How I know you’re full of it about ROI

Horse manure (courtesy markyweiss at Flickr CC)I’m getting cranky about how some folks misuse the acronym ROI (Return on Investment) particularly with regard to the ROI of social media and bloggers.

ROI is a mathematical formula, with results usually expressed as a percentage.

Nothing more, nothing less.

Here it is in its simplest form:

(Return – Investment)
________________
Investment

You cannot determine ROI until you have data for the Return (results) part of the equation, and you must also accurately track the many things that go into your Investment. There’s money, but there’s also time, number of staff members required, etc.

To measure the ROI of, say, a blogger outreach program, you must have:

1) Predetermined goals for your investment of time, money and effort, and….

2) Predetermined metrics (KPIs or Key Performance Indicators) that you’re going to use to measure whether or not you are reaching those goals.

If you do not have all that, then any tossed-off mention of “ROI” is, well, mostly horse manure (see illustrative image above in case there’s any confusion or misunderstanding.)

This is lazy business thinking, and it’s also often a smoke screen for not setting sensible, clear goals ahead of social media efforts, and then digging through the data without twisting it to make it say what you’d like it to say.

ROI = “Really Outrageously Ignorant”

It’s also a way for some who do not understand the social web to sound like they’re making tough, practical business decisions when in fact they don’t know much about this new online and mobile world of ours, but are loathe to let anyone know of their ignorance.

When someone asks me an unfocused question like, “What’s the ROI of one of your travel blog posts?” I immediately know that they do not know what the hell they’re talking about.

If instead, for example, you tell me that you want the content from a blogger fam tour or press trip to your destination to:

—->>  Achieve a goal of increased interest in your destination, measured by….

—->>  KPI #1 of “X” amount of increased traffic (over a previously measured baseline) to a specific website landing page that you’ve set up with analytics beforehand and told the bloggers the URL, and ….

—->>  KPI #2 of “X” amount of conversions from that landing page traffic; conversions defined as, say, downloads of your tourism brochure or signups for your email newsletter….

THEN we can talk sensibly and accurately about the ROI of my blog posts and other online publishing, and whether bloggers are worth your time and effort.

How are you handling the often-thorny ROI issue? Let’s talk in the comments below!

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6 Responses to How I know you’re full of it about ROI

  1. Donna Hull says:

    I was discussing this very topic with a group of travel bloggers this morning. Your remarks are right on. It all starts with a goal, then progresses to how to measure the results of the actions aimed at that goal. As a travel writer/blogger, when a company or destination approaches me about a project, one of the questions that I’m going to be asking them is, “what is your goal?” Then, we’ll talk about how I might help them achieve it.

  2. Sheila says:

    Thanks, Donna. Your boomer travel site is one of my favorites!

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