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Measuring Online Conversation – Social Media ROI

I’m going to be honest.  I haven’t completely cracked this nut.  My gut tells me I’m going down the correct path, but I don’t have all the answers.  I’ll give you what I have thus far, and a glimpse of where I’m going with this problem.

My motivation for answering the Social Media ROI equation, stems from our clients’ needs.  They want proof, and I’m going to do my best to give them that proof.

In the most simple terms, if you believe that positive word of mouth generates an increases sales, then increasing word of mouth online should logically have a similar effect.  This is my starting point.  It sounds simple, but it has become a lot more complex, as I started peeling back the layers.

My next step was to look for correlations of month to month sales data, with increases or decreases of online mentions of brand x.  We had some initiatives to spur an increase in online conversation of brand x.  You could see the increase, it was very apparent, and there was a lag effect from the inception of the campaign.  It generated initial momentem for the span of about 1 month, then it hit a plateau, but sustained for about 3 additional months, then settled down to a day-to-day volume that was still 100% increase from before the initiative, where it still sits today.

When looking at sales data, from whatever source, you have to take into account numerous data points which affect this overall number.  Distribution changes, mechandising changes, TV, Print, Radio, FSI, Consumer Confidence, the wind blowing a butterfly in Africa, but seriously, there’s a lot that effects that number.  This is where a good analyst can sift through those data points, and give you a clearer picture of influence.  This is why it’s much easier for small business, who don’t always put money into those areas, see a much more dramatic increase in sales from an increase in positive online coversations.

So what does something like that look like?  Well, Mark Addicks – CMO of General Mills, showed the audience at Blogwell exactly what it looks like (via @josephrueter).  It maps online conversations/mentions of Fiber One to sales data.  According to General Mills, online conversation was the second leading driver of sales, while distribution was number one.

And I rest my case.

London School of Economics study finding an increase of online share of voice of 7% increased a business growth by 1%.