Return on Influence, the New ROI

Three years ago, I invented a social media metric. I'd be lying if I said this was a divinely inspired event. I did it because it was necessary.

Here's the story: Three years ago, I was prepping for a meeting where I hoped to convince a major CPG brand that my celebrity client was more influential in social media than other celebrities, and therefore they should invest their dollars in my proposed "social media endorsement deal." (Remember at the time, Facebook was just emerging from its college roots and Twitter was nowhere yet.)

The dilemma, I knew, was the metrics. I knew that the company would expect me to defend my client's value with the standard "cold metrics"--reach, frequency, page views, impressions, eyeballs captured. Executives who are about to spend lots of money like numbers, even when they know they're flawed. Numbers help justify decisions, remove some risk, and limit accountability.

I agreed with the potential client that these were important to have, but I also knew they weren't enough. In social media, I argued, my celebrity client could have the same or a fewer number of fans, followers and website page views as another celebrity, but still be a better investment for the brand, because my client could convert more of those followers into something positive for the brand--click throughs, sign-ups, media consumption or even product purchases.

What drives that conversion are "warm metrics"--engagement levels, viral factors, sentiment analysis. Even today marketers can be skeptical of warm metrics, because they defy easy math. Three years ago, many were downright dismissive of them. They were the fluffy intangibles you used when you couldn't build a statistical case for investment. Business people like structure. We like rules, industry standards and compartments where our solid numbers to be housed. Sentiment? Not so much.

Still, I believed in this blend of cold and warm metrics. In fact, I believed if you ignored the warm metrics, you ran the risk of hiring the wrong social media partner, because the old school cold metrics alone are actually quite bad at capturing influence.

Still I had to prove it. So I came up with ROI - Return on Influence.

I was lucky to be able to draw upon my previous experience as the director of digital media and research for the Phoenix Suns. In that position, I was constantly needing to prove "fan affinity" (a warm metric) to big brand-marketing partners who spent seven figures on their sponsorship deals with the team. These brands had options, often with competitors (NFL, NHL, MLB) and more traditional channels (TV spots) that might be able to tell a better cold metric story than I could.

But I realized that social media provided a way to measure something fan affinity in a way a TV spot never could. Why? Social media communication is two-way. It's a dialogue versus a monologue. Instead of promotions, it creates conversations, sometimes unprompted conversations that can be listened to, recorded, and measured. No longer did we have to say, "Trust us, our fans really like the team." Suddenly I had data to show how fans really liked us.

This isn't just about celebrities or sports teams, either. Intuitively, it's easier for most people to grasp the concept when talking about tweeting wide receivers, but all brands have influence and it can be measured in the same way.

Once you recognize that each entry into the social conversation is creating influence, you track it. A tweet is a transaction. So is a retweet. So is a purchase that results from a retweet. Unlike outdoor and TV advertising, say, marketers can track online behavior from a social channel from the initial marketing message all the way through to purchase.

The next step is to associate influence to investment. This is where the dollars come in. Divide the total revenue generated via social efforts by the number of social media fans and followers, and you get a per-fan/follower value.

Once you do this, it opens eyes. I've found with brands varying from DoubleTree by Hilton to high profile individuals that there's a direct correlation between Return on Influence and Revenue Available Per Fan and Follower. The time interval of this relationship is the key variable that I'm still studying. When brands figure out how to control the amount of time lapsed between the cause and effect, the art of social media becomes scientific, and the warm metrics become as accepted as the cold ones.

The more marketers accept the concept of measuring influence relative to reach, the quicker social media industry standards will surface. Social networking revolves around the art of people interacting with people, not logos. People have influence. Things do not. Ultimately, influence is power that differentiates.


Amy Jo Martin