How would you measure the ROI in social media?
The Answer is ,Economic valuation for corporate initiatives can absolutely be determined. The pillars of valuation are cash flow, net present value and then, lastly, ROI.
And yes, social valuation *should* be determined — just as you would for any other significant corporate initiative.
Social gains derive from several categories. The most prominent are: Sales revenues, and cost savings from customer insights, brand protection, lead generation, and cost center ops. The most prominent costs are people and technology.
Which gains a social initiative will accrue depends on the initiative strategy and focus.
The thing to remember is the valuation is not just about numbers. Instead, valuation is a numerical representation of an initiative’s strategy. The stronger the strategy, the more likely it is that the valuation is will a winner. Weak strategies will be reflected in weak numbers.
Additionally, you have to think like a corporate executive. Their objective is simple…to either generate revenues or increase profitability (which is another way of saying lower costs relative to revenues).
Social initiatives are not a special class of initiative that exempts them from Business 101 fundamentals. Like any other initiative, they can and should make or save money for a company.
A social initiative is just one within a field of corporate opportunity. Executives have a responsibility to ensure their company is investing in the best available opportunities to meet corporate objectives for revenues and profitability.
Economic valuation will show an initiative’s potential and give executives the information needed to make the best decision for their company.
And yes, that means social initiatives too