Much has been written about the ROI that can be generated by Social Media, I’ve read many kinds of ROI’s, all trying to reflect efforts and its return.

But there’s a paradox when having a closer look at the two terms in relation to the new open business environement.
First let’s decompose ROI and Social Media.

ROI:

A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio.

Keep in mind that the calculation for return on investment and, therefore the definition, can be modified to suit the situation -it all depends on what you include as returns and costs. The definition of the term in the broadest sense just attempts to measure the profitability of an investment and, as such, there is no one “right” calculation.

For example, a marketer may compare two different products by dividing the revenue that each product has generated by its respective marketing expenses. A financial analyst, however, may compare the same two products using an entirely different ROI calculation, perhaps by dividing the net income of an investment by the total value of all resources that have been employed to make and sell the product.

This flexibility has a downside, as ROI calculations can be easily manipulated to suit the user’s purposes, and the result can be expressed in many different ways. When using this metric, make sure you understand what inputs are being used.

Secondly, let’s have a look at the definition of Social Media:

Social Media is media designed to be disseminated through social interaction, created using highly accessible and scalable publishing techniques. Social media uses Internet and web-based technologies to transform broadcast media monologues (one to many) into social media dialogues (many to many). It supports the democratization of knowledge and information, transforming people from content consumers into content producers. Andreas Kaplan and Michael Haenlein define social media as “a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of user-generated content. Businesses also refer to social media as user-generated content (UGC) or consumer-generated media (CGM). Social media utilization is believed to be a driving factor in the idea that the current period in time will be defined as the Attention Age.

When thinking of both terms and and how they can relate to each other, I conclude that the terms are “forced” in order to create meaning with current understanding and definitions.
The ROI of Social Media is like trying to ascribe ROI to a telephone line.
Part misinterpretation and misunderstanding of both terms and part the necessity to quantify in order to meet business objectives, are reasons why this enigma won’t be solved soon.

Return on Investment is a short term metric, a direct relation between cost and return is calculated, and (short term) objectives don’t have much room for tactics or actions that don’t add direct value to the ROI.
Here’s where the complication is, communication and interaction often do not add direct value to a quantifyable objective (for example sales).
The best example within Social Media is Trust. How can the long term process of gaining and retaining trust be expressed in a ROI?
Surely, when consumers do a purchase (be it a soft or hard conversion), it is the only quantifyable and “visible” action/reaction within a much larger process by the company and other consumers.

The latter is important and the crux within this question.
Social Media is causing a paradigm shift where all conventional wisdoms are becoming obsolete.
One of these wisdoms is the notion of two seperated entities, businesses versus consumers and the interaction between these two, ending up in sales, profit, revenue, ROI and so on.
A revaluation is necessary, in this transparent digital world, the seperation is disolving and consumers are complementing and replacing pieces of business processes.

If consumers become part of the business, how must these external entities be calculated and taken into account?
It’s not only the -direct- cost business cost what counts, but also the indirect and consumer-added related costs which should be taken into account in order to understand the new relationships and impact.

So, what is the real “ROI” of Social Media? I do not have a clear and sustaining answer yet.
A new digital landscape requires as a new way of conducting and quantifying business.
I believe the first step in this paradigm shift is to release the legacy of conventional business rules. Comparison -with old standards- is in this case a devaluation of the real opportunities and power of Social Media.
From there on, known metrics and KPI’s will have new interpretations which explain relations and money flows better than the current ones.

It’s a long learning curve and many challenges won’t be solved within months. Take the business effects of Social Media into long term strategies, set aside budget to research and test this phenomenon. In the mean time, transitions will happen and New and Old ways will meet.

What do you think the ROI of Social Media is?

(Disclaimer: I’m part of the team at Traffic4u that develops TrafficSAM)

In the digital environment where quantification reigns, the importance of Online Advertising has become increasingly evident.
The worldwide success and adaption of Search Engine Advertising (PPC) is the most obvious example of this. Search Engine Advertising rapidly grew as the pull and results driven-channel because it is able to attract and convert visitors in an advanced manner.

Over the years competition has become more fierce, and all sorts of tools have been developed to cope with expanding accounts and the increasing complexity of this channel. The role of Search Engine Advertising is maturing. Companies understand the power of focusing on target groups and Search Engine Advertising’s strategic use for internal processes (competitive intelligence, market research tool, etc.). Along with the maturation of this channel, a demand has arisen for sophisticated technologies that are able to assist marketers in the decision making process.

This is where TrafficSAM comes in. It’s a tool that has been developed in-house from the experience we’ve gained over years of extensive (international) campaign management.

Two important aspects define TrafficSAM and the way it meets the needs of businesses:
(more…)

* * * * * * * * * * *
This article is a guest post by Paul Johnson and does not necessarily reflect the opinions of the Agora Media Group editorial staff. ( Twitter of Paul Johnson is @tweets4pj )
* * * * * * * * * * *

We did it!

The prediction by CEO Richard Kastelein has received plenty of votes, enabling him/Agora Media to be present at the Deloitte Technology, Media and Telecom event the outlook for 2010 and further. This is the chance for him to be recognized as a ‘Tech Visionary’ representing Agora Media – and further – the entrepreneurial community of the Netherlands.

Richard’s prediction is in line – of course – with Agora Media’s outlook of the future in terms of Media Convergence and the rise of Social TV.

His entry:

Media Convergence and Social TV
If we all thought the Facebook and Twitter social media growth phenomena were extraordinary, wait until social TV hits your screens. And it is not as far away as you think – not only with the logical IPTV market, but also terrestrial TV. Social media fused with TV is …the future and the implication of reach that will touch billions not millions.

As Facebook revolutionized the way advertisers can niche-target their online demographics, social TV will profoundly change the ad agencies and marketing departments will offer their wares in the television realm. It’s called tCommerce and watch out – TV widgets and recommendation engines are not far away.

Neilsen ratings seem vague, less targetable and will likely become obsolete in TV 2.0. See http://agoramedia.co.uk/blog/?s=kastelein&x=0&y=0 for articles I have written on Convergent Media and Social TV.

Contest link

On March the second the prediction will be pitched in front of a crowd of 200 Deloitte thought-leaders, CEOs, presidents and other VIPs in the Dutch TMT sector. The winner will be selected by the crowd.

This will be great exposure and certainly the platform to show our outlook and opportunities in these sectors.

We will keep you up to date!

Mobile is in the spotlights, at the Mobile World Congress in Barcelona, like the Verizon Wireless-Skype agreement, Google’s new Mobile mantra, the Windows phone etc.
Interesting announcements are made, ubiquity is becoming clear, the Mobile Web is being adopted fast, Mobile Search rises and many more -convergent- developments.

Where does Mobile stand in your strategy?
If it’s important for you, what are you doing right now to incorporate it in your strategy?
If not, what are the reasons for that decision?

Discuss as well via Google Wave
(more…)

That is what Verizon Wireless and Skype have announced yesterday at the 2010 Mobile World Congress in Barcelona!
It was bound to happen at one point, but I never thought that Verizon would be the operator to initiate this.
Secondly, this is a huge milestone for Skype which is trying to get access to wireless networks for several years now.

What do you think the effect of this development will be on the mobile industry and on the current relationships?

Press release from Skype:
(more…)

The information on Youtube says the following on this new and experimental way of applicating Augmented Reality:

Adidas Originals is launching the first Augmented Reality experience in footwear. The adidas Originals AR Game Pack is a set of 5 shoes, each printed with an AR code on the tongue. When you hold the code in front of your webcam, you’ll gain access to a virtual version of the adidas Originals Neighborhood. Each month between February and April, we’ll launch a new interactive game within the Neighborhood and your shoe will be the game controller. The experience launches on February 10th at http://www.adidas.com/originals

Great way to get attention and be an innovative brand!
It certainly is a fun way to use your shoes ’slightly’ different than normal. The campaign behind is excellent, giving the Augmented Reality enabling also real meaning by using it as the game control and not solely as something which calls a digital superimposing.

Augmented Reality can be applicated in many situations, creating new, fun and innovative ways to bind customers, offering them a new experience.
What other examples can you give where AR is applicated like this?

The book Groundswell was enlighting, how to create Social strategies and so on. It was an eye-opener for many to understand how Social Media can be applied and intertwined in marketing efforts.
One of their tools is the Social Technographics, which classifies how people use social technologies.

Forrester has announced an upgrade in the classification of their Social Technographics ladder, they added the Conversionalists to it.

It’s good to see the enhancement of the ladder, because it shows the evolution of the usage of social technologies.
Dynamics as less perceived risk, adoption, diffusion amongst their circle of people, social technologies upgrades and so on, make the Conversionalists a new and present group. This doesn’t mean that status updating didn’t happen before, but networks and interoperability of networks have made it so much easier for people to inform their connections on what they’re doing.

The Social Technographics ladder is an important tool in social strategy creation.
First of all it let you create a profile of your customer base, it will prevent the creator of deploying tactics on networks where your customer base is not present, or with the wrong activities.
At the right of the ladder you’ll see the activities per group, these have to be tuned in with the marketing campaigns you’re going to execute.
On a wider scope, you’re able to segment the audience appropriately which will increase the relevancy, quality and successes of strategies.

What does this mean for social media plans?
Microblogging or real-time updating has become an important way for people to interact with and inform their networks.  It also shows that people are becoming hyperconnective, a constant flow of short messages which are bounced back and forward between people and objects (read The Synaptic Web and the Flux of Information for the impact of the connections) to create an information infrastructure for private and business purposes.

Your target audience might have reached a critical mass to seriously investigate the opportunities of your Conversionalists, how to reach them and most importantly, how to empower them to create word-of-mouth enthausiasts. C2C (consumer to consumer) communication is a daily activity.
Your brand is what customers think the brand is, it’s in their hand, and the simplicity of status updates offers lots of opportunities to tap into this vast resource.

The challenge though, which as a community needs to be looked at, is how we can make sure that users won’t have a constant information overload?
An effect for this example is that your current customer base and potentials don’t read your content as you’re not the only one asking for the consumers’ attention.
Another effect is that the content which is communicated has to be relevant (be it in time and network), here the Social Technographics ladder proofs its importancy. It’s better to create small vertical campaigns which reach smaller amounts of quality people. It might cost more (in time), but you’re assured of a better long term effect and word-of-mouth.

Like the Social Technographics ladder is being updated in reaction to the differing usage of the Web, the next phase is how to cope with all the fragmented information, both from the customer and business point of view.
Technology-wise, opportunities lie ahead to find the much needed solution.

What’s your first reaction?

Google Buzz is “a Google approach to sharing.”

Google is making an interesting move which is two-folded.
At the one hand, it’s trying to enter the social networking business, on the other hand it’s trying to do what it’s overaching goal is: organizing information, in this case, social information.
Google’s trying to get a grasp on Facebook and Twitter. Especially Facebook is unstoppable in its advance in monthy traffic.

What Buzz does is incorporating social tools in Gmail.
It has five features:

• Users can auto-follow people which he/she is frequently communicating with, be it email or chat.
• Sharing becomes much easier, the user will be able to share content from Flickr, Youtube and so on.
• A recommendation service where Buzz will help you find popular content.
• The user will get social updates.
• The user will be able to update his/her status, be it to the public or private.

Some features do look alike the ones which are available on Facebook and Twitter. Gmail is a perfect platform to deploy these social tools, a huge userbase of 170+ million, which will return Google lots of intel, on usage, functionality, usability etc.

One of my last articles, The Synaptic Web and the Flux of Information, referred to search and filtering and why filtering is becoming the mechanism in this highly communicative digital society.
Google Buzz will create Google’s own real-time stream of information, how will Google manage the flow for the user, in terms of keeping an overview and not being overloaded?
Yet another tool is not adding more simplicity to the overcrowded landscape. Looking forward how and if Google is able to convince its users to go for Google Buzz.

What are your initial thoughts?

We are looking to take Social Gaming to TV via Social TV platform – think Mafia Wars, Farm Town, and even Second Life on TV.
We have developed and successfully broadcast Social TV in Europe bypassing the remote using telephony 2.0 (mobile and landline), advanced IVR and business logic servers, realtime 3D along with web integration.

We need partners. We need financial backing to redevelop the project.

… where viewers can create a virtual character, pilot it in the TV environment, meet, compete, play and even talk to other viewers/competitors via phone.

What is the Cross Media Social Platform (CMSP)?

The TV market is ‘on the move’ – competition is growing and digital channels via ISP’s and IPTV providers are now crashing through what was once the walled fortress of broadcast television. Interactive content and social media are the buzz and broadcasters are looking for both innovation and revenue generation models that fall outside of the traditional advertising box of the past. And the need for all types of content is growing exponentially, of which one is created by users themselves.

The Cross Media Social Platform is a unique product that not only offers a business model that encompasses current and widely spread advertising revenue – it also has added value by offering broadcasters the opportunity to earn money via telephony (Premium Rate Numbers and Premium SMS) via freemium modelling, as well as web and phone subscription models – where users can augment their profiles and characters on the web for TV and the web.

We created an interactive, virtual world on both television and the Internet that envelops social networking, community, user generated content, competition, and entertainment. And we are interested in developing this further with principles who were involved in the previous project. And it works on both standard broadcast or terrestrial TV as well as IPTV, Satellite, Cable etc.

See video of work we did in the past at Youtube

Visuals of the Cross Media Social Platform (CMSP)

Below you will find a basic CMSP architecture demo and a couple of screenshots.

It evens goes further, technology developments are evolving, partners have released an API enabling developers to create unified communications (telephone, cellular text message, instant message (Jabber, AIM, Yahoo, MSN) applications using traditional document-based web development flow. This sort of technology can be implemented in the Cross Media Social Platform, adapting to the needs and ways of nowadays communication.

Why Agora Media?

We have the experience and know-how, without having to invent the wheel and exploit this competitive advantage, we can respond very fast and accurate to the concretizing needs of the Social TV/Social Media/converging Media community and industry! We have a vast network of 2.0, cross media and technology pioneers, working closely with them to stay on top of trends and developments which will enhance the Cross Media Social Platform.

Why now?

The interest in Social TV is rising, the television landscape is changing, permanently. Media consumption is converging and increasingly socializing. More and more experiments, products and services are initiated and developed to meet these changes. Being on top of these trends and offering new digital cross media experiences to your target audiences and putting you permanently on the map!

Feel free to contact us if interested or wish to receive more information.