"None of these intangible assets has value that can be measured separately or independently. The value of these intangible assets derives from their ability to help the organization implement its strategy... Intangible assets such as knowledge and technology seldom have a direct impact on financial outcomes such as increased revenues, lowered costs, and higher profits. Improvements in intangible assets affect financial outcomes through chains of cause-and-effect relationships."
-- Strategy Maps: Converting Intangible Assets into Tangible Outcomes by Bob Kaplan & David Norton
Social media profiles and participation on social media channels are intangible assets. How do we measure them as such? What is the ROI of an account on Twitter?
Let's address the invisible gorilla. Why measure social media profiles in dollar terms? Why measure intangible assets at all?
After all, intangibles are difficult and expensive to measure; and accurate measurements of social phenomena are impossible, aren't they?
All measurement systems rely on representations of value -- value being a concept which, itself, is a layer of abstraction away from the actual events, actions, and things that are or were valuable. Measurement itself, in many ways, can be a lot like the children's game "telephone" where each layer of abstraction further obscures the original message. The influence of each conversion along the way allows for increasing distortion of the original message -- or in the case of measurement, of the original importance of an event or action.
Should we have a strong drive to measure and valuate intangible assets, including our measuring the value of our social media profiles and the people that follow them? Through the years, as I've asked many people important to me, including strangers on the Internet, about the drive behind this need to figure out "the ROI of a tweet", I'm most often met with a variant on one brilliant and true evergreen answer: "if you can't measure it, you can't manage it."
As a student of management and a numbers-driven guy (S.E.O./CRO), "measure it so you can manage it" has always been a personal mantra of mine, too, so I totally understand and cherish the measurement mindset we share. But, by being so one-minded, have we unknowingly ignored an important "second half of that measure to manage" axiom, as was expressed by W. Edwards Deming, when he said "The most important figures that one needs for management are unknown or unknowable, but successful management must nevertheless take account of them."
Perhaps our first mantra -- if we can measure it, we can manage it -- needs Deming's response. I realize now, with Deming's words from the previous sentence so boldly emphasized, that -- if we can measure it, we can manage it -- is really about emphasizing control, not about creating and delivering value. Perhaps Deming rustles our ability to recognize that measurement can be about control or it can be about proper accounting.
Can accounting really be more important than control in the awesome world of social media? I'd say so. Success in social media has to be about delivering value. Doing meaningful things. Earning and deserving attention. And then, accounting for that awesome activity afterward.
Trying to predict the ROI of participating in social media is missing the point. Let's be present in the conversation, and really try to make a meaningful difference. I get the feeling that's what where the ROI is.
Social Media ROI Resources:
2 thoughts on “What’s the ROI?: Measurement and Valuation of Social Media Accounts as Intangible Assets.”
Return On Investment can be stated in several ways. In the case of your solar heating, the idea is that you would save enough from the electricity that you no longer use to heat the water, to pay for the cost of the equipment and installation, in two and a half years. (If you didn’t heat your pool previously, then stating the ROI this way is useless.)
Intangible asset ROI is not some simple calculation. Break out earnings from units to see intangible contributions. http://alfidicapitalblog.blogspot.com/2013/05/intangible-asset-roi-needs-clear.html
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