Thoughts on Social CRM, Big Data Analytics and E2.0 by Harish Kotadia, Ph.D. - Part 26

Those who understand Social Media don’t talk about ROI

By Harish Kotadia, Ph.D. | Published: December 9, 2009

It is not uncommon to see people arguing passionately about “Social Media ROI”, thanks in part to discussion on the subject in Social and Mainstream Media. Businessweek recently published an in depth piece titled Beware Social Media Snake Oil.

It is important to remember that Social Media is just a medium for connecting with people (or customers if you prefer that term). It provides necessary platform or tools to reach out to millions of people instantaneously across time-zones in a cost effective manner. But since “Social” is just a medium, it doesn’t have any ROI of its own. ROI will depend on how well this medium is used for attaining a well defined objective. So ROI is for the “usage” and not the “medium”. Many people associate ROI with the medium and that is incorrect.

See this excellent interview with Lee Odden on Social Media Marketing and ROI. According to Lee, measuring ROI as a direct result of Social Media is not the right question. Social Media is a platform, not a tactic.

Moreover, Social Networks as a medium for connecting with Customers for branding and engagement is a very new development and unlike marketing through traditional media such as Television, Print or Radio, we are yet to fully understand how Social Media marketing affects consumer behavior. To borrow famous words of former Defense Secretary Donald H Rumsfeld, we don’t know what we don’t know about how Social Media influences consumer behavior. And in the absence of this understanding, it is prudent to say that those who understand Social Media don’t talk about Social Media ROI.

Rather than trying to measure effectiveness of Social Media campaigns through ROI, it is better to use other KPIs (for a good list, see 35 social media KPIs to help measure engagement).

So beware, next time some one talks about Social Media ROI, it is very likely that person is trying to sell Social Media Snake Oil.

What DARPA’s Red balloon contest can teach Social Media Pros

By Harish Kotadia, Ph.D. | Published: December 6, 2009

The Defense Advanced Research Projects Agency (DARPA) recently announced a Network Challenge to mark the 40th anniversary of the Internet. This challenge required participants to discover exact position of 10 large, red weather balloons that DARPA placed at undisclosed locations across continental United States. The first person or team that identified all the locations correctly would win a $40,000 cash prize. Aim of this contest was to identify ways social networking can help accomplish a large-scale, time-critical task.

As planned, this contest was held on December 5, 2009. A team from the Massachusetts Institute of Technology won $40,000 “high-tech scavenger hunt” by discovering the location of 10 red weather balloons first.

Team from MIT “Crowdsourced” solution to this puzzle by inviting people to sign up to help find DARPA’s red balloons (see MIT RED Balloon Challenge Team’s website for more info). MIT team plans to give away $2000 to the first person to identify location of each Red balloon, and also $1000 to the person who invited that person to join this contest, and $500 to whoever invited the inviter, and $250 to whoever invited them, and so on … (see how it works). Fascinating stuff isn’t it! MIT team not only planned their strategy well but also executed it brilliantly. And it’s no surprise that they won DARPA’s Red balloon challenge.

So what can DARPA’s Red balloon contest teach Social Media Pros? Several things in my opinion:

First of all, DARPA held this contest to identify ways social networking can help accomplish a large-scale, time-critical task. DARPA could have engaged Social Media consultants to help them figure this out and they could have spent endless hours debating and discussing about how Social Networking can accomplish a large-scale task. Instead, they chose to conduct a simple experiment through Social Media. Lesson for Social Media Pros is that rather than having a long debate on how Social Media works and how it can be leveraged, it is better to design a simple, low cost experiment and start using Social Media to understand how it works. Outcome of such small and inexpensive experiments are more valuable than having endless discussions on the subject. They are also far more cost-effective compared to time and travel cost of personnel involved in figuring this out.

Secondly, MIT Crowdsourced solution to this contest by inviting people to sign up to help find DARPA’s red balloons and also encouraged them to invite their friends to sign up. MIT team provided monetary incentive even if some one’s friend (or one of their friends (or one of their friends…and so on…)) found a balloon. Lesson for Social Media Pros is leverage reach of Social Media and have trust in wisdom of crowd. It is important to reward not only individual member for their winning contribution, but also those who brought them to the network thereby extending reach of network and making Crowdsourcing a reality.

MIT’s winning approach to solving DARPA’s Red balloon contest can be applied in business and government for finding innovative solution to complex problem cost-effectively and quickly. Added benefit is the buzz it can generate, both in “traditional” and “New” media resulting in free publicity and media coverage. For that reason alone, it is worth the money spent!

What do you think? What other lessons Social Media Pros can learn from DARPA’s Red balloon contest? Looking forward to your comments: