Back in October, I posted our initial research on the ROI of blogging. Many of you contributed your ideas, thoughts, and criticisms - thanks so much as it was extremely helpful.

We've (finally) published the report - and actually, there are two of them. The first is "The ROI Of Blogging: The "Why" And "How" Of External Blog Accountability". It's available at URL for Forrester clients and also for purchase. I've included the excerpt below:

Many large companies stand on the brink of blogging, yet they are unwilling to take the plunge. Others, having dove in early, now face the challenge of managing existing blogs without the ability to show that they effectively support business goals. While blogging's value can't be measured precisely, marketers will find that calculating the ROI is easier than it looks. Following a three-step process, marketers can create a concrete picture of the key benefits, costs, and risks that blogging presents and understand how they are likely to impact business goals. This, in turn, enables marketers to answer the key questions, such as whether to blog or not to blog, or to make smart choices about an existing blog.

We also published another piece of research, "Calculating The ROI Of Blogging: A Case Study, A Look At The ROI of General Motor's FastLane Blog" which applies the framework we describe above. Again, here's the excerpt:

Forrester used the process outlined in the first document in this series to calculate the ROI of General Motors' FastLane blog; but, this is not merely an exercise to generate a number. Using scenarios, General Motors can understand the risk and impact of increases and decreases of a key metric â€" the number of press mentions â€" on the value of the blog. With this knowledge in hand, General Motors can make critical businesses decisions, such as whether to invest heavily in innovations that will rekindle press attention.

We developed a framework that allows companies to track and measure the benefits of external blogs. From the companies and individuals we spoke with, the most common benefits are; increased brand visibility, savings from customer insights, reduced impact from negative user-generated content, and increased sales efficiency. The hard part is coming up with metrics that reflect these benefits, and more importantly, how to value those metrics. Here's the graphic from the report:

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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. The case study contains a full-blown Excel model (Update: this is available only to clients) showing how we calculated the FastLane blog ROI in excruciating detail.

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But the key metric that we think drives the value of the FastLane blog was the number of press mentions it received, which we valued on the basis of "advertising equivalence" -- how much would it have cost GM to buy an ad in the same news outlet? This is a long standing metric used by the public relations industry to measure its value. We found that this metric drove a significant amount part of the FastLane blog's value -- and that press mentions were decreasing significantly over the last two years. With this knowledge, GM can decide whether to take steps to increase press activity -- or to de-emphasize this metric in favor of other ones in the calculation of the blog's ROI.

As you can see, this process and framework is not cut and dry, black and white. Rather, it's highly subjective, requires tremendous judgment, and is open to interpretation. But it is a starting point for an otherwise nebulous activity.

We invite you to provide your ideas and feedback as this is an ongoing exercise -- we believe we're just starting to scratch the surface when it comes to blog measurement. As the number of companies with blogs grows, we'll be able to add to and refine the framework.

Finally, here are some frequently asked questions that I'm getting about the ROI of blogging, which I thought would be helpful.

Q: Is there a standard ROI for blogs? A: Nope - sorry, it isn't that easy! Just as there isn't a standard ROI for a Web site, there's no standard for a blog. It depends on what the goal of the blog is and also how much investment the company (and the blogger) puts into it.

Q: What's the best way to measure the effectiveness of a blog? A: Again, it starts with the goal of the blog. I strongly suggest that companies start with the goal, develop metrics that measure the attainment of that goal, and find ways to assign value to those metrics.

Q: But aren't blogs risky? How do you take that into account? A: We definitely take risk into account by generating scenarios that show the impact of low-likelihood but high impact events -- such as a lawsuit.

Q: Our CMO/CEO/CFO won't let us have a blog until we can show him/her the definitive ROI of a blog. Help!! A: It's not an unreasonable request -- they don't really understand the value of a blog and see just the potential cost and risk. By going through the exercise of defining and quantifying the benefits, costs, and risks of a blog, you'll be educating your C-level executives while also demonstrating the discipline that they expect.

Q: But this is heresy - you can't put the benefits of a blog on a spreadsheet! You've just got to believe that blogs are a good thing because they develop conversations with customers. A: At the core of my bleeding heart pumps the soul of a pragmatist. Sure, I buy into all of the positive, feel good reasons to have a blog. But when your manager asks why the company has a blog versus spending more time and resources on XYZ initiatives, it sure would be helpful to be able to show a spreadsheet of those blogging benefits in dollars and cents.

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