The Great ROI Debate

A comment on the blog yesterday spurred an interesting thought. What is ROI and how is it measured? ROI is a business word, meaning return on investment.

One definition from thefreedictionary.com states: return on investment - (corporate finance) the amount, expressed as a percentage, that is earned on a company's total capital calculated by dividing the total capital into earnings before interest, taxes, or dividends are paid

For me, I see return on investment as something much more than that. It's not entirely the money, but rather the return on investment from a particular program as dependent on that program's goals.

So if one of the program's goals were to meet ten donors, I would consider the return on investment the number of donors actually met.

What do you think? Is ROI specifically a word that is used to describe monetary capital earned or can it be more than that? If it is, is there another word to replace it?

Sound off in the comments below!

Budgeting for Social Media Part Two

In a discussion with @alexbono about my last blog post, Budgeting for Social Media, I realized that I missed out on mentioning several important things to budget for, so I'd thought I'd add them here in this post.

When budgeting it's also important to recognize the skill level needed to set up and operate social media tools. While many social media tools seem fairly easy to create, if you want to add a personal touch, it will take certain skills. There are two main areas to examine:

Design
Most social media sites come with a typical design (or if it's a blog, a series of templates). If you want to modify them to include your logo and design, then you will need someone with graphic design/CSS abilities. A perfect example is this blog. While, currently I'm using a template, eventually I will be moving to a design of my choosing. As I don't have the skill for that, I'm relying on my business partner. If you have someone in your office who has the skills to make the changes, then that is great. If not, you will have to outsource. And of course, there are costs associated with that.


Content
Another important issue is content. As mentioned in Ten Things a Nonprofit Should Do Before Setting up Social Media, it's important to determine who's writing the content you put up before you start any social media tool. If this is something you can do internally, remember to weigh out the costs of that person taking the time to write it. Content also doesn't just mean the written word. If you have videos or photos, you need to assess who has the ability to create/post these and what the costs associated with them are.

Putting together a budget for social media will definitely save you some time in the long run and give you a better idea of whether social media tools are viable for your organization.

Budgeting for Social Media

How to do you budget for social media? In fact, do you have to budget for social media? Isn' the majority of it free?

A budget is more than just money and it's important to develop an accurate one to keep on track.

What goes in a Social Media Budget?

Time

This is the most important thing to include in your social media budget. One of the perks of social media tools are that the majority of them are free. But are they really? Once you factor in the time it takes for someone to complete the social media tasks, the cost goes up.

Example: Let's say you have someone posting a blog post every day who gets paid $25 an hour. If it takes them an hour to write a blog post, then:

5 hours a week x $25 an hour = $125 a week

It's important to determine what the true value of your time spent on each social media tool is to better understand whether the tool is a viable option for your organization.

Professional Development

New social media tools pop up everyday. There are also new applications for your existing ones. Setting aside a professional development fund is crucial. Whether the social media user attends a conference, buys a book or just takes time to learn new things, it's money that needs to be allocated.

Future Costs

Although it seems a little unnecessary to plan for costs that aren't actually in your budget, I recommend having some money set aside (if possible) for future costs. What if that great social media tool you've been using suddenly makes people pay for it? Some social media tools, like blogs have the ability to purchase 'premium features' that enhance it.

Technology
Another thing to consider is the technology costs. If you look at your current technology and realize that you need to upgrade, costs are going to be incurred. Knowing from the outset whether you need certain technologies for certain social media tools will help you avoid panic down the road.

Budgeting for social media is extremely important and will help sustain any social media program you implement in your organization.

Update: After getting some great ideas about things I missed, I will be posting a part two tomorrow!