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Making sense of social-media ROI with Olivier Blanchard

Olivier Blanchard is perhaps the most sought-after expert for those looking to connect the dots between social media and return-on-investment. Not only are we lucky enough to have him on our SmartBrief on Social Media Advisory Board, Olivier is sending off the Buzz 2010 Summer Series with a serious exclamation point. Before we introduce him to the association and nonprofit world here in D.C. on Wednesday, we wanted to throw some questions at him for the greater good.

The chatter around ROI seems to be as loud as ever. What would you attribute this to? Are we at a pivotal moment for business proving value for social media activities?

The chatter around social-media ROI is as strong as ever for two reasons: The first is simply because ROI [points to] one of the most important questions an organization can ask before green-lighting a social-media program: I could spend this budget somewhere else — Why should I spend it on social media? Before any other questions can be asked, you have to start with “why.”

The second is that most social-media “experts” seem incapable of a) being able to define ROI … and b) plug social media into a [profit-and-loss statement] and actual business objectives. Most [social-media marketers], having no true management background, they simply don’t understand how to tie social-media measurement and performance to business measurement and performance. This lack of business-management experience is a major problem in a field where everyone seems to have become an “expert” overnight.

As long as these so called “experts” fail to answer the ROI question, the chatter will continue. Ironically, the question can be answered in about three minutes. All it takes is someone on the social-media side of the table who understands how to plug new communications into a business from the C-suite’s perspective.

Have you noticed a recurring point where businesses and organizations decide to get serious about applying ROI to social activities? Is it based on experience, resources allocated or both?

Every organization is different. Some want to establish upfront measurement practices that include ROI from the very start. These are organizations with a specific focus or clear goals. ROI is based on accomplishing those goals. The program won’t get the go-ahead until every “t” has been crossed.

Others don’t get around to asking about ROI until 6 to 18 months after a program has begun and budgets need to be reviewed. Trust me, when 10% of your group’s budget is being cut, you start asking hard questions. Social-media programs not clearly in support of specific business objectives had better come up with a good answer when the budget hatchet starts to come down.

Typically, companies that start by identifying ROI before a social-media budget is assigned, people [are] recruited and the project is even outlined, fare better than their counterparts.

How can those who are in the trenches, but not selling product or services themselves, best justify their social efforts/hours to their bosses and peers?

By aligning their activities and objectives with key business objectives. The fastest way to ensure that your budget is renewed or validated is to show that you play a part in making the P&L positive.

Perhaps your group saves the organization money by using social media. Customer service is an example. Media buying, reach, could show some interesting cost reductions, [with social media] increasing reach while reducing relative Cost Per Impression. Perhaps your group generates not sales but leads by using [social-media] channels in insightful ways. There are dozens upon dozens of ways to ensure that your program can be shown to contribute to either reducing costs or generating revenue. What you don’t want to be is a “cost center” alone, or worse yet, the project team that can’t articulate its value to the organization. Which happens.

At Wednesday’s Buzz 2010 event here D.C., Olivier will be speaking with an association and nonprofit audience — taking a closer look at how¬† organizations that are looking to provide customer (or member) value via social media build satisfaction into the ROI equation. Join us in person or follow the event with #buzz2010.

Image credit, Olivier Blanchard