One issue that keeps coming up over and over again is how to
measure the ROI of blogs. I’ve written
about this in the past and have been stewing over how to go beyond the
intangible “blogging is good for your business” exhortations to quantify
blogging’s benefit to organizations.
Well, we’re getting close but we could use some help. My
colleague, Chloe Stromberg, and I have been interviewing companies about how
they measure ROI and realized that we needed to throw the net wider – this is
where you come in!
The working idea is to create a framework for measuring the
ROI of external blogging efforts for medium- and large-sized companies. Below
is an outline of ingredients for the framework. Please help us by fleshing
out sources, providing examples, and adding/editing our ROI factors – feel free
to add comments to this post or to email
us directly (if you’d prefer, we’ll keep specific numbers and examples
confidential and use them only as background).
In turn, we’ll cite significant contributors in the upcoming
report and will also send the contributors a copy when it is published. The
report will also include information we’ve gathered from our research, as well
as our synthesis and analysis. I’ve also included a few links to resources we’ve
found helpful so far.
The ROI Of External Blogging Framework
The ROI of blogs can be broken down into three components:
1) Benefits; 2) Costs; 3) Risks
Potential Benefits
& Measurement
One of the hardest things to do with blogs is to quantify
the benefits, mainly because there’s a blog for almost everything under the
sun. For example, you can’t compare the ROI of Direct2Dell.com to Microsoft’s Jobsblog as they have completely
different goals. Hence, measuring just traffic to a blog or the number of
comments on a post means little unless the traffic or the comments are linked
to value creation. This gets at the task of measuring intangibles – what does
it mean for an additional visitor to come to the blog or contribute a comment?
One parallel to consider – how do companies measure the
value of public relations? We found one paper by Fraser Likel, et. al. “Perspectives
on the ROI of Media Relations Publicity Efforts” that was helpful in this
area. Likel, et. al. break down the ROI of PR into four approaches: 1) return
on impressions; 2) return on media impact (akin to market mix modeling); 3) return
on target influence; and 4) return on earned media
I currently suggest that companies start with metrics that
they already use within the company so that 1) the metrics are familiar; and 2)
it makes it easier to compare the blog’s value to other marketing and
communication channels. So here’s an attempt at some of the ways intangible
value can be quantified. I’d love to get your thoughts on how feasible it is to
actually measure these things and also, how your company measures blogging’s
benefits.
|
Benefit
|
Appropriate
measurement
|
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Consumer self-education
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Higher conversion rate for blog visitors
|
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Greater visibility in search results
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Increased traffic from search to blog
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Lower the cost of public relations
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Generate the same level of awareness as PR
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Reach an enthusiast community
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Lower cost communication tool
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Address criticisms on other blogs/news stories
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Measure the slow down of bad news spreading
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More responsive to consumer concerns
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Track customer satisfaction and retention
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Improve employee innovation and productivity
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Track employee satisfaction and retention
|
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Improved stock price with greater visibility into the
organization
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Connect improved investor sentiment to blog readership
|
Potential Costs &
Measurement
This section is pretty straight forward and is separated
into set-up and recurring costs. Some obvious areas include blogging platform
costs, training, policy creation, and employee time. The biggest area of
feedback I could really use is how you have had to scale up as your blog has
grown more successful. Have you had to invest in more hardward/hosting costs to
handle the traffic? How much more time does it take to handle incoming
comments, trackbacks, and spam? And there’s also the additional time it takes
to monitor and comment on topics that appear on other blogs.
Potential Risks &
Measurement
The perceived risk of having a corporate blog often
overshadows all of the benefits that can accrue from them. One best practice I
have seen is when the senior executive asked the blog champion to come back
with a list of the top five things that can go wrong – and to also include the training
and policies he would need to have in place to mitigate that risk. To calculate
the impact of risk, it needs to be quantified. So here’s an example.
Let’s say that the risk is someone divulges confidential
company financials just before an earnings release. The risk can be quantified
as $1 million in legal fees to deal with the SEC and another $2 million in lost
goodwill from the company’s brand and reputation. The risk mitigation plan is
to provide $10,000 in training to the bloggers and to have all posts reviewed
by Investor Relations. With these policies in place, the team expects that only
1 post out of a 1000 (0.1%) may contain any confidential company information,
and that 1 in 10,000 (0.01%) would actually result in the full loss. Do the
math and multiple the probability by the cost of the risk and you’ll come out
with 0.01% * $3M = $300 in factored costs against which to weigh the benefits. The
real impact on the ROI will come not from the probability-weighed cost of the
risk, but from the risk mitigation efforts required.
Putting It All
Together
Once you have the benefits, costs, and weighted risks
figured out, simply divide the benefits by the costs + risks to arrive at the
ROI. The key is what to use it for – it’s not enough, I believe, to use the ROI
calculation only to justify a blog. It should also be used to manage and
optimize the performance of the blog on an ongoing basis.
So I hope you find this interesting and helpful – and I
encourage you to add your suggestions, ideas, and examples to the discussion.
Additional Resources
Constantin Basturea’s del.icio.us page for the “ROI”
tag. Constantin is currently at Converseon
and was a co-founder of NewPRWiki, one
of my favorite reference sites.
“Perspective
on the ROI of Media Relations Publicity Efforts”, by Fraser Likely, David
Rockland, Mark Weiner.
“Market Metrics: Measuring
The Impact Of Blogs And Mainstream Media To A Brand”, a podcast interview with
Deborah Eastman from Biz360 on Marketing Voices
“The
ROI of blogging and whether Jonathan Schwartz’s blog pays for itself” from
Jason Stamper’s, Computer
Business Review Online
Lastly, this is very last minute, but I will be speaking on
Tuesday, Oct. 3rd at a free
Webinar on the “ROI of Blogging”, hosted by Cymfony. If a link is available to a
recording, I’ll post it here as well. (Disclosure: the host of the Webinar, Jim
Nail, is a former colleague of mine at Forrester.)