Charlene Li of Forrester Research has now released (blog post) her research paper into measuring the return-on-investment (ROI) of business blogging. I was promised a copy of the paper when I signed up for a webinar on the subject back in October, so hopefully I’ll be able to report in more depth soon without coughing up the $279 that Forrester is asking.
[Update: Yay - got my copy. May take a few days to digest.]
Li says that the report found six main benefits cited by those companies interviewed: “greater brand visibility in mainstream media on the Web, word of mouth, improved brand perception, instantaneous consumer feedback, increased sales efficiency and fewer “customer service-driven PR blowups.”
In relation to the GM Fastlane blog, researchers found that when all these factors were costed, the blog “generated $578,000 in value on an investment of $291,000″. Impressive figures. However, these benefits were measured against quite specific goals: “to share information about its products and to start a dialogue between GM leaders and customers” was a main one (or two). The report measures the cost of getting 100 people to comment on the blog, compared to the cost of getting equivalent customer insight through focus groups “at the cost of $15,000 a month, or $180,000 a year”.
This kind of begs the question – or two questions. First, are those two things equivalent? I’m a big fan of company blogs, make no mistake, but I am not sure they are. Second, what about if you only spent $5000 a month on those focus groups? Does that mean that your blog actually made a loss? Yes, it would, if your stated aim is obtaining that feedback and nothing else.
A similar case might be brought against ‘word of mouth’ as a goal. If you take the ‘advertising equivalent’ approach – a common, if unpopular, metric of PR activities – then you may or may not be able to show a return. But are those things ‘equivalent’? Surely, you’ve achieved something very different by not using advertising to stimulate word of mouth.
Lots of questions, and I’m not an expert. I guess my feeling is that:
(a) While attempts to distil blogging ROI into an Excel sheet are undoubtedly a very good idea, and perhaps the only way some marketing execs will be able to get the plan past the grumpy FD, I think it’s a good idea to make your aims fairly broad. Measuring the power of a blog against the cost of focus groups (or advertising; or traditional PR; or more service reps; or a longer development cycle) is potentially putting the blogging champion into a corner if the aforementioned grumpy FD turns round with an alternative, less costly plan to deliver the same result.
(b) It’s pretty hard to measure the returns on something that’s actually very different to its alternatives by costing up those supposed equivalents. Having a business blog is not the same thing as doing some PR, some advertising and some focus groups. It can allow you to achieve some of the same aims, but it also has its own unique benefits that aren’t easily achieved in any other way. I’d say that achieving the impression that people are listening at your company is one of the main advantages of the blog format, for example. So is having a better Google position for your CEO’s name. So is the ability for customers to talk to that person in an intimate way. The equivalence model doesn’t really help measure ROI on these benefits.
Check Li’s blog post – linked above – for a good list of blogging ROI FAQs. Look forward to getting my hands on the paper.
Technorati: blogging, blogs, Forrester, ROI
I think blogging is very similar to PR. You may think it’s different, but in many ways third party credibility — which is my definition of PR — is garnered. Whether that’s placement in a search engine or a cross link to another blog is irrelevant. The visibility of the entity is raised by other parties.
I’m not so sure – though it depends on your PR representation, of course – but blogs are also ‘first party’ credibility. You can talk to the MD, which is golden as an opportunity.
I’d say blogs in their own right are about as credible as advertising. It depends on how discerning the reader is…
[...] ROI Revisited | twopointouch: web 2.0, blogs and social media: As blogging becomes an acceptable way to make money, naturally people will figure out more ways to financially forecast success. [...]
I don’t know if “business” blogging means a business as it faces customers or as it faces its employees.
But, in terms of facing customers, the potential for 3rd party credibility is there. I am thinking of the Trump Blog which I have visited a couple of times. It purports to be an information provider and a university if you pay a fee, but in reality it is a big PR engine. I wonder what the ROI is on this site? It’s got to be huge.
Ian, I like your point on 1st party credibility.
Ian. This does Forrester no good at all.
The whole advertising equivelent argument is juts not credible. This is shoe horning social media into press advertsing metrics.
Blog comments are not ads, they are editorial; Blog commenst can be nice and nasty does this mean negative value; Blog comments are networked; blog comments are lurked; blog comments interact with other relationship clouds (Digg? Flickr? YouTube? etc).
What do we mean by ROI? Is this discounted ROI; is the investment of the third party bloggers included – and where; is The Long Tail and assets or on the trading account? There are so many flaws in the methodology that I wince.
David – I hope it’s clear that I mostly agree with you. I like the idea of understanding the costs and gains associated with blogs – and I think it’s important that social media champions are credible and accountable. However, yes, equating it to the equivalent cost of some other marketing activity feels misguided.
Bob – the Trump blog sounds like it’s probably not the best example of embracing this format!
I read a piece on this subject by Drew B’s take on tech PR. Drew linked to a Forrester marketing model to help you cost your company blog.
Not very convincing at all.
Yes, busiensses need and should measure ROI on their marketing activities. But Forrester and many other businesses have missed the point. It’s as much about reputation and building communities, in this case business communities.
What will the financial director cost that at?
If a blog is to make a real difference to a business it must be set-up with a view to complementing current marketing, not for ticking boxes and assigning dubious values to its success.
Afterall blogs and social media can reach influential and hard to get customer segments. What is the value of this attribute when it is applied well?
Let’s start applying numerical values to literature: story vs expression= greatness of novel