Calculating ROI on Web 2.0 tools

Many marketers are contemplating adding some form of new media to their marketing toolkit this year. How will this fit into their business? How to get started? How to get past the internal legal hurdles?

All excellent questions. But when marketers are asked to define ROI for their blog, it’s the one question that really throws them over the edge.

As Web 2.0 tools become more visible, and expensive in terms of both time and money, supporting them with underground budgets and late night resources just won’t cut it anymore. Marketers will need to provide a hard ROI for the dollars they spent.

Of course, the purists will argue that demanding accountability misses the whole point: The true value of Web 2.0 tools, they say, comes from the spontaneous expression of ideas and unstructured interactions such as through a blog or a podcast.

But there are ways to calculate return on your Web 2.0 investment. For example, for your blog, first get some highly targeted CPM numbers, such as you would when buying ad placements in any homogeneous community. Second, think about what it would cost to hire a dedicated company to just do WOM advertising for you. Next, think about the relative change in Net Promoter Score (NPS), and how that might be valued. Add these up, and it’s a compelling figure.

Another way to think about it is to start thinking less about ROI and more about Engagement. My theory here is I only care about 2 measurements: conversion events (like a registration, download of podcast, post to a blog or wiki) and the path a customer or prospect takes to get there. That’s all I care about right now. Why you ask? When a customer participates they become more engage and invested in your brand.

So where’s the Buzz? Arguably calculating ROI on Web 2.0 tools is not easy since there are so many “soft” aspects to it. But don’t underestimate the potential when a blogger genuinely embodies your company’s values, fueled by real passion, and has the ability to create entertaining content. Such an advocate can be a tremendous asset to your brand.

5 comments to Calculating ROI on Web 2.0 tools

  • Barrett

    Great post Paul, I agree with what you are saying is the purpose of blogging for companies, engagement, which is the main attraction for companies to blog. Getting to know the brand and the people behind can prove very helpful. That has been our main purpose with our Client Consulting blog at TechTarget.

    First time reader, great content here, keep it up.

  • Jenn

    Hi Paul!

    Thanks for the comments that you’ve shared, they have been most insightful, particularly around brand recognition. Have you seen any type of research or content out there that has made an attempt at measuring Web 2.0 ROI yet? I’d be especially interested to take a look at anything you’ve seen, I’m trying to put a task force together on this at my organization…

    Thanks, and keep the good content coming 🙂

  • Sudeep Gupta

    Hi Paul,

    really good thoughts, many companies are still thinking about Web 2.0 and how to utilize them from brand awareness perspective, your thoughts give a direction on ROI well before implementation. I think ability of a company to turn the collected database of contacts into live connections cajoling them to interact and stick with the brand will make all the difference.

    Cheers
    Sudeep
    http://sudeepguptaa.blogspot.com

  • SBL – Video tagging

    I agree with your idea…
    Great content…
    Keep up the good work…
    Regards,
    SBL – Video tagging

  • Rich

    Great content Paul, this is an area Web 2.0 believers are stuggling within their organizations. The “blind leap” of starting in this space it difficult to sell. Corrilating brand following to product selling isn’t a black and white conversation. Keep it coming and thanks for the validation.

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