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.

I attended the annual WOMMA Research Symposium
today in Washington D.C. and had the opportunity to listen to and talk with some of the leading thinkers on word of mouth marketing. What became clear over the course of the day is that there’s a lot of good research on how word of mouth (WOM) works and how to measure individual campaigns, but the industry is looking for more guidance on how to sell WOM to senior management to secure budget, how much budget to put toward WOM in an integrated campaign and how to compare WOM metrics and results to other marketing metrics.

Research from Ed Keller of the The Keller Fay Group reminded us that the majority of WOM is still happening offline (90% if I recall correctly). Still, there’s strong and growing demand to measure what’s happening online. This is partly due to how fast the channel is growing and partly because technology makes the job much easier than it’s been in the past. Forrester’s Peter Kim led a panel to discuss the reasons why. It included six of the seven vendors from his Brand Monitoring report - Maxine Friedman (Brandimensions), Max Kalehoff (BuzzMetrics), Howard Kaushansky (Umbria), Jim Nail (Cymfony), David Rabjohns (MotiveQuest) and myself.

While not everyone agreed on the importance of measuring traditional media to understand how word of mouth is generated (a position Biz360 supports), we all agreed that technology is an important enabler for making sense of social media - the millions of thoughts, ideas and creations posted to the Internet everyday. Human analysis remains an important component, however, for understanding the finer nuances of language (Biz360 uses machine-learning techniques that rely on regular human analysis and input to take technology as far as it will go). The session ended with vendor recommendations on what questions companies should ask themselves before investing in a brand monitoring solution. A few of the top questions were:

• What are my program goals?
• What resources do I have internally to support a monitoring/measurement program?
• What level of service (involvement) do I expect from the vendor?
• How confident am I in the vendor’s ability to deliver insight, not just data?
• How frequently do I need information and to what depth?

There were several great presentations over the course of the day. Jim Nail presented research on the word of mouth of cereal brands, which he confessed was not an exciting topic and didn’t generate a lot of content. What I found interesting though were the motivational categories he used to break out the WOM - health & wellness (Wheaties), parental (Cheerios), nostalgic (Count Chocula), etc. Biz360 conducted similar research on yogurt brands and also found a relatively low level of social media content (yogurt isn’t nearly as exciting as Paris Hilton or Nintendo Wii, so we weren’t surprised). What we did find was that the health-based messages appearing in social media were coming from the health & wellness publications. This is a good example of how traditional media can drive word of mouth. Companies looking for word-of-mouth influencers only among consumers are stopping short of their ultimate goal.

For the full list of today’s presentations, check out WOMMA’s Web site. I believe you can also order audio recordings of the presentations after the event.

The Forrester Brand Monitoring Wave that we mentioned last month was published today and is now available for purchase. The Biz360 summary is available here. It’s the deepest dive into our space to date, and we’re hopeful that the increased attention will benefit the industry as a whole, especially those of us who were selected for the review.

Overall, analyst Peter Kim rated Biz360 as a “Strong Performer.” From the executive summary:

The vendor offers a strong, end-user-focused brand monitoring solution with good coverage of data sources. The company’s Market360 product features a powerful and flexible user interface with broad reporting capabilities. Biz360’s presence in analytic and consulting services is small but growing, making the solution a better fit for companies that seek a self-service tool.

The report includes more detail regarding our flagship product, Market360:

Biz360’s user interface provided the most in-depth functionality for client-side use. The ability to construct queries, reports, and alerts, as well as tuning and filtering sources and speaker sentiment, are provided in a user-friendly Ajax-based interface. However, empowerment comes with a downside: Some clients report that the system’s complexity makes it easy to miss some of the functions that are available for use.

The complexity criticism is fair, and one that we’ve heard from some of our users in the past. In an effort to help our clients to realize as much value as possible from the application, we just conducted an extensive round of customer feedback interviews. Based on this feedback, further usability enhancements are in the works. Here’s what we currently do to help users on this front:

• Build customizable dashboards that can incorporate all of the reports our customers need on a single home page.
• Offer alternate delivery options, including periodic email, email alerts, offline reports, and RSS.
• Provide personal assistance through our account services and technical services teams.

The Forrester report also evaluated our services capabilities:

The vendor offers training opportunities on par with other vendors. Biz360 is building consulting services capabilities, but these services are still nascent.

On this point, we respectfully disagree. Our consulting services team is small, true, but it consistently generates very high rates of satisfaction and loyalty among our current customers. Our services strategy involves not only building a top-notch internal staff, but also partnering with external consultants for targeted strategic engagements. Combining the power of our application with the insight of expert media analysts has led to some of our most compellling client success stories.

A couple of our competitors secured higher overall ratings in the study. Congratulations to Cymfony’s Jim Nail and Nielsen BuzzMetrics’ Pete Blackshaw, both of whom are recognized as industry thought leaders. We can thank them for leading effective marketing campaigns which have increased awareness for this space. With our own brand and thought initiatives like MarketIQ and key executive positions filled, we plan to be in the leader category when the next brand monitoring wave rolls around in 12-18 months.

Forrester analyst Peter Kim offered this update today on the Forrester Brand Monitoring Wave being published in September. Biz360 is one of a handful of vendors being evaluated in what will likely be the most in-depth review of our space to date. I can’t say much about this while the review is still in progress, but I’m confident the attention from Forrester will help marketers understand 1) the importance of monitoring brands across new and traditional media channels and 2) the differences between the service offerings available.

Setting the stage for this Forrester Wave, Peter recently published his views on Reinventing the Marketing Organization (July 13, 2006). One premise of his piece is that large media buys are becoming, and will continue to become, less effective for generating brand loyalty and revenue. He recommends starting to move those dollars toward technology investments that help marketers 1) understand customer preferences better and 2) create more meaningful experiences for customers.

Note the movement of money bags in the chart above from large media buys –> customer-centric technologies, including brand monitoring. Who knew corporate vaults still had Scrooge McDuck-style money bags?

Source of graphic: Forrester’s Reinventing the Marketing Organization by Peter Kim, published on July 13, 2006. To purchase the full report, click here.