Social Networking's ROI

I recently read an article - the Fork in the Road for  Social Media - which asks a very important question -  What revenue model works for social media? the assumption is advertising... but is that assumption right?

I took a break form doing this post to view a webinar on the topic of product innovation. Communities such as Dell's Idea Storm and Starbuck's, My Starbuck Idea were just a few of the many communities discussed in the webinar AND whose main purpose was to generate ideas for new products and services. These social networks were NOT built to generate ad revenue. Seems that many companies 'get' the true power in all this talking and chatting, better in fact that the advertisers who are trying to crow bar the  technology driven social trend into their old ad model.

The article mentioned in this blogs opening makes a statement..."at some stage, social media has to move from a cool technology to a fundamental new business type". I would suggest that the word media needs to be viewed differently if not totally replaced by a social networking model that delivers ROI - Return on Innovation. This model then derives its revenue from the number of non-duplicative innovative ideas and  the value of those ideas when translated into new products and services. If a community is created with this goal in mind, then joining the conversation and becoming part of the community become a natural extension through things such as moderation, rewards and contents for 'best innovative ideas' etc.

The article discusses another social media model - the authorized lurking model. This model can be viewed at Sermo. The author also feels that no consumer company would 'pay to listen to dorm chat'. The author obviously has not heard of companies like Cymfony whose clients are in fact paying, and paying big, to do just that.

From direct experience, the communities we have created and are monitoring provide value in the following ways.

• Messaging - by viewing what is being said, how it is being said and the stories, experiences discussion...these are wonderful sources to enhance communications and sales marketing materials
• Product/services enhancements - a 24/7 virtual focus group which allows you to truly listen to  and then translate customer desires into feature and function improvements
• Competitive intelligence - along with the good and bad about your products, you will be able to hear the same about your competitors - data which can be a gold mine for your sales team
• SEO - Customer words, comments, and phrases...handed to you on a silver platter to incorporate into your SEO strategy

So when you or your company are ready to make the social networking jump - view ROI in the following way:
I = innovation & inspiration,  I = insight, I = I (as in what I as the customer would like versus what you as a company needs)

Comments

[Murray]

When people ask me about the ROI of social media I always as them what R they are looking for and work back a case scenario to help them.