If you are in the social media, digital marketing, or Internet marketing space… it is extremely important for you to read Oliver Blanchard’s new book called, Social Media ROI. I had the pleasure of reading the book before it was published and, to say the least, it changed the way I viewed measurement and metrics. I wanted to briefly review five things I gleaned from the book that I find to be extremely important to the world of digital marketing.

There are two types of measurements in this world – financial and non financial. The two are extremely important but we tend to view them as separate when preparing our reporting or strategy development. Why is brand awareness separate from open-rate or conversion rate? Could it be just the numbers?

Oliver talks about the five stages of measuring ROI in the world of social media.

1. Investment Stage – This is the first step. In my opinion, this is my least favorite step. This is the time when you determine how much money you are wanting to invest in the world of social media and digital marketing.

2. Action Stage – This is a marketing firms favorite step. This is the stage where the money creates a platform. This action could be viewed as small (Facebook Page) to large (numerous different campaigns on numerous different sites). The action stage pulls users into the process.

3. Reaction Stage – This is the public perception stage. How does the public, users, and constituents view a company’s action online. The perception can be measured as negative or positive by the audience. A positive reaction will increase the non-financial outcome of a given campaign. This stage is the measurement of brand engagement and digital advocacy.

4. Non-Financial Impact Stage – This stage is devoted completely to the growth in likes, comments, fans and followers. How effective was your campaign with the public? How effective was your reaction stage from a brand awareness measurement? Did you have an increase in Twitter followers or “Likes” on your Facebook page? Did you have an increase in email newsletter subscriptions?

5. Financial Impact Stage – This is the tricky stage. Did you see an increase in sales or giving during the previous four stages? This is the tougher metric to measure and it may take longer to realize the full return of your investment. Did your email list bring an increase in sales? Did Twitter actually drive revenue?

Oliver discusses the conversation flow chart as a story:

“It’s the story of how your investment turns into gains and how return is mapped not in random data points but as a narrative whose chapters are steps in a daily-chain of conversion, ultimately ending in a change in transaction behavior.”