ROI of social media can be an intangible

March 15, 2011

What’s It Cost?
ROI of social media can be an intangible

There’s Facebook, Second Life, Myspace, LinkedIn, YouTube, Twitter and now Jumo. There are many smaller social networking platforms. When it comes to deploying assets, where to be in cyberspace is a tough decision.

Catholic Relief Services (CRS) in Baltimore is going through the evaluation process. CRS is one of Facebook’s 500 million active users, and also tweets on Twitter and posts videos to YouTube. CRS has a Myspace profile with 3,288 “friends,” although it is not seeing a lot of activity there and managers are trying to decide what to do with it. Deleting it is a serious option.

“We, like many other nonprofits, struggle to accurately measure the financial ROI (return on investment) of our efforts,” said Laura Durington, online community manager at the CRS. “We look at Facebook Insights, Google Analytics and we look at source code reports in our online fundraising program. But, it only gives us part of the picture. Still, I would argue, although it’s more of a hunch, that we are getting something important out of these efforts.”

According to an Idealware study, “The Nonprofit Social Media Decision Guide,” CRS isn’t the only organization considering cutting back on Myspace. The Portland, Maine nonprofit technology group surveyed 460 nonprofit employees, held six telephone focus groups, and a case study collection in which 273 staff members provided details of which social media channels they are using and who they are targeting.

As you might expect, since 2008 Facebook has seen a huge increase in popularity and there has been a substantial decline in Myspace nonprofit users. Many nonprofits aren’t investing much time in it and are seeing decreasing benefits.

Myspace cut its staff in half in January, letting go 500 employees. The decision came after the social media website was revamped in October 2010 to run with fewer people. MySpace had 54.4 million unique U.S. visitors in November, down 15 percent from a year ago.

Julie Somogyi, director of integrated marketing and communications for the Girl Scouts of the Greater Chicago area, believes the organization needs to focus on the social media websites where their girls and volunteers are virtually congregating. “Even though we did have some initial interaction with Myspace a couple of years ago, we began investing our time more heavily in Facebook, Twitter and LinkedIn in the past two years because those are the most active sites within our key demographics,” she said.

According to Andrea Berry, Idealware’s director of partnerships and learning and coauthor of the study, nonprofits are using social media websites for public interest, although the idea of fundraising is always in the back of their minds. “A lot of nonprofits are struggling to use it as a fundraising tool but use it as a way to reach out to new people, potential supporters, engage current supporters and reinforce their brand for key people in their area like the press,” she said.
More than 30 percent of people surveyed who use Facebook and Twitter said they know that these social media sites are reaching new supporters for their organization and more than 75 percent responded saying they think Facebook and Twitter are reaching new supporters. The numbers jumped to 80 percent for sites such as Facebook, Twitter, video sharing sites and blogs for nonprofit managers who responded they think that these sites are enhancing their relationship with their audience.

“It’s a good way to reach an untapped audience,” Durington said. “When we started we weren’t sure what to expect three years ago. Every article about it said this is going to be this huge boom for fundraising but very quickly most nonprofits found that not to be the case.”

CRS uses Google Analytics, but it’s still hard to see the absolute correlation for the Facebook donations because the tracking gets lost and it becomes a “grey area.” They also spend more time promoting and encouraging people to go to their own website rather than the organization’s Facebook page, although, the Facebook page is becoming a place where people can go to build and engage in an educated community, Durington said.

“Our commenter’s seem to be very educated about global issues,” she said. “We have witnessed a lot of some interesting dialogue, not just between us and them but also with each other.”
It’s an interesting experiment to see what people are talking about. CRS’s goal is to boost traffic to their website and have Facebook be a referral point. Durington said that the people going from the Facebook page to their website is in the single-digit percentage but it is equal to the number of referrals they get from Google.

Facebook isn’t as reliable as a website but it’s starting to be a place were people look for information. “A website is always going to be number one. You shouldn’t be using a Facebook instead of a website,” Berry said.

ROI for nonprofits is hard to calculate, said Thomas A. McLaughlin, vice president of consulting services for the Nonprofit Finance Fund and contributing editor for The NonProfit Times. One way to see if there is anything happening is to look at the overall fundraising of operations. “In reality, even assuming that organizations have record keeping for this, its almost likely the best we could hope is to calculate a marginal interest on fundraising costs and attribute it to social media if that’s the only thing that’s changed,” he said.

Another reason ROI is so hard to determine is it doesn’t translate to mean the same thing for nonprofits. “ROI is popular for for-profit businesses and doesn’t transfer easily to the nonprofit world,” McLaughlin said. “There is no such thing as an investment in the nonprofit world like there is for for-profits. It would be more of a cost.”

One cost expense would be if an organization hired an employee solely to work on social media campaigns or trying to break down the time of an employee who works on overall fundraising campaigns. “If organizations can somehow isolate the employees’ times in various elements of fundraising, social media will be one of those elements,” McLaughlin said. “If you get lucky enough, some organizations might track what that employee spends their time on. In those cases you might be able to strike some approximation on dollars and time spent on social media.”

For the Girls Scouts of Greater Chicago and Northwest Indiana, instead of having one person designated exclusively to social media, they include the social media responsibilities in three marketing team members’ job descriptions.

Maria Wynne, CEO of the Girl Scouts of the Greater Chicago area, thinks its important to have a place to go on the Internet for all ages, which is why the Girl Scouts just launched their new website, http://www.worldsstrongestgirl.org for girls 13 and younger. “It’s a place for girls where they can express themselves that is safe, with anonymity and the latitude to be imaginary about a story or tell something that is very concrete,” Wynne said.

The website is animated with cartoon-like characters that represent badges. Girls can click on a badge and write a story or create their own badge. “The younger girls are very much about something that interacts and engages them,” she said.

For girls who are 13 and older, they want to network and talk with people online. One of the reasons why they created the website was to give the younger girls an entry point for interacting with the Girls Scouts online with an activity that isn’t threatening.

“The financial value of those communications is secondary and although some decline in the program and marketing print budget has been realized, the intangibles are a bit more difficult to quantify,” Somogyi said. “For example, when girls use social media to reach out to their friends and family members to ask them if they would like to order Girl Scout cookies, there is a financial advantage to the girl and her troop because they have reached more customers, and to the council as a whole because proceeds from the Girl Scout cookie program support how we can best support our membership locally.”

On the Girl Scouts’ Facebook page, girls and volunteers are connecting and even creating their own Facebook pages for their capstone projects and other programs that the Girl Scouts participate in. The Girl Scouts are also on Twitter and LinkedIn. “I think it’s the way people expect entities to participate in the virtual world today,” Wynne said. “Along with having a presence, it is for many the practical way of sharing information.”

For example, Wynne has seen new leaders and volunteers ask for advice on their Facebook page and almost immediately there are 10 responses from other members of the Facebook group. “It’s a mentoring and networking tool for best practices and a way for people to ask for help in the volunteer community,” she said.

Justin Perkins, director of nonprofit strategy for Care2.com, has been working with nonprofits for five years with online marketing and donor improvements. He was inspired three years ago to make the ROI in social media calculating tool when Facebook Causes launched to help nonprofits decide if this would be worth their time and money.

“There was initial skepticism that there was a vital business model there (Facebook),” Perkins said. “Before investing time, it was ideal to come up with a tool to look before you leap.”

The calculator was created using typical metrics that nonprofits use to measure online success like how many employees or volunteers are working on a social media campaign, how many hours a week they spend on it, how many “friends” they recruit, how many of those “friends” sign up for an e-mail list and ultimately how many become donors.

The calculator allows nonprofits to plug in their information or number goals in a four-step process to see their potential ROI. It can be found on http://www.frogloop.com/social-networks-calculator

Perkins believes nonprofits that started using social media had a sort of “gold rush mentality” but they need to figure out if it will actually be promising for them in the end. “What’s the actual cost? What’s the opportunity cost if we do this at the expense of something else? What is something else we could be doing to have a higher ROI,” he said are some questions that nonprofits need be asking themselves when using social media. NPT

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March 2011

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