When you hear any of the following terms or words, make sure you ask the person using them what he or she means by them. And if their definition does not match the one below, be very, very careful who you are dealing with, and what you are buying.
1. ROI
ROI is an acronym that stands for Return On Investment, an accounting term for a specific calculation of financial results. The formula for calculating ROI is:
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ROI = (Gain from Investment – Cost of Investment) / Cost of InvestmentThat’s it. There is no other definition, despite the many uninformed people who use ROI as if it means “results.” So unless you can calculate net gain, you can’t measure ROI. Many people seem to think that ROI and measurement are the same thing. They are not.
2. Measurement
Measurement is collecting data that will help you make informed decisions about your performance. Good measurement should tell you what is working and not working in your programs. Measurement is often mistakenly used to justify someone’s job or program or budget; it should not used to justify anything.
3. Impressions
Impressions are the circulation figures of a magazine or newspaper. Impressions, reach, and opportunities to see are often used interchangeably. But they really aren’t. And they are numbers, not measures of success. Frequently, when people say that we need a standard measure for PR, they refer to a Nielsen Number. That “number” was in fact a rating that measured the potential reach of a television broadcast. It was invented to provide a broadcast version of impressions. Today, people want a Nielsen Number for social media, which is very difficult to come up with, because about 85% of all social conversations take place in private places such as email or private Facebook pages, or off-line all together.
4. Social Media: Earned vs. Owned
Most people want to measure social media, but they blur the lines between earned and owned social media. Conversations that you start on your Facebook page or YouTube channel are owned social media, and it is relatively easy to measure their success via Facebook Insights or Google Analytics. Earned social media is made up of all those things you can’t control. Like all the Tweets, blog posts, and other activity that is swirling about in the cyberverse that may mention you, but in ways that you may or may not find desirable. Remember, there is a reason they call it earned.
The metric you choose communicates to your organization what’s important to you (the POWERFUL person). It communicates to them how their personal success will be measured. That translates directly into what they prioritize when it comes to your digital initiatives.
Choose the right metric and they’ll create the most glorious digital experience in the universe, the perfect acquisition campaign, the most amazing customer service channel. And they will shock you with the profits they deliver.
Choose the wrong one and they’ll create self-serving, sub optimal, non-competitive, tear-inducing outcomes that will, slowly over time, bleed the business to death.
It really is that stark. Simply because it all comes down to the incentives you create.
Don’t believe me?
Let’s look at six corrosive metrics and their angelic twins, which illustrate this challenge – and magnificent opportunity – quite vividly.
1. Page Views vs. Visitor Loyalty
Is there anything easier than measuring Page Views? This metric has been in every tool since we started torturing web server logs to measure hits (!).
What does Page Views measure? It kinda sorta measures consumption. It is hard to know if a lot of Page Views per visit is a good thing (“The visitor loved our site so much that they read 23 pages of content!”) or a bad thing (“Our site is so horrible that it took 23 pages for the visitor to find what they were looking for”) or a horrible thing (“After 23 page hunt the visitor gave up, cursed us, abandoned the site, and went on to tweet to 23,000 followers that we stink”).
When you look at 23 Page Views, how do you know which of the above three was the outcome?
But it gets worse.
Most content sites are currently monetized using display advertising, most commonly on a Cost Per Thousand Impressions (CPM) basis. When you are paid on a CPM basis the incentive is to figure out how to show the most possible ads on every page (“mo ads mo impressions!”) and…. ensure the visitor sees the most possible pages on the site (“mo ads mo impressions mo page views mo money!”).
That incentive removes a focus from the important entity, your customer, and places it on the secondary entity, your advertiser.
It does not take a degree in rocket science to see what happens next. The web is littered with examples of this awfulness.
