Charlene Li’s report: the RIO of Blogging is an important milestone in the understanding of what blogs deliver to business. At the top end, Charlene estimates ROI of 75%, at the bottom end -6.2%. These are enormous differences. The good news is that startup costs are low $25>50K (£12-25K) is Charlene’s estimate for a non-integrated blog project. She’s not specific about how this breaks down or what size of business that applies to. Personal experience tells me these figures are in the right ballpark where the object is merely to get a decent sized blog up and running. Interestingly:
Demands on legal and design were modest, and many marketers initially circumvented their IT departments when launching their blogs.
That blows apart objections I’ve been hearing for over 18 months that establishing a blog could have all sorts of legal problems. Starting one certainly doesn’t but there is no doubt that some care is required.
Charlene does a cracking job of giving readers a solid insight into her thinking and analysis and even though there are potential flaws, her candour should be seen as a positive. As Charlene is careful to point out:
- we believe we’re just starting to scratch the surface when it comes to blog measurement. As the number of companies with blogs grows, we’ll be able to add to and refine the framework.
Marketing types will be concerned with Charlene’s candid admission that one of the top questions gets a less than solid answer:
Q: Is there a standard ROI for blogs?
A: Nope – sorry, it isn’t that easy! Just as there isn’t a standard ROI for a Web site, there’s no standard for a blog. It depends on what the goal of the blog is and also how much investment the company (and the blogger) puts into it.
Accounting types will smile. Charlene may not realise but you get six FCA/CPAs in a room and ask an opinion, you’ll get six different answers. It also means we have to be super careful when trying to figure how to evaluate both the inputs and outputs. Here, I like the way Charlene has kept things simple, explaining marginal costing, opportunity cost and GPM in ways most people should understand. That’s important because selling blogs does become an accounting exercise but its inputs and outputs are not always readily discernible or the calculations understood. As Charlene says in the main report:
The exact benefits of blogging are impossible to measure. Many of the benefits of blogging are indirect, and this causes a whole host of measurement problems.
Now you know. The one area where I disagree is in her metric for blog effectiveness at Ford Motor Company:
But the key metric that we think drives the value of the FastLane blog was the number of press mentions it received, which we valued on the basis of “advertising equivalence” — how much would it have cost GM to buy an ad in the same news outlet?
I’ve always been sceptical of this measure for PR effectiveness. Ink on the page is not the same as marketing effectiveness or lead generation. Others can defend the ROI of PR if they wish. My estimate is that 98% of that ‘ink’ is wasted. Spend doesn’t correlate with ink either. When the handful of Enterprise Irregulars turned up at SAPPHIRE 2006, they generated an order of magnitude more coverage than that of the press corps. I don’t have the exact figures to hand but I’m guessing there was an inverse ratio between money spent on bloggers and mainstream media compared to coverage at the time. The question is, has it been effective?
Several SAP folk are part of the Irregulars’ team. Thomas Otter for one. Mark Crofton is another. Jeff Nolan, who kicked the project off while at SAP defected to the start-up side late last year. There is a genuine two-way communication between the people involved and a lot of the time we disagree – vigorously. Some of us on the ‘buy’ side are actively consulted on our opinions. My point is simple – each of these components has a value which can be enumerated. Sometimes it will be for the buyer, at other times the seller. It is not an either/or but an either/and when you engage a community.
In coming up with a model, Charlene recommends:
Use metrics that everyone is familiar with, rather than try to come up with a new metric for intangibles like engagement. The key is then to associate each metric with a dollar value that quantifies the benefit.
That’s OK up to a point but it quickly leads back to measures that are flawed in certain important scenarios. Many businesses use click through as a measure of advertising impact. I can readily accept that correlating clicks to sales is a good measure in a retail environment.
I don’t see the same correlation in a business-to-business environment. I don’t believe business people make buying decisions based on a blog or press cutting. Instead, I believe that business blogs serve a different purpose which is easily defined but somewhat ephemeral. I am firmly of the belief that business blogs are more influential than press mentions. But I would say that – wouldn’t i?
As Charlene says, ‘it’s a start’ and a positive one at that. The ROI case is proven, even given the weaknesses (as I see them) in some of Charlene’s assumptions. If anything those weaknesses work in her favour as the SAPPHIRE example should demonstrate. If not then consider this: I blogged about a video I found amusing. Unknown to me, another blogger who has a massive audience, wrote it up. Video views doubled in 48 hours. It was almost certainly an indirect effect but the value created was huge for everyone concerned.
ENDNOTE: Hugh McLeod will, I’m sure have a quiet giggle when he finds out that he’s referenced. Hugh and I enjoyed many a tussle over this topic in late 2005. He’s an ex-Madison Avenue type, I’m en-ex bean counter – go figure it.
Disclosure: As one of the people accredited as having contributed to Charlene’s thinking, I was rewarded with a copy of the report. And no – I ain’t giving readers the link. Charlene did the foot work, Forrester owns the copyright. Some things are not free.
UPDATE: If you’d like to see who is discussing this top, it’s on Techmeme
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