ROI or measurement: Which one is it?

Nice post, Chuck! I really dig how you ‘defined’ how to look at the differences between ‘ROI’ and ‘measurement’ - keeps it nice and simple!

Hi Chuck,
Good post - still a lot of confusion between the broader concept of measurement versus the calculation of financial impacts - ROI.  A lot of folks say ROI when they really mean ‘results’, ‘outcomes’ or ‘impacts’.  (I appreciate the shout-out to my blog, BTW).

Basically if your readers can explain the following, they get the difference:
1. The difference between impacts (or outcomes) and ROI
2. The difference between value created and demonstrable ROI - and why the time dimension is important
3. The difference between financial impact (ROI) and non-financial impacts (which create value).

Reading the posts you suggested will provide the answers. 

-Don B @donbart

Nice post Chuck - I think a lot of folks confuse the terms.  There are thousands of things you can measure - but a subset can be used to calculate ROI. Something was definitely amiss when I saw the words “process for ROI” - there is a process for measuring, and a process for calculating ROI, but not a process for ROI itself.  Mack Collier’s blogchats are a great resource, by the way.

Chuck, a bad trend is replacing “investment” with another ‘I” in the ROI acronym. We shouldn’t do that. It’s one of the worst impulses of PR, changing the meaning of a well-known phrase…

This is more evidence that we PR folk need to think of ourselves as business people who use communication tools to create value, rather than would-be novelists or journalists, filled with the creative spirit, fighting the forces of banality.

and another thing… If we think business is boring, we’ll write either boring copy or useless copy. Don’t like business? Don’t be a PR person.

Chuck, the impact of non-financial measures is also critical, as our pal @DonBart and many others say. The ROI calc is most important in specific campaigns—if we are trying to drive Website visits for an online retailer, do so, but don’t see an uptick in sales that gives us incremental income gains, that’s #fail.

I think the reputation side is one place where we can decouple from the ROI calc.

We also can talk about the awareness question.  Sometimes, building awareness is the objective. This is where the lines get fuzzy. You can’t have a sale without awareness—and awareness only is a good objective if the organization does something with it, levers it in some fashion.

The measurement programs can live in this awareness-understanding phase for a while, and to say it’s not a success because of lack of ROI is wrong.

Sooner or later, though, to paraphrase Dylan, you’ve got to sell somebody. That’s where our marketing cousins lord it over us.  But you can’t determine the business value of anything if you don’t measure it, right?

Chuck,
I’ll take a literal crack at the awareness question.  Of course awareness can be measured.  Generally you either measure unaided awareness (e.g. name all the hiking boot brands you are aware of) or aided awareness (For each of the following hiking boot brands, please tell me your level of familiarity (likert scale - ‘not aware of them’ to ‘very familiar’).  For unaided awareness, the first brand mentioned, i.e. ‘top of mind’ is really important in positioning and branding. 

What you can’t measure is an objective that says, “Increase awareness”.  You have to make the objective measurable - “Increase awareness from 10 - 21% in the next 12 months”.

I never cease to be amazed by what a low percentage of objectives written by PR pros are actually measurable as written. 

-Don B @donbart

Chuck, great post on this topic. While I missed the blogchat discussion about ROI, I’ve seen enough conversation about this to concur with your assessment, there is confusion and mixing of the terms. Without getting into a detailed definition, I think it can be simply described as so:

ROI - Answers the what (what did we do/accomplish)
Measurement - Answers the how (how will we track/measure this to be able to answer the what)

Perhaps I was keeping the definition too simplistic. Measurement is the instrumentation, the means to the end. What metrics, variables, or items need to be collected, tracked, etc… and then analzed in order to calculate a determination.

ROI measure is that determination, (yes I agree, historically a financial one). A value, or score, representing the performance of a particular initiative.

Are we arguing over semantics?

I made these comment son Twitter and thought i’d post them here.

@chuckhemann just read “ROI or measurement: Which one is it?”, yes they r different, but do r clients know that?

@chuckhemann it’s hard to get them to understand when it all seems quite confusing to us

@Schembri_group in a majority of cases, I’d say know. but if you’re a consultant, I’d say the impetus is on you to educate

@chuckhemann tough sell in this economy though, everyone wants “measurable results”, but calls it ROI. I see your point though

Chuck - folks who are serious about ROI should be heavy users of PR research and measurement, and if so, the IPR Commission would love to encourage them to enter this year’s Jack Felton Golden Ruler Awards for Excellence in PR Measurement & Evaluation.  Entries of all types are welcome – including research using social media!  As you know, the award recognizes superb examples of research used to support public relations practice. Winners are feted at the IPR Summit on Measurement as you know, and it’s quite a big deal. Entries are due August 15th.  Here’s how to enter: http://www.instituteforpr.org/awards/golden_ruler/. We’d love to see all you ROI-minded folks enter!

Chuck - thanks a million!! Great blog, by the way!