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Jan26
Social Media Marketing: It’s All About The ROI
There’s a lot of conversation going on in boardrooms, at conferences and other places where executives congregate about social media marketing.  Some have embraced the power of this communications strategy to drive visibility, improve customer responsiveness and put a “human face” on the organization.  However, when it comes down to brass tacks everyone wants to know: what’s going to be the return on investment (ROI) of social media marketing?

Well, the good folks at Forrester, specifically Charlene Li, Chloe Stromberg and Tenley McHarg, have provided a great service to interactive marketers everywhere.  They have just developed and published a very interesting model for calculating the ROI of blogging.  Li and colleagues have produced two documents: The ROI of Blogging and Calculating the ROI of Blogging: A Case Study.  

Because I attended the Forrester/Cymfony Webinar on this topic, I received complimentary copies of both documents (they are available for purchase on Forrester’s Website).  I was especially interested in Forrester’s analysis of GM’s FastLane blog, which I highlighted last year.  According to Forrester’s calculations:

“We estimate that the ROI of FastLane for its first year of operation in 2005 was
99%, and the estimated ROI for 2006 was lower at 61% primarily because of fewer stories about the blog. Our predicted risk-adjusted ROI for 2007 is 39%, again because of the continued decline in press coverage.”  

These are significant numbers by any measure.  In addition, I found it very interesting that Forrester says that “GM’s innovation with social media has become a symbol for its ability to innovate on the design and engineering fronts [emphasis mine].”  This clearly indicates that GM is not blogging for blogging’s sake, but doing so to reinforce its core corporate identity/brand.  

Thanks Forrester for this important contribution to the interactive and social marketing arena.  

2 Comments/Trackbacks




Not having read the Forrester analysis, I ask "Is ROI the right measure? Is it meaningful for most companies?"

In the GM example, how much did they have to invest to create and promote a blog? ...perhaps a few salaries, some PR $$...a small company could do this for 5 figures, even if GM might have gone into 7 figures.

So what's the big deal? Let's assume GM spent $10 million and they doubled their money...this is a rounding error for a company like GM. I don't get it.

Vince:

Thanks for your comment. For corporate execs, ROI is a critical measure -- especially for a marketing activity. They need some way to quantify the risk/rewards of an effort so that they can sell it upstairs, downstairs, sideways, etc.

Although I've seen the full report, I can't provide a link b/c Forrester's selling it. However, please check out Charlene's blog for more info and conversation here: http://blogs.forrester.com/charleneli/2007/01/new_roi_of_blog.html.

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