov 19, 2009 @ 04:18AM
Comments: 16

ruler moneyI had a chance to sit down recently with a Vice President of Marketing with a software company that is thriving in the recession.  She was proud to tell me they had experienced six straight quarters of growth and hadn’t laid off a single staff member during that time.  A very different conversation than I have had with others in the same industry.  I was interested to find out what part their social media strategy contributed to their staying ahead of competitors.  She assured me they were in fact proud of their efforts. Their blog, launched only nine months before, was definitely getting traffic but they weren’t really sure yet what part social media was playing in getting their message out.  She had devoted one full time marketing staff position to championing their social media efforts but this person was more of a coordinator and project manager who was actually prodding other members of the organization and serving as a standards bearer for the company efforts.

I hear this uncertainty a lot.  Companies know they need a social media presence to look current in their marketplace but is all that blogging, tweeting, Digging and LinkIning translating to dollars?  According to a recent study 84% of business professionals engaged in social media are not measuring the ROI of their efforts.  See chart below.

ROI Chart

I am an analyst by nature.  I know I am mentioned here before but I am really a data junkie so I knew there had to be a measurement for Social Media ROI and I set out to find it.

The absolute best explanation I found related to ROI is this presentation by Oliver Blanchard. 

In a mere 67 slides he conveys through humor the real world problem my VP of Marketing colleague was facing nine months into her social media investment.  I highly recommend sharing this with anyone you know who is struggling with the ambiguous results of their social media investment.

But still in my quest I needed a simple formula.  Something I could quickly whip out and draw on a white board to illustrate to my clients how they can do a gut check on their social media investment return.   So I found this post by Steve Gershik where he references an equation from Jason Stamper.  I couldn’t find this equation on Stamper’s own blog but I am trusting the citation was correct and if he ripped it off from you feel free to contact me and I will correct this post!

Anyway the equation credited to Jason Stamper says:


The assertion is that a Social Media Value greater than 1 shows ROI.  Most companies expect more than a 1 to 1 ROI for their marketing efforts but in this case a demonstrable ROI for Social Media coupled with all the “soft” factors that Blanchard mentions in his presentations might be enough to make your case.   Only time and trend tracking will tell long term if many social media campaigns are paying off but it is nice in the short term to have some tools to calm the nerves of less progressive business leaders.

I would love to hear from some readers about ways you have justified or quantified social media efforts based on ROI.  Is there a better formula out there?

Comments: 16


1. Billy Mitchell  |  my website   |   Thu Nov 19, 2009 @ 05:04AM

Thanks Heather for sharing the story example and the link to Blanchard's presentation. I'm linking to it next but the simple formula from Stamper you provided is right on the money. Literally.

2. Larry Kunz  |  my website   |   Thu Nov 19, 2009 @ 06:29AM

Good article. But I think the top line of the equation is oversimplified.

Is the real value found just in leads? Social media can help me find and develop leads, cultivate relationships with those leads so that they become paying customers, and support those customers. All of those factor into ROI. The social media manager (Blanchard's guy in the little car) needs to convince the bosses that all of these have value.

By the way, I love the Blanchard slides. Thanks for including the link to them.

3. Kathy Tito  |  my website   |   Thu Nov 19, 2009 @ 07:08AM

Not sure if it's about inbound lead gen - OR - strengthening a company's ability to move prospects through the sales funnel with multiple, credible touchpoints.
"Selling points" of social media may be:

Competitive differentiation
Establish credibility
Stay on prospect's radar with daily/weekly messages
Demonstrate market knowledge

I would begin to look at closed sales, and ask if social media content influenced their decision-making process...

4. Jimmy  |  my website   |   Thu Nov 19, 2009 @ 07:31AM

Thanks for sharing the Oliver Blanchard's presentation and Stamper's formula. These are great resources!

5. Heather Rubesch  |  my website   |   Thu Nov 19, 2009 @ 08:15AM

Larry - I couldn't agree more that the top line is oversimplified but you have to start somewhere. Particularly in the case of the the VP of Marketing I was talking with that is only 9 months in. She needs something to show her internal shakeholders (both upper management and internal blog contributors) that there is value to their efforts. I think the long term relationship cultivation is the greater value long term but very hard to measure for a company 9 months into their effort.

Thanks for taking the time to comment. I appreciate the feedback!


6. Heather Rubesch  |  my website   |   Thu Nov 19, 2009 @ 08:21AM

Kathy - I agree completely with your assertion that Thought Leadership (through the 4 selling points you define) does serve to move clients through the sales funnel. Comprehensive case studies of sales on the backend would reveal this but as most B2B sales cycles are long in nature it will be a hard result to ever truly measure. Field sales people need to be trained to listen for clues that prospects are giving them about having come through social media channels so they can circle back with marketing to reinforce the efforts. In a perfect world anyway!

Thanks for sharing your thoughts!


7. Christopher Ryan  |  my website   |   Sun Nov 22, 2009 @ 07:27AM

Heather, this is an excellent discussion. Many B2B marketers are struggling with the issue of how to quantify the impact of social media. Since a lot of the positive benefit of social media comes early in the sales cycle (generating awareness, education, prospect self-qualification, etc.), it is tougher to measure than traditional lead generation campaigns. But tougher to measure is not the same as non-important. Those who diligently practice social media tend to have better overall results than those who do not.

Christopher Ryan

8. Shelly John  |  my website   |   Tue Aug 19, 2014 @ 06:36AM

The article is absolute true. There was a recent survey of Chief marketing officers that nearly 49 Percent (ie. half) they were unable to quantify whether social media had made any difference to their companies. there were only 15 percent people to observe the quantitative impact.

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