Return on Eyeballs: The new ROI
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.
——
See the other posts on this topic from my fabulous co-panelists:
12 Comments
I guess the key is to put yourself in the radar of interested people, and provide content they are interested in, whether just reading content, or interacting with you about that content.
A fascinating article that has come at a great time for me as I was considering giving up on Twitter despite having a decent number of followers.
By the way congratulations on the SXSW invite, usually I hear the noise about it going on way to late to actually go, maybe this coming one I will get there.
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Great post Sue. I wish more people understood the ROE value of Twitter, Facebook, blogs, etc.
Everyday, I’m amazed as some new opportunity or contact or even a sale that comes in because of those efforts.
It’s truly a new world.
Cheers,
Michele
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Hi Sue, I struggle with these questions every day as part of my current software project. For me being able to simply calculate dollars in and dollars out is the most commonly understood form of ROI but not necessarily the only one. What I’d like to do is figure out ways to stretch how ROI is perceived much in the way that you described. Great post and you have my vote.
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I think you’re bang-on, Sue. We all have too much of a tendency to boil success down to a set of tangible, supposedly apples-to-apples statistics related to clickthrough and bounce… and while there is never any guarantee of success, the more fertile fields seem to lie in places where statistical numbers don’t mean anything.
While the financial investment in social media can be relatively low there can be a considerable investment in time – so the calculation has include the opportunity cost for not doing something else (developing a new feature, calling baseball managers directly – or using social tools like linked in to get introduced etc).
Personally I think counting on serendipity is not compelling but your underlying points, know your audience, craft your message to it are – and as a tool to develop a psychographic profile of users social media can’t be beat. In what other media can you dig into underlying motivations through targeted questions or comments.
As to the issue of quantifying the value of specific followers (where to focus) – that is somewhat more difficult – but not impossible. It’s not numbers as you suggest but understanding the relationship between specific users and the trends you think grow your business. At the 100,000 foot level that’s a complex matrix of user reputation (both in your industry and to the people you want to influence) and keys to new trends, like the word or values that signify them.
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Hi. Sue.
I have given my thumbs up to your SXSW panel and hope I’m there to hear it. I also hope your perspective is less than a rogue one because it is a necessarily grounded one, notwithstanding the catchy line you’ve come up with.
I hope this doesn’t come as too much of a shock but … there’s nothing the least bit new about your ROI metric. It is a bit of a novel proposition within too many social media circles, though.
Here’s the thing … for as long as there has been even the slightest notion of measurement in marketing, it has been critical that we know how many people we are reaching. (And what sort of people, and so on.) But it has always been far more critical that we know what actions those people took as a consequence of our reaching them.
In your scenario, the fact that even a very tiny number of the owners of the eyeballs you reached acted on what those eyeballs saw produced the only return you were really interested in — selling more baseball bats. It was important that you sent the right message down the right channel but the only measurement of success that meant anything was sales. And that’s how it should be.
To Scott’s point, ROI doesn’t always have to be measured in dollars. Sometimes — often, in the world his clients populate — the objective is not sales but recruitment, or newsletter subscriptions or the very act of engagement itself. In which case, it still matters much less how many the message reaches and much more how many act on that message to achieve the desired objective.
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Great example, and so true, Sue. It’s not all about the numbers (though they are incredibly important) – it’s about how you get these numbers.
Does 10,000 initial sales matter if you don’t get return sales? Np. Your company will live off the profits of 10,000 sales, but that can go pretty fast. If you’re not keeping the eyeballs interested, you’re just making it harder to keep going in the long-term.
Give the eyeballs reason to be interested. Give the eyeballs reason to be.. well, eyes. Once you have the eyes, and the eyes of the people you’re after, it’s a little bit easier to make it into ROI – actionable ROI as well, just to please the traditionalists. 🙂
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Although I agree with you in general, I do urge people in this space to get a bit more scientific about things so we can move the yardsticks that will cause a social media tipping point on the business side. We’re so far from this, it ain’t even funny.
My job is exclusively focused on convincing people of social media ROI and then delivering on it. We work and interact with people at all levels, often in traditional markets, which makes it even harder.
The people on the ground we work with at many companies get it because they are involved themselves. They see the value plain as they and they’re chomping at the bit to do things and champion social media. However, the C-levels are very hard to convince and I find myself having to take more and more of the risk, meaning that we get paid X amount flat + Y incremental based on reaching certain goals. So far so good but still, kinda sucks because the goals aren’t always totally in our control.
For someone to cut you a cheque, you need more than anecdotes. That is of course not arguing against “the right eyeballs”, just hoping everyone works hard delivering the “proof” the C-levels need so we can all succeed.
Cheers,
@aisfan
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“Because it’s not always about how many people are interacting with your stuff. It’s about who is interacting with it.” It’s all about inciting future action, not just passive views. Which is an approach I deeply believe in (http://centerline.net/blog/?p=249).
Great post! Thanks!
John Lane
@johnvlane
Sue,
Very nice post. I really appreciate your articulation of the ROE concept. I’m deep into consulting with a marketing firm that is wisely determined to improve its social media acumen for itself and for its client service offerings. As always, measurement and ROI are tough concepts to navigate in social media.
Anyway, thanks again.
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[…] this blog about a concept that I think is, unfortunately, going by the wayside. It’s called “Return on Eyeballs”. The idea is, it’s not about targeting your stuff to people who are influential. It’s […]