I’m honoured to have been asked to be part of a proposed panel for this year’s South By Southwest 2010 conference, called “Prove It! Exploring Social Media ROI for Business”. I’m even more honoured to be sitting on the proposed panel with some of the people I admire most in the world of new media: Amber Naslund, Allan Isfan, Keith Burtis, Jason Falls, Jay Berkowitz and Justin Levy. I really hope you vote for us, because this group has an unbelievable amount of insight and experience in the world of social media. As businesspeople, they’ve broken new ground. As leaders, they’ve inspired and motivated. We’ve got lots of insight to share on the topic of Return on Investment in social media. Hope you’ll give us a chance to bring the discussion of social media ROI to this event.

I suppose Keith asked me to be part of this, not because he thinks I’m some sort of thought leader on ROI in social media (I’m definitely not), but because I come at the whole ROI thing from a bit of a different perspective. But just so you know, my co-panelists are definitely the best people to tell you the specifics about ROI, and you darn well better listen to them, too. I’m the rogue panelist of sorts, because I don’t necessarily know the “best” ways to measure ROI in social media. I know what’s working for me and for my clients. So I want to share with you what I’ve learned about ROI and how it plays out for me, in the hopes that it gives you a taste of what I want to talk about more when we (hopefully) get in front of you at SXSW.

Size doesn’t (always) matter. Measuring ROI in social media is a big, huge, fuzzy grey area for most people. It’s simply not cut and dry. Viewers and listeners and readers are much more intangible in this space. If 1,000 people read your blog post, but only 2 comment, is that good ROI? If you have 20,000 followers on Twitter, but only 3 of those people engage with you and tweet about your product, is that solid evidence that investing resources into building a social media presence is paying off? Many would argue no. Absolutely not. Three engaged followers does not a good ROI make. Might as well give up then, move on to the next thing, or go back to taking out an ad in your community newspaper.

I think that’s just plain wrong. Why?

Because it’s not always about how many people are interacting with your stuff. It’s about who is interacting with it.

Batting a thousand in a single tweet. Here’s a sports example (which is funny coming from me, because I don’t know a darn thing about sports). Let’s say you make custom baseball bats. You set up a blog about baseball bats that includes a link to buy your bats online, and create a Facebook group as an outpost to direct people back to your blog. 1,000 people sign up for your Facebook group. Out of those people, 500 click on the link to visit your blog. Out of those, 50 people buy a bat for $100. You make $5,000, of which $3,000 is profit. Not a bad return, considering it cost you nothing to set up your blog, your Facebook group and the PayPal account so people can purchase online.

Then one day, someone comes across you on Twitter. It turns out this someone is the Equipment Manager for the New York Yankees (Don’t laugh…why couldn’t this happen? Rob Cucuzza probably has the Internet too!). It just so happens that his players have been complaining that since their regular bat maker retired last year, the bats just haven’t been the same. Mr. Cucuzza sees a link on Twitter to your Facebook page, and sees hundreds of comments from people who are raving about your bats. He sends you a DM on Twitter, and before you know it, you are flying to New York to negotiate a 3-season contract to be the official baseball bat supplier to the New York frickin’ Yankees! It’s not long before other teams catch wind of your great bats and are banging down your door. Your profits for the 2010 season are $500,000.

$500,000, from a single tweet, seen by the right person, at the right time.

ROI is important, but so is ROE. The baseball bat story is an example of a subset of Return on Investment that I like to call “Return on Eyeballs”. You see, the game changer of social media and ROI is not how the numbers stack up…it’s how the eyeballs stack up. Now, more than any other point in the history of media, we have the opportunity to get our products and services in front of not only vast numbers of eyeballs, but in front of the right eyeballs. How long do you think it would have taken for you to get a meeting with the Yankees if you’d taken the traditional approach of writing a letter (or 100 letters), and making phone calls to 40 people up a chain till you get to the right person’s voicemail that’s never returned? Instead, one message, in front the right set of eyeballs at the right time and you’re in business.

Is there a certain amount of luck and serendipity involved here? Absolutely. But name me a business deal that hasn’t involved a certain amount of getting the right person’s attention at the right time. The cool thing about social media is, it hugely increases your odds of getting noticed by the people who can make the deals.

The trick is making sure you are getting the right messages to the right audiences across the right channels. That you’re putting it out there, but you’re also watching very carefully who is picking up your signal. That you’re engaged in the audiences that are engaged in what you have to offer.

Return on Eyeballs. It just may be the new ROI of social media. And if I’m doing it wrong, that’s okay too. There are lots of people out there making leaps and bounds in the world of Social Media ROI. But I can tell you from personal experience, that the right eyeballs are just as important as crunching the numbers when it comes to ROI.

So…you know those two engaged followers? Maybe it’s time you found out a little more about them.

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See the other posts on this topic from my fabulous co-panelists:

Allan Isfan
Keith Burtis
Jay Berkowitz
Jason Falls