During last week’s BusinessWire sponsored panel discussion at the City Club in Cleveland (video above), every panelist agreed that determining social media ROI should be a distinct component of any social media campaign. So why do so few companies track any form of ROI?

Because it’s boring.

There, I said it. The cat’s out of the bag. Determining social media ROI is tedious, dull and boring. It requires you to read reports, check analytics, create timelines and check data against specific activities and website minutiae that are profoundly uninspiring, yet absolutely necessary.

Getting a social media program off the ground is fun. It requires strategic planning, creative execution and active engagement. Everything is fresh and exciting. Every new conversation is an affirmation and every relationship is a success.

Tracking the results of this activity, however, is considerably less fun. Although there are excellent software tools, like Radian6, that will measure the success of your social media efforts, most of these cost money. Social media is supposed to be free, isn’t it? So, most small companies will likely develop some home-grown, spreadsheet based tracking mechanisms to determine their ROI.

And then, they’ll be largely ignored or neglected, like 84% of social media programs.

Because tracking ROI requires you to know what you’re measuring, how to measure, how to interpret the data, how and when to establish a baseline, how to measure impact and requires you to track specific transactional activities.

And where’s the fun in that?

A recent study released by Universal McCann reveals that we are immersed in the fourth wave of internet usage characterized by social networking participation. Their study notes that social networks are becoming the dominant platform for personal interaction and content creation and distribution.

The global internet audience now totals 625 million people, with almost 100 million of those users located in the United States. Nearly two-thirds of these users are active in one or more social networks.

What’s also revealed is how these users spend their time on the social networks. The most popular activity was watching video, followed by listening to streaming audio, blogging and connecting with friends.

What does this mean for you or your industry?

First of all, the place to connect with people – whether personally or professionally – is on one of the social networks. They’ve made their choice how they want to interact with others, and it’s not through email. For professionals, this typically means LinkedIn, though Facebook is being used more and more by professionals who have learned to adjust their privacy settings so as not to share overly personal information with other professional contacts.

These trends also mean that you need to generate content that is interesting, engaging and compelling enough to generate views and inspire your connections to share your content with their own network of friends and colleagues. The dominant format for this content: video. If you’re not creating videos to put on your site, your blog, your LinkedIn page, your Facebook Fan Page, then it’s time to start.

But don’t stop with video. Over 70% of social networkers also post photos to their pages. People want to see who they’re connecting with, and a thoughtfully designed series of photos can generate a powerful impression. For the professional, these can include images of your office, your personal workspace, your coworkers and even photos from events that you participate in. Sharing some personal visual insights will increase your familiarity, strengthening your connections with your networks.

Finally, if your company really wants to engage online, you need to create a community that’s worth joining. That means frequently updated, compelling content. The promise of interaction with other, like-minded people. A thoughtful, meaningful – even delightful – user experience. And the ability to listen to your community members and adjust your activities to satisfy their needs, not yours.

Cheezhead this week wrote about Monster.com’s recent announcement that they will (for a hefty fee) execute a social media strategy for their clients.

What’s noticeable about this announcement isn’t that large companies are becoming aware of the value of social media and are trying to cash in on the gold rush of consulting fees that uncertain and unfamiliar companies will fork over to play in the social media pool.

No, the shocking thing about this announcement is that Monster.com has absolutely no social media presence themselves. They don’t tweet. They have no Facebook page. And I can’t find a Monster blog. All of which suggests that perhaps they’re not the best source of social media advice.

What’s also disturbing is that they don’t promise any tangible ROI, just a number of impressions. That’s right, for a mere $12,000 they will set up a Facebook page and Twitter profile for your comapny and promise that a banner ad will appear on 2 million Facebook pages.  Are you whipping out your checkbook yet?

Developing a social media strategy isn’t something that you can outsource to a third party. It should be part of your strategic marketing plan with specific objectives and an anticipated ROI. Company participants need to engage online in genuine conversations. Bloggers need to write about their real world issues. Problems. Successes. Difficult issues. Complex questions. With an authentic, human voice.

It’s not easy, it’s not cheap, it’s not quick and it’s not someone else’s responsibility.

Living in Cleveland, as I do, I have frequent conversations with executives who run prototypical rust-belt businesses. Heavy manufacturing, industrial distribution and professional services that support these core businesses that are decidedly unsexy and unremarkable.

What’s surprising about these discussions is how many of these executives view their own companies as unexceptional and nondescript. Which begs the question: If you don’t think your company is remarkable and unique, why would anyone else?

As the former owner of a manufacturing company that produced labeling machines (it doesn’t get less sexy than labeling) I can attest to the dysfunctional industrial mindset that dominates entire industry sectors. Manufacturers are obsessed with their physical equipment, not what it is capable of providing. Distributors are the sum of their products, not the value they add in knowledge, responsiveness and expertise. And service companies have absolutely no idea how to separate themselves from nearly identical competitors.

When I hear these executives describe their own company in these terms, I see boundless opportunity. In most cases, their competitors behave in exactly the same way, enabling a savvy, thoughtful  and creative marketer to create a distinctive and memorable presence in their industry sector. And with the proliferation of penetrating social media tools, the ability to create an impression and reach your targets with precision and frequency has never been greater.

So if I can see the opportunity, why can’t they? I hear the same excuses over and over, including:

1. My customers aren’t on the internet. I was wondering who it was that wasn’t on the internet at all. Turns out it’s always the clients and prospects of every industrial executive I speak with. Theirs are the ones who don’t use e-mail, never watch anything on YouTube, get their news exclusively from newspapers, still use film cameras, listen only to CD’s and still deliver presentations from a stack of transparencies. I don’t believe it. What’s more believable is that these companies have never provided any reason for any of their clients to use the internet to gather information, gain knowledge or, heaven forbid, entertain.
2. My customers buy on price, so what’s the point? The point is that you’ve never given your clients any reason to base their buying decision on anything other than price. That’s the fundamental problem. You need to become more valuable, and a thoughtful social media program can communicate your distinctive abilities, and reinforce the true value you deliver.
3. What would I say? At first, it’s not about what you say, but how you contribute. How can you help? What do you know that you can share? It’s about them, not about you. Link to articles that you think they would find helpful and interesting. Link to videos that are instructive and entertaining. Link to research that will help their strategic business decisions. And write about the successes that you’ve contributed to and the problems that you’ve helped overcome. Nobody’s expecting brilliance. Insight will do.
4. I don’t have the time. What priorities do you have that are greater than developing your business? Building close relationships with your prospects and clients is not something you can outsource to a marketing firm. Your web developer cannot substitute Flash for real conversations. Want to demonstrate your commitment? Spend some time each day participating. If you don’t commit and engage, neither will your staff.
5. I would lose control. For many old school executives, the concept of social media participation is downright scary. What do you mean people can leave comments? What if they say bad things about us? How can I control what my employees say online? For the command and control executive, the openness of the social media channels strikes fear in their heart. For these executives, I can only commiserate and offer the limited consolation that the new world of social media marketing won’t be that bad if you’re authentic, open, truthful and helpful. Now is that too hard?

I had a meeting this morning with Michael DeAloia, Cleveland’s former TechCzar, who has spent virtually his entire career involved in assorted aspects of business development. As the founder of several technology start-ups, an advisor to emerging technology companies, former director of technology development for the city of Cleveland, former company owner, CFO and director of business development for several Cleveland area technology firms, the TechCzar is intimately familiar with the essential financial elements that enable business growth and success.

He’s also a social media maven, with two blogs of his own, a daily fixture on assorted social media platforms and the founder of two social media startups. Basically, he’s got the credentials, the experience and the detailed understanding of the potential of social media to advance specific business objectives. So, when he talks about executing social media strategies, a lot of savvy people in town listen.

That’s why I wanted to hear his perspective on social media ROI – a topic that’s inflamed the Twittersphere since Olivier Blanchard published his series of blog posts that excoriated the pretentious social media gurus who promote unreliable and flawed ROI models.

So, does ROI it exist? Should it be tracked? And, if so, how should it be measured?

As Michael makes clear, an essential element of any social media strategy is how that strategy contributes to business development. And business development is clearly defined as activity that generates revenue. It really is that simple.

Salesforce.com recently introduced tools that integrate the online CRM system with Facebook, LinkedIn and Twitter, thereby enabling their users to track contact and activity originating in the social media sphere. Salesforce’s integration an acknowledgement that companies need to track all of their business development activities, not just those emanating from the historic direct marketing channels. As marketing investment shifts to the new social media platforms, executives will need firm data to determine the efficacy and effectiveness of their assorted social media channels.

Sorry if this sounds so Web 1.o, but this is the real world, where investment decisions are based on hard data, not on warm feelings. Bottom line, if your social media efforts do not translate into an increased number of transactions, larger transactions, increased margins or reduced costs, then your insistence on the value of your conversations, retweets and Fan Page subscriptions is a pure and limpid farce.

As Michael concludes: “Dollars in the bank, baby.” Truth.

The blogosphere and Twittersphere have been buzzing this past week over a series of blog posts by Oliver Blanchard on his blog, The BrandBuilder, discussing how to communicate social media ROI to skeptical executives.

The posts sparked dozens of comments and hundreds of Tweets from social media aficionados that split between those who castigated Olivier for daring to introduce crass mercantile interests into the pristine world of social media and those who recognize the business realities involved with securing investment and executive support and need practical guidance to pitch their social media plans.

Olivier was precisely correct when he wrote that executives need to hear how any social media plan will generate a tangible and measurable return on their investment. These executives are responsible for dispensing a finite amount of corporate resources among departments. It is practical, desirable and reasonable that they dispense investment dollars to those projects that will advance the company’s financial position the farthest. That’s reality. Now how do you deal with it?

Once you understand their agenda – maximizing the return on their finite investment dollars – you can frame your social media plans effectively, in language that is compelling and convincing.

Rule #1: do not talk about Twitter followers, the number of retweets last month or the number of times a Fan Page was shared on Facebook. They don’t understand and they don’t care. Zip it until next month’s local SMC meeting.

Rule #2: Speak in language that they understand: Process, Plan, Cost and Return. CEO’s will want to understand the SM process and know that you have a precise plan to execute. By the way, it must be written, or it’s not really a plan.

Rule #3: Do not tell the CEO that the cost of your social media plan is zero or you’ll lose all credibility. Although Twitter, Facebook, LinkedIn and WordPress do not charge their users, their cost is not zero. Their actual cost must include the human costs of participation, engagement, content development and management. How many employees will be involved? At what level? How many hours per day? Per week? Although the company doesn’t write a separate check for social media costs, they are paying for participation, and the total cost may be significant.

Rule #4: Focus on Quantitative, not Qualitative returns. Qualitative returns include the impact of your participation on your company’s reputation and the value of extended online conversations in relationship building. The CEO doesn’t care. I know you do, and I know your CEO should, but that’s not how he measures success. He wants Quantitative metrics. How many new customers did your efforts generate? How many new sales? How much did the average sale increase? What impact did your efforts have on gross margin?

Rule #5: Understand how the F.R.Y. metrics explain and support your social media goals. As Olivier described in his blog post, a compelling social media strategy should improve:

Frequency Increasing sales revenue by shortening the interval between transactions.

Reach (breadth) Increasing sales revenue by increasing net new customer count.

Reach (Depth) Increasing sales revenue by helping customers buy deeper into the product line.

Yield Increasing sales revenue by driving customers to want to increase their average per transaction spending.

Rule #6: Be prepared to detail how you intend to track sales that emerge from the social media channels. You must be able to track results to prove that your SM participation justified the company’s investment.

There. That wasn’t so hard. Now head up to the CEO’s office and tell him how you’re going to improve the company’s bottom line. And you can blog about it later.

I carry a newspaper in my pocket at virtually all times. Actually I carry hundreds of them. All resident as flowing electrons on the screen of my iPhone. This scares the hell out of the major newspaper companies. And it should.

News stories abound detailing the assorted turmoils afflicting the newspaper industry. Major city papers have already ceased operations, and even the most revered journalistic icons, the New York Times and the Boston Globe, are hemorrhaging cash and are trying desperately to execute a corporate strategy that reverses their current death spiral.

Redefining The News
The major newspapers are in serious trouble because they are not really in the news business, they are in the printed news delivery business. Everything they do, every corporate strategy they envision, revolves around newsprint and its physical distribution.

They have hundreds of millions of dollars invested in huge physical plants, enormous high-speed printing presses, fleets of delivery trucks and an enormous, largely unionized, labor force all devoted to delivering a mass of newsprint to an audience whose demand for printed news has declined precipitously.

News As Advertising Vehicle
It’s not just the demand for printed news that has diminished. It’s the demand for printed advertising, the source of all the newspaper’s revenue.

Craigslist, the free online ad service, single handedly destroyed the newspaper’s classified advertising, which provided about 40% of their total revenue. In the Bay Area alone, area newspapers lost more than $50-65 million a year in help wanted advertising and untold millions more in merchandise and real estate advertising.

Local businesses have discovered that most consumers now rely primarily on the web when searching for a new product or service. These businesses are shifting their marketing expenditures to search engine optimization, pay per click advertising and website development and away from traditional newspaper advertising. And these dollars will never return.

Lack of Design Thinking
The newspaper’s response to this critical strategic shift in demand for their product reflects an absence of design thinking. The typical management response has been to reduce staff, demand concessions from their remaining employees, reduce the size of their paper and threaten online bloggers and news aggregators who dare link to the newspaper’s articles.

Design thinking is about creating a better, different alternative to newsprint for news (and advertising) delivery. The current news executives are focused on analytic choices between producing newsprint for a large audience or a smaller audience, not on envisioning a different news delivery vehicle altogether.

These executives appear to lack the essential components for creative design thinking. Rather than empathize with our desire to receive the news on our terms and on our schedule, they continue to focus on printing and delivering the news on their terms. They need to take a “people first” approach and design a solution that revolves around our desires, not theirs. And I have no desire for a stack of newsprint in my driveway each morning.

They should also read Roger Martin’s brilliant book, The Opposable Mind: How Successful leaders Win Through Integrative Thinking. Martin, the dean of Toronto’s Rotman School of Management, details through case studies how managers can synthesize opposing ideas and create bold and dynamic solutions to seemingly insoluble problems.

Experiment and Collaborate
One thing is clear: the newspaper industry won’t solve its problems by doing more of the same, but at a smaller scale. They need to accept that their industry has changed and will never revert to their former glory days. They will need to experiment with new solutions and collaborate with creative geniuses in online disciplines to create a news experience that people will clamor for.

Collaborate with Google, Twitter, Facebook and other social media leaders. Partner with Amazon to deliver your news to reader’s Kindles. Provide subsidized netbooks that receive your news and advertising feeds directly.

I’m not sure what strategy will work or what the future of news delivery will look like precisely. Only one thing is certain: it won’t look like their current model. And they need to start now.

Recall the best customer service episodes of your life. The bending over backward, amazing and memorable service that still stands out in your mind because of its novelty and surprise.

Now think about the worst service you’ve received. The utility company that puts you on hold for 40 minutes. The cellular provider whose billing errors are repeated month after month. The cable company whose installers can’t show up within a 4 hour window.

What’s the difference in perception between the two? Excellent service is typically characterized by intimate personal care and attention while infuriating corporate service is defined by its impersonal, detached and indifferent nature.

One is delivered by a caring person, the other by a faceless, nameless corporate drone.

Which one do you want to do business with?

Now, which do you provide your clients? What’s the face that you put on your social media interactions with your clients?

Many small businesses aspire to be larger and more impressive than they actually are. In their misguided efforts to appear more “corporate,” they depersonalize their client interactions. Calls are forwarded to “Accounts Receivable” instead of “Beverly.” E-mails come from “ABC Inc.” instead of “Mike Bender.” And clients are asked to follow a corporate Twitter account instead of “Betty_at_ABC“.

The explosion of social media platforms and their rapid adoption by business has magnified the disconnect between the “social” potential of these online tools and the typical, misguided, self-interested corporate implementation of these platforms.

They are called social media because of their ability to foster and encourage two-way conversations and to enable tangible and enduring relationship building. But individuals – your clients – don’t build relationships with companies, they build relationships with people. People with names. With interesting backgrounds. With unique, and perhaps overlapping, personal interests.

Your dedicated, caring employees are a distinct and valuable asset that should be leveraged in your social media strategy. They’re the ones who interact with your clients daily and already have the relationships that can be strengthened and extended.

You want to play in the social media sandbox? Be social.

We’re all exhibitionists now. The amalgam of perpetually available social networking tools have enabled everyone to share their most intimate thoughts, personal feelings and illuminating (and embarrassing) photos. Now if only there were a website that infused its visitors with a modicum of common sense and decorum.

Sonny Gill wrote this morning of a west coast job seeker who posted her thoughts about landing a job with Cisco. It seems that after her interview, the applicant Tweeted:

Cisco just offered me a job! Now I have to weigh the utility of a fatty paycheck against the daily commute to San Jose and hating the work.

The stupidity of this public comment cannot be overstated. Shortly after its post, the job seeker received a Tweet in reply from Cisco :

Who is the hiring manager. I’m sure they would love to know that you will hate the work. We here at Cisco are versed in the web.

Busted.

This public idiocy followed a recent embarrassing Tweet, recounted by Peter Shankman, that caught an ad agency rep responsible for social media training (oh, the sweet irony), trashing the home city of his largest client, FedEx. On a public forum. Where everyone could see. Including the CEO of FedEx.

Time for some quick rule reminders:

1. Refrain from posting negative comments about another person or company.
2. If you break Rule #1, remember that all public comments are permanent.
3. Rule #2 means forever.
4. Share intimate thoughts and feelings in a private medium (e-mail), not a public forum.
5. If you write it, expect that it will become public someday.
6. Expect repercussions. There is a Twidiot tax. Tweet something profoundly offensive or stupid, and you can expect to suffer the consequences.

Full disclosure: I fully acknowledge that my intemperate comments below concerning my raging hatred of the dark and evil forces controlling Ticketmaster will likely prevent me from ever pursuing employment with the Ticketing Evil That Must Not Be Named. I’m ok with that.