This article reveals the findings of a few new research studies. What they found might surprise you.

Small Business Focusing Big Time on Social Media and Blogging

Small businesses are spending three times more on social media and blogs than larger businesses.

In HubSpot’s 2011 State of Inbound Marketing Report, researchers discovered that small businesses plan to spend 29% of their lead generation budget on social media and blogs. Asked the same question, medium to large businesses only plan to spend 9% on the same categories.

HubSpot‘s conclusion: all marketers are increasing their lead generation budgets for social media and blogs. In fact, the average company increased their spending from 9% to 18% between 2009 and 2011.

The HubSpot report has many more important insights on acquisition rates and comparative data on various industries. Check it out here.

Social Media Spending Trending Up

64% of all marketers plan to increase their social media budget in 2011 according to Target Marketing’s Fifth Annual Media Usage Report. Email marketing is the only area where more marketers will increase their spending.

Email and social media are becoming rivals for acquiring new customers and customer retention:

• Email – 85% of marketers use it for acquisition; 90% for retention
• Social media – 75% use it for acquisition; 65% for retention

No-one belittles our current economic crisis. That’s what makes these trends even more interesting.

In a day where many marketing budgets are frozen, marketers are allocating an increasing portion of the pie to social media. Some might say they are panning for gold, but I think the signs show that they’ve already found some gold.

Match Social Media Spending to Your Experience

All businesses should consider their social business maturity as they establish priorities and their social media budget. This is Altimeter Group’s conclusion after conducting a study of 140 social media strategists at enterprise-level corporations (1000 employees or more).

While the data is derived from large companies, the principles recommended apply to businesses of all sizes. See which of the following strategies match your needs and priorities for 2011:

What about you? How do these reports get you to look at your plans for 2011? How do your social media spending plans compare to these trends? Leave your comments in the box below.

However, in a stricter sense, social media ROI is defined as a measure of the efficiency of a social media marketing campaign. This definition might sound complicated, but in reality, it’s quite simple.

What Does ROI Really Mean?

Let’s backtrack a bit.

We’ve all heard what “ROI” stands for, but what’s less understood is the actual meaning and the importance of ROI.

In the financial world, ROI is used to measure the financial efficiency of an investment. ROI is based on the financial formula:

ROI = (return – investment) / investment %.

Increase social media ROI.

This means that if you increase your return while keeping your investment the same, then you increase your ROI. This is good. If you decrease your return while keeping your investment the same, then the ROI goes down. That’s bad. A high ROI is better than a low ROI.

Because the ROI formula uses only two inputs – the return and the investment – the ROI formula is an easy way to measure and compare marketing campaigns. A marketing campaign with a high ROI is considered better and more efficient than a marketing campaign with a lower ROI.

It’s important to understand that ROI measures the efficiency of an investment because then you also understand that ROI cannot be defined using alternative definitions. “Return on inactivity” does not help you measure the efficiency of your campaign.

Social Media ROI Uses The Return And The Investment

Now, all we need is to take our social media return (the amount of value that we got from our social media campaign) and our social media investment (the amount of money that we invested in our social media campaign) and run it through the financial ROI formula.

Social media ROI = (SM return – SM investment) / SM investment %.

Simple, right? Not so fast. The social media investment is clearly defined, but how do you define the social media return and how do you attach a dollar value to the return? We need to answer both questions before we can calculate the social media ROI.

Social Media Return Is The Return On Your Social Media Goals

The peculiar feature of the social media return is that you can define it to be essentially anything you want it to be!

Brian Solis from the Altimeter Group puts it even more succinctly in his article ROI Doesn’t Stand for Return on Ignorance: “Everything starts with an end in mind.”

In reality, social media return is the value that you derive from your social media campaign. For instance, if the goal of your social media campaign is to drive sales, then your social media return is the number of sales that you can attribute to your social media campaign.

Instead of sales, say your goal is to drive consumer insights. In this case, your social media return is the quantity and quality of the consumer insights you get from your fans and followers.

A third example of social media return is brand awareness. If your goal is to drive awareness of your brand, then your social media return is brand awareness.

I could give many more examples, but the point is that social media return is the value that you derive from social media based on the goals of your campaign. (Note that the number of followers, fans, Likes and comments are not social media campaign goals.)

Quantifying Social Media Return

After we have defined our social media return, we need to quantify the social media return into dollars and cents. This is difficult because you need to look at each type of social media return and develop a method for dollar quantification.

For instance, looking strictly at sales, we can quantify the social media return by looking at “last touch” sales, or we can use sales forecasting techniques or use unique identifiers such as coupon codes.

Quantifying consumer insights is harder and requires different techniques to estimate value.

Hard estimation is critical.

One commonly used technique is to compare the quantity and quality of consumer insights from offline focus groups to consumer insights from your social media campaign.

The idea is that you know the value of consumer insights from offline focus groups based on their cost. By comparing the quantity and quality of consumer insights from both channels, you arrive at a reasonable estimate of the value of consumer insights from your social media campaign.

Brand awareness requires yet another method. In April 2010, social media analytics company Vitrue made quite a stir when they stated that according to their research, the average Facebook fan is estimated to be worth $3.60. Vitrue looked at the average number of messages each fan received and then compared this number to what it would cost to purchase impressions to send the same number of messages to each fan.

Use Social Media ROI To Compare Apples To Apples

After estimating your return and your investment, you use the ROI formula to calculate your social media ROI.

Remember, ROI is a measurement of efficiency, so having calculated the ROI of your social media campaign, you use the ROI number to compare to other social media campaigns and also your TV, print, radio and other campaigns.

ROI is possibly the most powerful tool in your marketing toolbox. This sentiment is demonstrated in Amy Porterfield’s post, Study Reveals Top 6 Social Media Goals for 2011, where she correctly points out that according to the Altimeter Group, 48.3% of all corporate social strategists will have social media ROI as their highest focus in 2011.

ROI is a very powerful weapon in your marketing arsenal.

What do you think? What methods do you use to measure social media ROI? Leave your comments in the box below.

All photos from iStockPhoto.

Twitter, Facebook, LinkedIn, YouTube, Google Buzz, Foursquare, and others that have just joined the game—and the list goes on and on ad nauseam!

“We already have a website and we get email. Isn’t that enough?”

The words invading our vocabulary are legion… and silly at times: blogs, fans, tweets, diggs, etc. Is this trip really necessary?

PERHAPS NOT. Let’s start by exploring why NOT to participate in social media:

#1. It’s Just a Fad

Pet Rocks, Hula Hoops, Chia Pets, social media. It won’t last. It’s just a flash in the pan. Something new will be showing up soon. Moore’s law (the number of transistors that fit in an integrated circuit doubles every two years) has NOTHING on the changes in social media!

Don’t try to keep up. It can’t be done. By the time you figure out how to do it, it’s already yesterday’s news!

#2. It Takes a Geek

“I never got my VCR to stop flashing 12:00, so how in the world can I learn this stuff?”

So much to learn, so little time. Even for those from the newer generations, the technology can be dizzying. This may work for Jimmy Neutron and Boy Genius, but not for most of us!

#3. It’s a Digital Black Hole

Farmville, Mafia Wars, Restaurant City, Bejeweled, Texas Holdem, and so forth. We’ll be paying our employees to play the latest version of Minesweeper!

The amount of time wasted, loss of productivity, and “dead air time” make the use of most of these applications a bad investment. Even if they TRY to use it effectively, the maelstrom of social media will draw them into its time-killing vortex!

#4. We’re Already Too Busy

Spending all day staring at a screen can’t be profitable. We should be meeting clients, talking to customers, negotiating with vendors, and beating our competitors, NOT typing insipid 140-character messages to our followers!

“I already get more email than I can handle, and you want to add MORE messages?”

Well, these arguments seem to be pretty cogent. I guess we should just sit it out. Skip this dance. Let others experience the “bleeding edge of the leading edge.” The return on investment just isn’t there, anyway.

Or is it?

Let’s take another look at these concerns.

#1. It’s Just a Fad

If social media is just a fad, then it’s managed to dupe an impressive collection of heavy hitters.

According to a recent study of 100 of the largest companies in the Fortune 500 list, 79% use Twitter, Facebook, YouTube or corporate blogs for communication. Companies as diverse as Sony, Target, Ford Motor Company and Starbucks are all employing some type of social media.

These companies invest millions of dollars in creating a presence on the Internet, and they see social media as an important part of that investment.

Hmmm. . . . maybe they’re on to something?

#2. It Takes a Geek

If you can type (with 10 fingers or fewer) and click, you can use social media.

There are many applications out there to make your experience “friendly.” TweetDeck, HootSuite, Seesmic and even advances in the applications themselves allow most of us to navigate the wild and woolly world of social media with ease. You don’t have to be able to speak hexadecimal code to use social media.

Witness the lower right-hand corner of Ford's home page.

#3. It’s a Digital Black Hole

It’s a fact that there is a multiplicity of time killers out there. Facebook alone has screen after screen of games and adventures that have nothing to do with productivity. Not to mention all of the vacuous Twitter responses to “What’s happening?” that are typed in daily.

The ability to waste time online is ever-present. Of course, a company’s effective AUP (acceptable use policies) for the use of Internet applications can guide employees in the appropriate use of the plethora of applications out there.

Simply stated, social media does not HAVE to be a “digital black hole.” Just because it CAN be a waste of time does not mean that it HAS to be!

#4. We’re Already Too Busy

We ARE busy. The credo, “work smarter, not harder” has its place.  But “working smarter” has its limitations. You can only work so much “smarter” until you must make up the difference with “harder.” This places time at a premium, and clicking and scrolling do not seem to be very productive. Time spent on social media can be extensive, but there are ways to use your time more effectively.

And, a BONUS:

The Opportunity For Branding Is Extraordinary!

The amount of time the global public is spending on social networks has tripled in the past year. That’s quite an audience, is it not? There’s unlikely a better venue out there to ply your trade these days. The Internet itself is a goldmine of resources to educate you on the effective use of these new applications.

For example, there are Twitter tips here, as well as practical insights for both Facebook and Twitter here.  Investigate these extraordinary resources before making your decision.

What are your thoughts? Are you facing skeptics head on?  How do you overcome common objections to social media adoption? Share them in the comment box below.

At a time when businesses are using social media to promote content and start discussions, Avaya has found that listening trumps talking.

“We’re listening to social media and responding,” said Paul Dunay, Avaya’s social media ringleader, who is global managing director of services and social media marketing.

“There is no Tweet that goes unturned. No forum post that goes unturned where our name is mentioned.”

What began as a way to engage and support customers has evolved beyond even Avaya’s expectations. And if Avaya ever doubted its investment in social media, those concerns are now put to rest.

A recent quarter-million–dollar sale, which began on Twitter, soundly answered that question.

Making the Case

Avaya started in 2000 as a spinoff of Lucent Technologies, but its legacy goes back more than a century to the original Bell system. From the earliest phone systems to advanced, unified communications, Avaya and its predecessors have been – and continue to be – at the forefront of the field.

It makes sense then that Avaya would be wherever people are communicating today. The company’s social media activity started informally and grew organically. First, it was mostly a matter of supporting – and keeping – existing customers, many of whom need replacements as old phone systems are retired.

At the time, Dunay followed Avaya mentions on Twitter, which were mostly questions that he forwarded to support reps.

“The old 1.0 way was a call center or inputting tickets on the web,” he said. “2.0 is we’ll try to reach out to Avaya support which is, by the way, me on Twitter.”

With the growth of social media, those mentions soon became too much for Dunay to simply watch on his own. He brought his case to Avaya’s CMO, and left with official backing to build a cross-functional, global, and virtual social media team.

“It was very easy for me to build my business case on retention of existing customers because it’s so expensive to get new ones,” he said

Customer Conversations ‘Everywhere’

Through word of mouth, Dunay found early social media adopters within Avaya’s 15,000 employees, starting with seven people across communications, marketing, support, legal and other business units. As the team began organizing Avaya’s social media strategy, they chose to focus on four main tools: Facebook, blogging, forums and Twitter.

From there, Avaya’s social media was “literally an explosion,” according to Dunay. That team of seven employees has now grown to 50 – all of whom volunteer to participate in social media on top of their regular jobs.

Today, the company has 42 Facebook groups, five Facebook fan pages, one external blog with 10 regular Avaya writers, 10 global Twitter accounts, and 12 LinkedIn groups. Internally, Avaya leverages social media just as much, with 14 internal blogs, 15 wikis, about 3,000 employees on Yammer and some on the recently launched Socialcast.

Facebook serves as the hub, with events, news, discussions and links to blog posts. The blogs discuss trends, innovations and cultural insights. Twitter allows them to post quick bits of information, respond to support requests, and monitor mentions of the brand and competition. Forums enable customers to get help from each other or from Avaya tech support.

With significant momentum, Dunay reported back to the CMO. “She asked, ‘Where are we talking to customers?’ I said, ‘Everywhere!’ She asked, ‘Where are we holding conversations with partners?’ I said, ‘Everywhere!’ We’re holding all the conversations in the same places with each one of those constituencies – and then some.”

Contests, videos and other resources engage Avaya’s Facebook fans.

The Eyes and Ears of Avaya

With active listening as the team’s main approach, members found they simply couldn’t be everywhere at all times – especially as mentions of the Avaya name grew to between 1,000 and 2,500 weekly. They turned to Radian6 technology to listen to and measure all social media mentions of not just the company’s name, but competitors’ names, product names, and types of conversations.

“We identified conversations we wanted to go deeply into,” Dunay said. “Wherever conversations about small business and communications happen, we need to be there.”

Avaya tracks a dashboard of mentions, and can choose to either ignore or respond to each. When one member “hears” something requiring further action, he or she posts it on an internal wiki and it’s assigned to someone on the relevant team to address it. That might be support, billing and finance, engineering, a partner, and so forth.

Dunay stresses that none of Avaya’s responses are automated. Who knows what a customer or prospect might say? If your response isn’t tailored to their comments, then you’ve missed the opportunity to connect on a personal level.

The 58-Character Sale

On average, Avaya interacts with a couple of dozen customers through social media on a weekly basis. By listening, the team also comes across sales opportunities. In June of this year, 58 characters of a simple Tweet started the relationship with a potential customer.

“shoretel or avaya? Time for a new phone system very soon,” the Tweet read.

“In less than maybe 15 minutes, we had seen it and figured out what the heck to say to this guy,” Dunay said. “I wrote back, ‘We have some highly trained techs who can help you understand your needs best and help you make an objective decision. Give me a call.’”

Dunay referred the gentleman to a business partner, and 13 days later, they closed a $250,000 sale. At the same time, the new customer’s follow-up Tweet went out: “…we have selected AVAYA as our new phone system. Excited by the technology and benefits…”

“We were there. We were listening. It pays to listen,” Dunay said. “I can’t say we hit 100% of the conversations where we’ve wanted to be, although it’s probably 60–70%. But on our brand name, it is 117%. We’re on every one of those.”

Avaya proactively identifies and responds to support issues using Twitter.

One Tweet Away

By proactively looking for mentions and conversations, Avaya sees issues before they even arise, before anyone contacts the company. A response to a social media mention truly makes an impression on customers, prospects and partners. “We are the early response center for things happening in the marketplace,” Dunay said. “They love knowing you’re one Tweet away.”

Avaya’s social media team grew quickly, but Dunay has an even bigger vision for social media.

“I don’t think it should be 50. I think it should be 15,000. Everyone should have a hand in it,” Dunay said. “We definitely want more people deeper and broader in the organization.”

“Our goals are to have deeper, more interesting and more pervasive conversations with as many people as we possibly can,” he added. “Why wouldn’t you take every opportunity for your brand to build better and deeper relations with every customer you can?”