Today we’re announcing the latest addition to our social media analysis capabilities: MediaSignal™ for blogs. It’s a significant development that enhances our customers’ ability to tap into the blogosphere for insight and information.

At Biz360, one of the guiding principles of our product development process involves taking a pragmatic approach to fulfilling our customers’ needs. In this case, there’s a clear need for marketing and PR professionals to be able to measure the relative impact of blogs—from the top professional blogs to the fringes of the long tail—and to be able to make direct comparisons to traditional media coverage. Because here is no definitive standard for blog impact measurement, we saw the need to come up with something new.

Most of the current methodologies for measuring blog impact involve either estimating site traffic or counting inbound links from other blogs. Limitations of these methods include:

• With a list of blogs ranked by their overall authority or influence, it’s impossible to know which blogs have the most impact in a given market—is it the highly-ranked blog that occasionally writes about the market, or the lower-ranked blog that covers it incessantly?
• Links from mainstream media provide an interesting view into which blogs are influencing traditional media, but they typically aren’t counted.
• The impact of the “linker” typically isn’t accounted for, even though a link from a top-tier blog implies more impact than a link from a less popular blog.
• The impact of the reader typically isn’t taken into account. PerezHilton receives more traffic than Engadget, but the topics over which they have influence differ greatly.
• Today’s site traffic panels are too small to estimate visitors to low-traffic sites in a statistically valid manner.

After a great deal of experimentation and testing, we settled on a methodology that provides a new estimate of reach that incorporates traffic estimates, linking patterns from blogs, and linking patterns from mainstream media. Our link analysis produces particularly interesting results, employing a technique that enables us to estimate not only the number of sources linking to a given blog, but also the impact of the sources.

The benefit of the detailed link analysis can be seen in the table below. Over a 3-month period last year, Jeff Jarvis’ BuzzMachine and Heather Armstrong’s Dooce received incoming links from similar numbers of sources. However, the sources linking to BuzzMachine received more than twice as many distinct links as the sources linking to Dooce, implying greater impact.

• Apples-to-apples comparisons. With MediaSignal, we have a single measure of brands, trends and issues across both traditional and social media.
• More relevant reach. Because our source rankings incorporate each source’s reach as well as its topical relevance, we are able to product a customized list of which publications and blogs matter most to each of our clients.
• More accurate reach. Our calculation of MediaSignal for blogs involves large-scale link analysis, calibrated by audience estimates to provide an understandable metric than pure visitors or pure link metrics.
• Tone impact. By factoring MediaSignal into the negative, neutral and positive impression counts we derive through our Point-of-View Sentiment engine, we’re able to weight our tone ratings by impact.
• Improved spam filtering. Thanks to the link-source impact analysis, we were able to identify and weed out many splogs that received many links but only from other splogs in the same farm.

Charlene Li of Forrester Research published two reports on blogging today, co-authored by Chloe Stromberg. The ROI of Blogging outlines a model for companies to evaluate the risks and potential returns of launching a corporate blog (or justify/optimize an existing one). The other, Calculating the ROI of Blogging: A Case Study, applies the model to General Motors’ well-known Fastlane blog, authored by vice chairman Bob Lutz.

While the focus of the reports is how to figure out the financial value of blogging, there’s commentary on the intangibles and a warning not to be over-calculating in your evaluation. This can lead to an overly scientific approach to blogging itself, which could hurt its value to your target audience. Some other insightful findings include:

• The largest contributor of ROI to GM’s Fastlane blog in 2005 and 2006 was press mentions
• The total cost of launching a blog with a team of 4-5 people starts at $25k
• Smart blogging includes monitoring brand discussions in the broader Blogosphere
• Tying benefits to known metrics helps translate blogging ROI more easily

NOTE: Forrester calculated the ROI of press mentions by adding up offline stories and multiplying them by their corresponding advertising values. Next, they added up online stories, estimated traffic for each Web site and multiplied those numbers by the appropriate CPM (Biz360 provides this calculation to clients with the click of a mouse… shh, don’t tell Charlene).

The report provides the following chart to help translate blogging benefits into known metrics/value:

This is the first step in a three step methodology - determining the benefits and translating them into a dollar amount. This should be done directly if possible or by correlating the benefits to metrics that have already been correlated to revenue. Forrester provides the example of correlating broader blogger sentiment generated by the corporate blog to a Net Promoter Score (NPS) that may already have revenue tied to its fluctuations. The second step is to calculate the total cost (hard costs and resources). Finally, calculate the risks and translate them to a dollar value by looking at the likelihood that potential scenarios could occur and what the financial impact would be.

The reports provide guidance on how to perform the calculations and include many case study examples. Charlene’s blog post has more information, excerpts and FAQs.