Judging by the conversations that have taken place over the past few months on social media, the general consensus is that the there is no clear ROI (Return on Investment). Typically and importantly, the ROI is correlated with revenue.
However, in marketing, despite the use of marketing metrics, there is
not clear ROI, and various methods must be utilized to maximize the
effectiveness of certain media. However, with the advent of the social
web that engages the public about your product or service a transition
in the thinking of ROI should take place. Web 2.0 is all about building
relationships and metrics should be developed to effectively measure
Return on Marketing Investment (ROMI) and Marketing ROI
are defined as the optimization of marketing spend for the short and
long term in support of the brand strategy by building a market model
using valid, objective marketing metrics.
Improving ROMI leads to improved marketing effectiveness, increased
revenue, profit and market share for the same amount of marketing
spend. As for social media, there are no clear models that say, “if 10%
of our consumers are having conversations on our products, 25% of the
people that they reach will convert (buy a the product). This
definition simply equates to revenues, and it should not be used when
it comes to social media; it demands its own terminology.
Digital Return On Marketing Investment (Digital Romi)
is new term that I believe most effectively measures social media
usage. Digital Romi is the measure of the overall digital impact as a
result of online marketing methods. The major maketing investments here
is the time it takes to provide knowledge and awareness on a product or
service through social media, and the time it takes to analyze the
resulting conversations and traffic. The are two types of Impacts: Qualitative and Quantitative.
Qualitative Impact measures the relevancy of the conversations and the contributions made to the processes and ideas to the company. Quantitative Impact measures
the number of memberships, mailing list , social network followers,
business network connections, inbound links, unique and returning
visitors, etc. These digital impact metrics will give you further
insight to your digital romi.
Forrester research as described by the book Groundswell, measures
the social technographics of online consumers. From their research they
have formed six type of consumers: Creators, Critics, Collectors,
Joiners, Spectators, Inactives. Digital Romi methods measure the
impacts of creators, critics, collectors, joiners. Spectators can be
measured through the number of unique visitors and returning visitors
to company web pages. So it is safe to say that approximately 100% will
contribute to your Digital Romi in some form or another and will be a
Analysis of Qualitative and Quantitative Impacts should be measured
on a daily basis. An added benefit is there will be quicker response
time to consumers. The data should be aggregated on a monthly basis and
compared at every three months to see trends.