ROI of blogging

Charlene Li of Forrester has an interesting report in which she tries to calculate the ROI (return on investment) for business blogging. Unfortunately the report is only available to paying customers but she lays out the model in a blog post:

Based on the model she has a comprehensive formula (I could not see it as the link is broken) that calculates the ROI. Charlene cites the example below as the kind of calculations she has in mind:

Let’s take for example the FastLane blog. One of the key goals of that blog was “to share information about its products and to start a dialogue between GM leaders and customers”. So a key metric would be to see how many times customers wrote a comment. FastLane has about 100 people commenting on the blog each month, which is equivalent to gaining customer insight on products and brands from a traditional focus group. We estimated that the value of this was equivalent to running a focus group every month at the cost of $15,000 a month, or $180,000 a year. Voila – there’s the value of the blogging benefit laid out in black and white.

I think the model she presents is a very useful way to quantify potential benefits, although, I am not sure I buy or will be swayed by specific calculations like the one above. The reason is that blogging opens up a new channel for customer interaction, which has its own unique dynamic. Comparing it to existing business activities like focus groups is problematic. E.g. with focus groups each participant is carefully selected whereas blog commenters are self selected web-savvy individuals.

The bottom line is that a CEO has to see the value of engaging customers in a conversation. I am not sure such calculations can help sway them as there are so many ways to poke holes in any such calculation. Another, more easy to establish, thing here could be to try and establish the costs associated with blogging. If the costs associated with blogging are not very high (I don’t think they should be), then the c-level exec’s will be more willing to take the plunge. I bet, another issue holding business blogging back, is that a number of c-level execs don’t fancy themselves as writers. As such, easy tools for video/audio blogging would enable them to take the leap much more easily.

More coverage on the topic is here.

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3 thoughts on “ROI of blogging

  1. This is only one way to look at blogging. What about the B2B market? What about internal blogs? some of Charlene’s metrics are suspect in construction but that actually works in her favour in some scenarios.

    Net-net: she’s done a very good job at articulating a framework. What you put into it is, of course, for you to decide.

    Disclosure: I was accredited as having controbuted to Charlene’s thinking and received a full copy of the report.

  2. Dennis, That is a good point…Internal blogs are gaining more traction these days as evidenced by Six Apart’s push into enterprise blogging.

    It will be interesting though to see how much influence internal blogs can have in a corporate culture. I can imagine blogs starting a new conversation at all levels of a corporation…Have you heard of any success stories here?

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