Tuesday, April 04, 2006

ROI For A Business Blog

This post has to come with a disclaimer.

Caution: Do not read this if you plan to drive, operate heavy machinery, or stay awake for the next couple of hours.

Numbers. Ughhh. What's the old saying? Figures lie and liars figure. Something like that.

Here's an article I came across on BusinessReviewOnline.com's blog. It's an attempt to satisfy the insatiable appetite certain business types have for analysis by numbers. If you're not an algebra person, you might want to avoid it. The reason I bring it up is as it relates to understanding the ROI of a business blog. The author, Jason Stamper does an admirable job cruching numbers and creating a mathmatical equation for figuring out if a blog is making, or costing, a company money. My hat's off to him for the effort.

My problem is in trying to reduce ROI to merely an equation. I think it's patently absurd because a certain amount of a company's return on their investment involves intangibles. Things that can't be measured or counted or reduced to a formula. You can implement plans A, B, and C in 2005 and then judge the results at the end of the fiscal year, but it would be foolish to assume that those were the only mitigating factors involved in your company's success (or lack thereof). For crying out loud, your administrative support champion could have been suffering through a personal tragedy and have an "off year", and that could be reflected in your bottom line, but certainly not quantified by a simple mathematic equation.

Let me pose this question to you. If you have a CEO who gets on a primetime TV program to talk about your company, do you evaluate that based on "ROI"? How can you quantify the value of that? Purely by sales generated by the interview? I think not.

So to evaluate a blog's ROI solely based on ad revenue, click throughs, or unique visitors is a mistake. If ROI is the only measuring rod, then who cares if customers are happy or not. As long as your ROI is good.

If you believe that, then you must believe that it doesn't matter if your customers are happy or not. A satisfied customer and an unsatisfied customer make you the same amount of money.

Geez, I hope no one out there thinks like that... ghostblogging@veritymedia.com.


At 6:15 AM, Anonymous Jeremy Ballenger said...

Gotta say I agree with you, but must also acknowledge the feeling of business in trying to determine whether to invest resources in bums-in-seats-blogging.

Personally I'm in favour of a more detailed and considered effort (http://thinkmojo.com/?p=153) than a cocktail napkin equation, but its a start.


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