Although the idea may not yet be considered mainstream, many corporate executives and marketing gurus believe corporate blogs are useful tools that can bring companies closer to customers and generate interest in products or services. But is there a way to calculate the return-on-investment (ROI) from blogs? Two analysts at Forrester Research Inc. -- Chloe Stromberg and Charlene Li -- believe there is. Stromberg and Li began researching the topic earlier this fall and are hope to publish their findings by the end of the year. Computerworld's Thomas Hoffman spoke with Stromberg and Li, who work out of the research firm's Foster City, Calif. office. Excerpts from that interview follow:
When did you begin conducting this research? What prompted this?
Li: I started looking at this last spring. I get this question all the time: How do you cost-justify blogging?' We had done a few weeks of formal research starting in mid-September and came up with some ideas and posted it on the blog. We posted everything we had on the blog. And people responded. It resonates with marketers who are intrigued by the power of blogs and ways of developing relationships.
What kind of research have you conducted? Online surveys? Telephone interviews? What have you discovered?
Stromberg: We will have interviewed nine Fortune 1000 firms that have external blogs. These include a mix of some traditional consumer-facing firms, some technology companies and some traditional B2B firms. We're using Forrester's Total Economic Impact model to help measure the impact of technology investments and we have done interviews with five thought leaders -- analysts, consultants and strategists in the blogging space.
Li: There are three major elements that drive the ROI of blogging. The first is benefits. The second is cost. The third, which is often overlooked, is managing the risks. The hard thing is measuring the benefits. Some might say that a benefit of a blog is that it brings you closer to your customers. Well, how do you measure that? What's the value of that? Many companies don't know the value of having a visitor come to their Web site.
It's really (about) breaking it down and getting it to the nitty gritty and attaching a value to it. The costs are pretty straightforward in terms of the start-up costs of launching a blog and then the people and technology needed to maintain a blog. The third area is risk. Maybe a lawsuit might be filed as a result of something that was published in a blog. You look at the probability of something occurring, assign a value to that and calculate the risks.
Are executives making efforts to cost-justify the time, resources or other expenses that may be associated with blogging?
Li: When you talk to the companies that are blogging today, very few of them measure the value of the blogs. Even when they do measure it, they measure basic things like the number of people who come visit. As they become more popular, companies will ask 'How can I maximize the value of this great resource that we have?'
Stromberg: Some companies haven't dug into [cost-justifying blogging] because the initial investment was so small, maybe a couple hundred thousand dollars, which pales in comparison to multi-million dollar CRM investments. There wasn't really a reason to dig into that.
How can clients calculate the ROI of blogging? By measuring the number of hits against a blog compared with advertising that might be sold next to it? Or by calculating the number of business leads generated by blogs and the amount of business generated by those leads?
Stromberg: I think it's important to keep the bigger picture of what you're trying to accomplish. People often want to drive down on methodology. If the material on my blog helped generate a story in BusinessWeek, then I could look at how much it might've cost me to generate that much (customer) interest from a story. What we're saying is look at the larger question of how big are the benefits and how big are the costs so you can put some boundaries around the discussion.
Li: People keep looking for 'the' metric for the ROI of blogging and that's really hard to do. For instance, if you look at a Web site, is it a consumer-facing Web site? Is it a B2B Web site?
Have you extended your research to examine the ROI of using social networks?
Li: I'm working on a report right now that looks at how companies can create their own social networks or tap into them. We're where we are with social networks now where we were with blogging two years ago.