Just to make sure we’re all on the same page – ROI = Return on Investment, which according to just about everything on the Wikipedia page revolves around money versus time
In finance, rate of return (ROR), also known as return on investment (ROI), rate of profit or sometimes just return, is the ratio of money gained or lost (realized or unrealized) on an investment relative to the amount of money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or net income/loss. The money invested may be referred to as the asset, capital, principal, or the cost basis of the investment. ROI is usually expressed as a percentage rather than a fraction.
Now onto the point of discussion. It all started earlier this evening when Jeremy Toeman posted this statement on Friendfeed
i have to say, friendfeed is actually *losing* value to me, not gaining it. if i don’t put in crazy energy here, pretty much nobody likes/comments my stuff, which pretty much makes using the site a waste of time. on a "ROI of my energy" perspective, my blog, Twitter, and even IM is seems like a better use of my time…
Which quickly blossomed into a full blown discussion due to the early input by Robert Scoble, who also posted a follow-up item on Friendfeed about Jeremy’s posted comment. Now I’m not even going to try and parse the conversation that developed between the two comments because that’s not the point of this post. That doesn’t mean that it’s not interesting and well worth reading.
What I am curious about though, is this idea that there is some sense of Return on (time) Investment when it comes to social media. Social Media isn’t about e-commerce. It isn’t about conversions. It isn’t about marketing or public relations. Yet in some ways it is about all of those things and a lot more.
At the root of it all it is about the conversation which in turn can mean many things to everybody involved. When it comes to Social Media though are we placing too much value on the financial aspects of the conversations and our time required to produce that financial consideration?
Personally I don’t like the idea of associating things like ROI with Social Media as it puts too much emphasis on doing everything we can to promote ourselves to the top of the pile. It becomes about using the tools rather than promoting the conversation. It becomes about the popularity rather than the content.
Popularity can be achieved rather cheaply but required a lot of time to maintain. Content that provides true value on the other hand isn’t created cheaply but once out there takes little to maintain. The conversation then can revolve around the quality of the item or quantity of the items. At neither point though does true ROI come into the equation, nor should it I believe.
Do you think that ROI should be a consideration when it comes to Social Media (not the tools) and if so why?
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I don't see roi in just economic terms – it can be just time vs pleasure. Say spending two hours to watch a terrible movie; that's a waste of time and zero roi. And I think it's totally applicable to social media since they can ask of our time and attention. Many early adopters have no problem investing a lot of time since it's their hobby, but many mainstream users are going to have a much higher expectaion of roi. Early adopters are easy.
A valid point Jason but even with mainstream users what is the return that should be expected? Or are we back to the financial gain (for someone) aspect again? I think that maybe ROI is the wrong term to be used .. not sure.
i absolutly think that the return-on-investment also is important in smm. depending on the objectives of a marketing effort in sm the roi can be hard to meisure.. i think when it comes to strategies like listening, the present knowledge and tools are not yet able to meisure a reliable roi. so at this time, even if we would like to, the roi cant be the one and only criteria – new technologies always bring a higher risk – and a higher potential revenue… so think about your smm budget wisely..
Hi Steven,
I think there is a purpose behind every action we take whether consciously or subconsciously. All forms of gratification whether it is happiness, peace, pride or something else entirely depend on what you expect (knowingly or not) to gain. This means that you have THE central position for each of your actions and you measure the fruits of your action willingly or not. (except if you’re a zombie)
That is probably why we rationalize so much.
Many bloggers today have very few readers and mainly blog or microblog to get the words out of their head, use it as a way to decompress. They don’t necessarily look for many followers.
For those who need something more and have the feeling they’re going nowhere I think some introspection time is needed and a ROI plan defined. I also don’t like the word ROI because of the “investment” part – sounds to me that an effort is required rather than something I enjoy doing. Maybe we can call it ROA (Return On Action) or something like that. Additionally, the return will be very different from one person to the other, based on the desire, need and even mood. My personal approach is to compare my online social activities to the ones I have in real life. The end is the same, but the means used are different.
Ask yourself why I’m taking 20 minutes to write this comment. Is it because I feel smart enough to give THE perfect answer and want you to read it? Is it because I feel the same way and want to share it? Do I try to promote myself and my blog? Maybe it’s all of them? Or none? Maybe I just feel compelled to react?
I’m not sure myself, but I know at least I feel better now that I acted because in a way I participated.
Indeed, sometimes a feeling is worth more than any measurable…
Well, that's my 2 cents.
@laurent: when i think about objectives for the private use of sm, 2 theories pop up in my mind:
1. the three objectives of using social media in german literature are: personality, information, relationships
2. the good old maslow…i think important are the three desires on top: self-actualization, needs for esteem, relationships.
i also think that there is a bit of all of them in a blog comment. in case of private sm usage, the roi is like you mentioned- uncoscious involved in every actipn – but not in a monetarian way! that is what makes it a lot easier for private people than for business owners to descide if the usage of sm is right for them..
Return on Investment is a fine measurement, though what the return is can vary and is often elusive. For me, FriendFeed is about learning – about turning data into information. The social aspect is just another part of the data stream – albeit a compelling one. As long as I learn, the investment is justified.
But to equate return on the number of Likes and Comments you get is … unfortunate. It's a Pavlovian popularity meter mentality. I would argue that it is just *that* mentality that might prevent the very type of return sought.
FriendFeed for me is an opportunity to learn and participate either actively or passively in topics I personally find interesting. I read Jeremy and Roberts threads yesterday in real time. I chose not to like or comment on the topic at the time despite the fact that I found the exchange to be both interesting and informative. I was honestly as interested in the subsequent slightly off topic debate as I was in the threads original intent. The return on Investment for me is an understanding of the basis for your post and learning about the dynamics of this medium as seen through participants lenses. Thanks for sharing yours
I agree Samuel that we really don't have the tools at this point in the development of Social Media to be able to measure a success / fail ratio. I would also like to think that if ROI is the accepted term to be used that it isn't the only measuring stick of getting value from participating in Social Media
The idea of an ROA value is interesting and yes I think you could be right about “a feeling is worth more than any measurable” (quantity). Thanks for taking the 20 minutes I appreciate it.
I'm beginning to see that ROI can work to a degree. I'm still processing all the feedback so far but I will probably do a short update post of my thoughts at some point today. Thanks for adding to the conversation AJ.
I sometimes find as much value in the 'off-topic' parts of conversations that develop as I do from the original conversation as well. It is interesting to see the varied understanding or interpretation of ROI as there is. thanks for contributing I appreciate it.
Measuring ROI is usually done to justify time or cost to someone else. As others have mentioned, there are conscious or unconscious reasons for using any site including FriendFeed. Even though likes and comments ARE Pavlovian they do reward activity. Where some see those who like too many items as an issue others know they keep users coming back.
Early adopters are “easy” as Webomatica said because what motivates their actions is different than what motivates the mainstream user. By not choosing to engage their early adopters who actively used and promoted them they have missed the golden opportunity to keep their cheerleaders cheering.
When some Social Networking site finally figures out how to provide what their users want but can not articulate THAT site will generate ROI for themselves, their users, and advertisers. I have explained precisely what that is in a post on my blog called “Nine Easy Steps to Monetizing Social Networking with Targeted Advertising”.
Well, I think about an example of “aged” relative who isn't very computer savvy. They constantly want to know what improvements will they get in their life from investing the time to learn something new on the computer. Say, will their life be improved in efficiency or pleasure by learning a new skill, which takes time.
This could apply to anything – say fly fishing which I know nothing about – I'm sure it would be really fun once I got pretty good at it, but I'd have to invest a lot of time getting up to speed and getting the equipment, etc.
It's not mandatory to think in terms of ROI for Social Media. ROI and other such metrics are a concern for only those who are in Social Media with a purpose other than pleasure.
Think of all those million facebook users that take silly(for some) quizzes religiously or millions of twitter users that broadcast anything and everthing that comes to their mind day in and day out. They never think about ROI and never will, Social Media for them is like TV.