Lost Social Media ROI Chapter
I recently rescinded my chapter in a book about “social media.” I did this because after seeing other pieces of the book, I was concerned that it would portray a definition of return on investment that may be misleading. Mine was to be one of 27 other pieces on social media return on investment. I’m not sure what this will become, but here it is for you to read.
Measuring Social Media Return on Investment When Marketing Specialized Services
Background
One of the big questions today is “how do you measure your social media return on investment (ROI)?” One of the major challenges is that while most of us understand what an investment is, (the expenses related to time, equipment, services, etc.), people try to measure return in a variety of ways, most of them wrong. Unfortunately for all of us, you can’t measure ROI with retweets, website visitors, “brand recognition,” or any of that. That is just foolishness. A return can only be measured in revenue generated or efficiencies gained that reduce operating costs. If you are a one man web design firm, it may be easy to gain a positive return on your investment because your investment is your time and expenses. But if you work in an office, it becomes a little more complicated. Now you have to take into account not just your salary but also overhead costs, which might be a multiple of your salary, and the opportunity cost associated with your other responsibilities. Selling specialized services (for example: construction claim analysis) adds another layer of complexity because you have a very niche audience that may be harder to find and connect with.
From a ROI perspective, involvement in social media is, in my humble opinion, on the riskier side of marketing tactics. But I can only speak from my experience, so let’s take a closer look at how me and my firm, a construction consulting firm, have used what is commonly referred to as social media.
Firm Strategy
The term “social media” came along quite a bit after my firm started experimenting with it. Neither I nor my firm ever had a social media strategy other than to experiment with ways to get in front of potential clients in a cheaper and more efficient manner. That was driving factor behind the Construction Netcast, our video podcast (and YouTube channel). One of our historically most successful marketing tactics was presenting seminars. The podcast was a cheaper and more efficient way to offer mini seminars related to our service offerings. We set up my camera, bought $150 worth of lights and, during the course of a couple of lunches filmed some 15-20 minute seminars off the cuff. It took maybe an hour of fiddling to get each episode on our server, which distributes them with bandwidth already paid for. I set up a website in a day for $65. Our total investment was less than $1,000.
While the Construction Netcast is still the most downloaded video podcast in our industry (well over 50,000 episode downloads), we have received calls with opportunities both in the US and abroad, and it is a more cost effective way to present seminars to a larger audience, I could not track a positive return on the experiment’s investment. Therefore, in 2008, i shifted my focus away from investing any significant time into the tactic.
We also recently developed an iPhone/iPad app as a cheaper and more efficient way to deliver an advertisement to our audience. One full-page ad in one of our industry’s top publications cost upwards of $16,000. Even a small campaign in a highly targeted local publication typically costs us at least $3,000. The iPhone/iPad app cost us less than $500. We will track which calls, if any, come about from the iPhone/iPad app. This is exactly what we have done for print ads. Something as simple as putting a unique phone number on your ad makes tracking ROI easy. From my standpoint, keeping your investment low is critical until you can prove, beyond a reasonable doubt, that there is a return to the investment. I recommend “bootstrapping” your efforts until a ROI on investment can be determined.
Personal Strategy
Some people think that setting up a Facebook or Twitter account for your firm and posting self-serving information about your firm is a great use of social media investment. I’ve talked to many social media users in the construction industry about this tactic and I have yet to see anyone make or save a dime this way.
I view Linkedin, Facebook, and Twitter as personal tools to help you maintain relationships with people. For example, the time it would take me to “ping” 200 contacts via the phone and email would be significant. But using LinkedIn and Twitter’s status update feature, I can ping well over 200 contacts each week rather easily, Even if they don’t check the websites, they will get an email from Linkedin containing my status update.
However, except for the occasional Linkedin use, I do not believe my time is best used on Linkedin or Twitter when I am in the office. Therefore, the majority of my Linkedin and Twitter use is set up during my train ride and automated throughout the day and week. I can check what others are doing and responding to on the train home to keep our conversations going. The opportunity cost is just too high for me to dedicate any amount of time during the workday.
By identifying potential clients on Twitter, I have been able to develop relationships and bring in a small amount of revenue (in the tens of thousands, which for an $8M/year firm is a pittance). However, these relationships may provide more return as they need our services in the future. Therefore, I view my use of Twitter and LinkedIn as a positive return on my personal investment but not high enough to trump my other, more traditional, marketing activities.
I’ve also helped create a group on LinkedIn called the Design & Construction Network (DCN). This group organizes real world networking events across the country. My involvement in this effort has helped me grow my professional network of industry contacts.
I also maintain a open blog for marketers in my industry on my personal time. This has helped me land writing and speaking gigs that increase my exposure in the industry. Not to mention, its part of the reason I was asked to contribute to this book.
Conclusion
The three rules of ROI are track, track, track. Track your investment and track revenue generated or efficiencies gained that reduce operating costs (i.e. return). Don’t even attempt to try and relate retweets, website visitors, or “brand recognition” to ROI. Bootstrap your efforts until you can prove a return on the investment and let your efforts grow organically from there. Look for ways that social media or technology can help you do what you already do, but more efficiently and cost effectively. If its not working within your test period, don’t be afraid to walk away. Interact with people and don’t forget to put the social in your social media efforts.
Author name: Matt Handal
As a marketer, producer of the Construction Netcast podcast, contributing editor of SMPS Marketer, co-author of the Marketing Handbook for the Design & Construction Professional, and Twitter.com’s @MattHandal, Matt sure is busy. But never too much to answer your questions at mhan7474@yahoo.com or post at www.HelpEverybodyEveryday.com, where you can sign up to receive his weekly articles.
Website URL: http://www.helpeverybodyeveryday.com, http://www.constructionnetcast.com, http://aeciphoneapp.com, and http://www.traunerconsulting.com
