The ROI on Social Media: Time to bring in an accounting framework

CMA Magazine

It’s time for Social media and social commerce to step up to the plate when it comes to accountability.

I’ve seen a lot of talk about the benefits of social media often without supporting financials that make for a solid business case. What I have seen so far tends to be a typical set of flimsy metrics, that, while indicative of incremental performance, do not explain causality to the bottom line. Other cases have used the term “ROI” very loosely without regard to the rigour of GAAP financial accounting methods. In short, I felt that it was time to speak to the issue. With the help of Syncapse, TD Bank and McDonald’s, I have opened the discussion of the kind you may want to have with CFO if you’re intent on moving the social media agenda forward within your organization.

The article can be found in the Premier issue of CMA Magazine – a newly revamped version of CMA Management Magazine, geared to the Digital Age.

http://www.nxtbook.com/nxtbooks/naylor/SMAS0111/#/20

I have always been fortunate to have a long standing relationship with CMA Magazine. Back in 2003 I wrote my first article titled “What Management Accountants Should Know About Market-Driven Quality”. 

Over the years, I authored 4 articles and one book of guideliness (when I partnered with Bradley T. Gale, formerly of the PIMS Institute) the recurring theme has been about financial accountability. This has always been important to me as a business manager based on my belief that if the impact of an activity cannot me measured, specifically in a ways that draws a link between money invested and return on that money invested, then it should be questioned insofar as its contribution to the performance of the enterprise. This does not suggest that everything needs to delivery hard financials re. EBITDA. What is does mean is that every activity has to have some associated set of metrics that help to explain the value of that activity and its relative contribution.  Whether you use hard financials or a series of performance metrics across all functional groups, measures are required in order to gauge the return on effort.

Being a manager means being accountable for your actions.

Ted Morris – 4ScreensMedia

Digital Dumping: It’s Time for Real Accountability

[Note: This guest post was originally featured in the ACA (Association of Canadian Advertisers) newsletter “Driving Marketing Success”. Reprinted by permission.]

Talk with anyone about what’s important for advertisers on the net, and after the obligatory deference to social media the conversation quickly turns to something more familiar, something marketers feel comfortable with: tried-and-true video.

When this recession hit last year, we all wondered what media would be hit the hardest. TV? Newspapers? What we didn’t wonder is what would be hit the least. That surely would be the Internet. Online spending for sure would be spared the axe, and in fact, if any medium could show growth during a recession it most likely would be online.

It didn’t happen, though. eMarketer reported recently that total online spending in the U.S. (Canadian figures were not available) will be down 2.9% for 2009. But have a look specifically at online video. It is the bright spot with a projected growth rate for 2009 of – wait for it – 43%! In a recessionary year. And here’s the kicker: eMarketer projects that online video will have roughly 40% growth rates each year for the next five years.

Add to this a New York Times report that online news is attracting $50 per thousand viewers for video pre-rolls, and a recent Advertising Age report that consumer packaged goods have embraced online video, and you have to conclude that something big is happening here.

There seems to be a certain pent-up demand for video on the net, and all indications are that it is going to manifest big next year. Which begs a pretty important question, and one that marketers always get around to asking when substantial investments begin to accumulate: how do I know if I am getting what I paid for?

ACA members attending our recent New Media Committee meeting got a glimpse into this future, listening to a presentation by Anthony Rushton, Director of Telemetry plc of London, UK, on online video verification. Telemetry is a new entrant into the online infrastructure which provides a service for clients with a very important difference: independent, secure verification that ads were run.

Not to pick on Google, but don’t they actually own DoubleClick, the ad server they use? Where’s the incentive for them to apply rigorous due diligence? How do advertisers know they are getting exactly what they have ordered and paid for? By taking their word? That might have been okay for an industry in its infancy, but it’s not okay for a mature business.

Telemetry showed us screen captures from publishers that were running five small video ads on the same page, buried 10 pages down in the site, in order to fulfill their contract count. Did it ever come up in the sales negotiations that you would be sharing the screen with four other video advertisers at the same time!? I didn’t think so.

It’s been a long, long time since newspapers were accused of printing extra copies in order to get larger circulation figures to boost the price they could charge advertisers – and then dumping many of those copies in the alley.

But it looks like circulation dumping is alive and well and living in some of the digital alleyways of the Internet. Telemetry is careful to point out that not everyone is doing this, but it is happening out there. Campaign discrepancies can run as high as 30%, they point out.

That is just plain unacceptable.

– Bob Reaume
– Vice President, Policy & Research

Get access to Telemetry and other leading-edge thinkers in the field through the ACA’s new media committee.

Bob Reaume’s 35-year career in advertising began in media at Ronalds-Reynolds Advertising in Toronto. Bob oversees the research required to support ACA’s many projects, especially those related to media. He also plays a pivotal role in supporting and developing various initiatives undertaken by ACA’s New Media, Broadcast and Print & Out-of-Home committees.