Monday, June 1, 2009

Math Muddies the Social Media Waters

Can a mathematical equation serve as the foundation of a value proposition to a prospective client?

A few years back Strategic Communications Group (Strategic) represented an innovative developer of software that helped companies make better decisions about where to direct their marketing spend. The core of MarketSwitch’s optimization product was a patented, mathematical process that allowed users to create interactive “what if” scenarios.

MarketSwitch’s CEO was one of those rare executives who had true public relations rock star potential. He was smart, well-spoken, opinionated and passionate about the company and its product. Yet, he had this unfortunate habit in an interview of digressing into a discussion of the math behind the technology, peppering his comments with phrases like “n-th potential.”

You could almost feel the air of interest squeeze out of the room as the English-degreed journalist struggled to follow. As a result, our media relations efforts on MarketSwitch’s behalf typically faltered at the point of interview.

Last week I came across a well thought and carefully crafted blog post from Jay Deragon that presents the return on investment (ROI) from a social media program. The conclusion is compelling: for a time investment of roughly $26,000 an individual can develop, manage and leverage their engagement in social networks and related promotion of thought leadership content.

Deragon even makes the all important leap of comparing this cost and anticipated ROI in terms of lead generation and sales to other marketing tactics, such as advertising, collateral materials and direct mail. It’s no surprise that social media stands tall in its ability to deliver tremendous value and return.

As someone whose professional charge is to market and sell social media and digital communications services to corporate buyers, you’d think I would be shilling Deragon’s blog post to every client and prospect on my radar. Not so fast.

Like MarketSwitch’s n-th potential, Deragon bases his social media analysis and ROI assessment on a statistical equation called Net Present Value (NPV). While I am confident this would be of great interest to the corporate finance department, social media investments tend to made by marketers and corporate communications professionals.

It’s best to keep the business case for the incorporation of social media into the marketing mix clear and concise: generate leads, support the sales cycle, improve search engine optimization (SEO), and enhance executive visibility and thought leadership. (NPV equation source: British Computer College.)

Let’s leave NPV to the accountants.

1 comment:

Kelly Marshall said...

This was very interesting and I think that increasingly marketers of every industry are trying to "measure" ROI and the value of social media with numbers and metrics that are quantitative instead of focusing on qualitative measures such as the tone of a comment on your Facebook page or the loyalty gained from a previous one-time client.