Forrester recently published a report on the ROI of blogging and a follow-up case study focusing on the ROI of General Motors’ FastLane blog.
According to Forrester’s calculations, GM’s first-year ROI on the blog was 99%. The primary contributors to the top line: 1) $180,000 in customer insight, which was estimated by assuming a cost of $15,000 for running a monthly focus group with 10 participants over the course of a year, and 2) $380,000 in press coverage, calculated by estimating the value of “high-visibility Web placements” and the cost of CPM advertising on sites like InformationWeek.
Now, I’m willing to bet the $6 in my pocket that few firms will get anywhere close to those returns. Why? Because I don’t believe for a second that many firms will actually stop running focus groups or stop running advertisements.
ROI estimates based on cost displacement are only realized if the expenses to be displaced don’t get spent.
Two implications for marketing execs:
1) Budgeting and investment allocation decisions that exist within departmental silos are practically guaranteed to prevent cost displacements that occur outside that department (talk to your IT folks, they know all about this), and
2) If you’re going to tout the potential ROI of blogging to your CEO, you’d better be ready to make some tough decisions about where the money to fund the effort is going to come from (talk to your analytics folks, they should be able to help you here).
Ron Shevlin's Marketing Whims 
I agree with your skepticism. Blogs are part of an evolving tool suite. I see no value in attempting to evaluate blogs per se.
Ron: It was never my intention that GM *stop* using focus groups. This was more an attempt to quantify the benefit of the insight GM gleaned from blogs. The same applies to the press coverage — agreed with Colin that blogs are more a part of the marketing tool suite than a replacement.
The biggest problem with corporate blogs is that there’s still tremendous skepticism about how they can help a company, especially given the cost in terms of employee time (which we accounted for in the model) and the potential risk that comes with blogging.
But you bring up a very good point about departmental silos and cost displacement — if the savings are virtual or potential rather than actual, it becomes harder to calculate the blog ROI. Harder, but not impossible.
Charlene —
[First off, thanks for leaving the comment].
Unless I misread, the way the insight benefit was estimated was by using the cost of doing focus groups. To realize that $180k benefit (and let’s keep in mind that it isn’t an “ROI” unless the benefit is realized), then GM (or any other firm using that justification) must do one of two things: 1) stop spending that money somewhere else, or 2) or generate $180k in additional revenue from the “insight gleaned”.
The way the ROI justification was written in the report, I don’t believe that it pointed to any evidence of the latter.
The bottom line on my point remains this: If you’re going to go in to th CFO w/ an ROI of blogging projection, the benefits have to be REALIZED.
Great post – and tips on how to put across the idea of corporate blogs as customer insight and interaction tools.
It’s easier to have response stats of a blog and to analyse how messaging is affecting people – but much of this is limited to people active online.
Just my opinion…
farrukh
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