Originally a simple calculation of quantifiable financial results, today the term Return On Investment (ROI) is commonly used to refer to situations where results cannot be quantified or simply expressed.
by Bill Paarlberg, Editor
A couple weeks ago I wrote about how the term ROI (Return On Investment) had become so watered down from its original meaning that most public relations measurement professionals don't want to use it. People who do use the term ROI mostly don't know what the term really means. Those who actually do know what it means mostly don't use it, because ROI is very difficult to calculate in the context of public relations and social media.
Well here's another nail in the coffin of the original meaning of the term ROI, in the form of Business Insider's Social Media ROI conference coming up in September. The term ROI appears only once in the description of all the programs on the agenda, and it's used both there and in the title of the event to mean "whatever kind of business-related results." Rather than its original meaning.
Don't get me wrong here. I am sure Business Insider's Social Media ROI conference will be an interesting, informative, and valuable event. My point is that this conference demonstrates that in popular usage the meaning of ROI has moved on from it's original financial meaning.
I'll bet you an iced mocha latte that almost nobody at that conference uses the term ROI in its original sense. But that doesn't mean they aren't using the term in a useful fashion. Saying "ROI" is a whole lot easier than saying "results related to business goals." Or (cynical me) "results I wish and hope are somehow related to business goals."
Also, of course, the term "ROI" has a certain business-savvy sense about it that comes in really handy when you're pretty sure you're not going to get any easily quantifiable results.
And that is the key to what is going on here. ROI was originally a calculation that could simply express quantifiable financial results. But now the term is used, at least in common reference to social media, to refer to situations where results cannot be quantified or simply expressed financially. Fascinating.
It's as if we wish we could have real ROI for social media, but we know we don't. So we try to hide that we don't by calling our results "ROI" anyway. Has ROI become anti-ROI?
Bill Paarlberg is editor of The Measurement Standard blog and newsletter, and of Katie Paine's book “Measure What Matters.” He is also editor of the book “Measuring the Networked Nonprofit,” by Beth Kanter and Katie Paine, which will be published this year by Wiley.
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The Measurement Standard is a publication of KDPaine & Partners, a company that delivers custom research to measure brand image, public relationships, and engagement. Katie Paine, CEO of KDPaine & Partners, will be glad to talk with you about measurement for your organization.