THE ROI of the Tweet: Twitter is often sited as a powerful marketing tool and even as a driver of sales. This pdf is a re-purposing of a post originally appearing on PhilBaumann.com A pro forma analysis is provided as well as an examination of viewing Twitter in a broader perspective than as a traditional motor for revenues.

1. THE ROI OF THE TWEET:
Facing the Truth About
Twitter as a Brand Tool
by Phil Baumann
@PhilBaumann
PhilBaumann.com

2. This document is a repurposing of a post
originally posted on PhilBaumann.com.
Is Twitter a sales tool? Can it “drive”
sales? If so, what’s the return on
investment of a tweet? Most executive
teams today still view the world through
the lens of the assembly-line. They like
metrics and clearly defined goals and well-
thought decision trees. They prefer
straight lines over curves with cloudy
distances. They are largely justified in
their lines of reasoning.
But the Web has opened up a decidedly
non-linear fabric of novel media.
Consequently, many organizations have
been slow to adopt emerging media and
technologies because they simply don’t
see the return on investment. Often,
they’re not even sure what the investment is. Or what the return might be. Or what the
goals or purposes or opportunities of subsuming the Web into their going concerns could be
for them.
So this post aims to provide a clearer, if alternate, view of what’s at stake. We’ll look at
metrics. We’ll also examine how organizations can better understand the nature and
essences of media – all media, old and new and media not even around yet.
If you work in an organization which has been struggling with keeping up-to-date, I offer
this to you so you can go into C-Suite and answer the tough questions without looking like
an unprepared stooge. You owe it to yourself to understand the media you sell to your
executive team – and you owe it to yourself to ensure they understand how to properly
enframe media in the 21st Century.
NOTE: This is a long post. My aim here is not to prove that Twitter is not valuable to
business. Quite the contrary: I don’t believe enframing Twitter as a generator of financial
ROI is the proper way to view the service. But I do believe that evangelists must be able to
say to executive management something like this: We have crunched pro forma numbers
and in our opinion Twitter is not really a direct (or even indirect) driver of ROI; we do
believe, however, that Twitter can be a linchpin within a web of comprehensive web
strategies.
BRUTE FORCE APPROACH TO TWITTER
In order to provide some insight into the difference between Twitter-as-sales-tool and
Twitter-as-public-utility, I believe pro forma metrics may help to reveal some important
properties of a medium like Twitter. Too often claims are made about Twitter’s business
values – and usually the issue of metrics is explained away with vague optimism.
But why not take a crack at metrics, if only to reveal a basic truth of Twitter? After all,
Twitter’s simplicity makes it a utility with varied uses. By seeing that Twitter’s effectiveness
in driving revenues (even indirectly), allows conversations to focus on a more robust
enframming of the service.

3. I’ll call the strict Financial ROI enframing of Twitter the brute force method. The brute force
method makes several assumptions and follows an algorithmic, assembly-line logic. So here
are the assumptions:
• Number of followers are true fans – not just the count of followers according to
Twitter – not bots, or miscellaneous people who aren’t invested in a brand.
• Followers are people who are likely to buy a product and who are actively paying
attention to the Twitter stream of the business/product account.
• The tweets include links to actionable web real-estate where conversion is possible.
• Customers make at most one purchase per month.
• Clickthrough and conversion rates are comparable with traditional web metrics.
• The effect of retweets is actually minimal on tweets about products (at least in this
case) and has been left out of the model.
•
So let’s look at a hypothetical. Let’s tackle a difficult industry: Pharmaceuticals. For this
example, we will leave FDA regulations and other constraints on the industry out of the
equation. We’ll say that the company runs a Twitter account for a particular drug and tweets
links about an OTC medication (again, we’re assuming these are “FDA-compliant” tweets –
yes: laugh – conversations around Twitter can be that ridiculous).
We’re going to assume that the labor time for running the Twitter account is based on $50
per hour. Furthermore, we’ll assume that only one hour a day of labor time is needed (for
Twitter accounts with a very high volume of tweets, management will probably need many
more hours of labor time in practice). But we’ll be conservative.
Here are a few scenarios (pulled the pro forma spreadsheet pictured above and which you
can view here):
1,000 Followers x 5% Clickthrough x 5% Conversion x $5 Margin x 12 Months
– $12,500 Labor = ($12,350)
128,000 Followers x 5% x 5% x $5 Margin x 12 Months – $12,500 Labor =
$6,700
1,024,000 Followers x 5% x5 % x $5 Margin x 12 Months – $12,500 Labor =
$141,100
8,192,000 Followers X 5% x 5% x $5 Margin x 12 Months – $12,500 Labor =
$1,216,300
In order to achieve over a million dollars in revenues, tweets would need to yield a ROI of
9,630%! Use your common sense: it’s utterly delusional to think that ten tweets per day
over a year would provide that kind of return. Even to achieve over $1 Million, this
pharmaceutical company would have to have over 8 Million followers! And each of those
followers would have to be devoted true fans. Think of the investment required to generate
a tribe of 8 Million followers – the time, the electrifying tweeting style, the power to be
loved.
You can tweak any of the variables and crunch new figures. You can input a higher margin,
for instance – but you may need to re-think clickthrough and conversion rates and follower

4. counts. Go work up a brute force model for you business or client and see what you get.
Just be realistic and understand the properties of Twitter (or whatever other medium you’re
working with). That’s one of the problem I think (some) marketers have: they don’t really
understand the media out of which they’re seeking to extract value.
I won’t say that you can’t generate these kinds of numbers – but there are weaknesses and
paradoxes in this approach which I’ll reveal in a moment. And yes, I’m fully aware of the
general effect of positive WOM but that’s not the point of this story. I’ll touch on brand
awareness in a bit – wait for it.
As you can see, given these assumptions, this brute-force approach to Twitter doesn’t
release a lot of financial return (not for larger enterprises with capitalizations greater than
$1 Billion). Sure if you run a relatively small enterprise and can cultivate a massive and
committed fan-base in the long-run, there’s a chance Twitter may provide substantial gains
in line with your revenue stream. Of course, your margins may be larger (but as margins
grow, you may encounter diminishing actual conversions). Most importantly: building a
tribe of true fans is hard work – very very hard work.
Yes, Dell has claimed it earned $3 Million from Twitter, but Twitter was simply an ancillary
service to their wider web presence – and Dell indeed has over a million followers (and a
larger margin than in my pro forma).
None of this means, of course, that Twitter has no business value. In fact, I would argue
that Twitter can an essential linchpin for overall web presences: Twitter enables a
pliant means to connect various media and web real estate together. It’s also real-time
which means you can literally stream your presence and respond swiftly to shifting currents.
But there are paradoxes hidden within the brute-force approach. Let’s take a look at them.
THE PARADOXES OF BRUTE FORCING TWITTER’S WINGS
There’s a sort of Uncertainty Principle underlying Twitter: the more directly you
mechanize a given strategy, the more dilute the attention of followers becomes.
For any Twitter strategy to “work”, the tweeting must be remarkable, attention-enlivening,
creative. Tweets need to be interesting day-to-day, week-to-week, year-to-year. Annoyance
and boredom are easily un-followed. Value and connection and humor are followed more
sustainably. Thus, the only way a business can hope to achieve long-term attention via
Twitter is to relentlessly be creative and captivating and social and valuable. Tweeting
coupons and links to products alone doesn’t work all by itself.
There’s another paradox on Twitter: Promotion of Other is a greater promotional tool
than promotion of Self. This is one of the hardest concepts most organizations have to
understand.
Retweet your competition.
If you can’t retweet your competition, you probably don’t have the confidence and faith in
your enterprise to stand out. If you’re not standing out, just what are you doing with your
marketing dollars?
Marketing not only has to be effective but it also has to be respectable. For an
industry like Pharmaceuticals, anything less than respectable is unprofessional.

5. RELATIONAL APPROACH TO TWITTER
I hope I’ve made it pretty clear that achieving a robust Financial ROI of Twitter directly is
not a realistic proposition in most cases. If that’s your only enframing, I would suggest you
forget Twitter.
I would suggest, however, that Twitter’s pliancy and immediacy and connectivity provide
means to many other ends. It’s basically just a telephone for our century. The most
valuable enframing of Twitter is in a Relational context.
Building and sustaining relationships are bricks and mortar for all successful businesses.
Smart businesses understand the paradox of the un-sales approach to relationships: the
more sincere and mature the relationships, the better the conditions for business
development.
Sure, we can talk about buzz-concepts like brand awareness. (Of course, you could also
stick a finger down your throat and achieve a similar effect.) But I actually think that’s a
sub-set of the brute-force approach to Twitter. Once you make that your purpose on
Twitter, you lose your followers’ attention. Brand awareness, at best, must be a
pleasant side-effect of much more remarkable ways to employ Twitter.
Yes, it’s a cliche but social media is social. If you have poor social skills, you better develop
them now. Since relationships operate in non-linear geometries, you’re going to have to
learn to think beyond rigid lines. The Web can be an unforgiving and will eventually break
you if you don’t have the pliancy to turn on a dime.
THE OPPORTUNITY COST OF STRICT FINANCIAL ROI ENFRAMMING
By hoping to achieve financial gain via an inhuman algorithmic enframing of Twitter, you
forgo several important and valuable business opportunities. If I were a Public Relations
guy, I’d look at Twitter and say: Wow! We finally have a way to re-humanize our
communications and how we connect – I can finally go back and re-work those arcane
methods we developed when we had only broadcasting media.
The fundamental truth of the Web is that organizations composed of cogs – people with
little incentive to shine their talents – simply don’t have the supple musculature demanded
of a public sphere laden with real-time technologies.
Organizations must cultivate cultures of creative, ambitious, informed and swift-thinking
human beings. If you’re going to invest in Twitter, you better have remarkable people
working for you – do it yourself if you have to.
A narrow focus on Financial ROI will enframe a human context within a technological one. In
other words, it’s putting the right shoe in the wrong box.
The opportunity cost of enframming the business value of Twitter within fincancial ROI is
the larger frame of possibilities which Twitter offers. The most important of these are the
re-humanization of corporate communications and the connecting of disparate elements of
an active online and offline presence.
THE ROI OF THE TWEET IS…
The ROI of the tweet is elusive.

6. The ROI of the tweet is what you make it.
The ROI of the tweet is the expression of your daily artistic creativity.
The ROI of the tweet can be mechanized – but at enormous expense and opportunity cost
and risk.
The ROI of the tweet is relational.
The ROI of the tweet is conditional.
The ROI of the tweet is contextual.
The ROI of the tweet is human.
How you enframe tools influences what you get out of them. Sales people enframe
sales uses around media. Marketing people enframe marketing uses around media. Public
relations people enframe public relations uses around media.
The fact, however, is that the Web is Mother of All Media. It not only spawns new media
with differing properties, the media it spawns all inter-relate among each other in novel
ways. We don’t have a Grand Unified Theory of the Web, but we can at least understand the
fundamental properties of individual media. When I get asked how to “use such and such a
tool”, what people are asking is: What’s the theory here. But there isn’t any tested theory:
at best we have intuition and reason and experience and imagination. Of course, if your lack
these then a theory probably won’t help you.
My recommendation to anyone interested in new media’s role in business is to go back to
fundamentals. Language like “old media is being replace by new media” can lead you down
misguided paths. Marketing is more than messaging, of course, but it’s important for
marketers and communicators and public relators to understand Media. Here are some
questions to ask yourself and your team about media:
• What is this medium? What’s is its essence?
• What are the properties of this particular medium?
• What are the possibilities of this medium?
• What category(ies) does this medium fill: social, impersonal, synchronous,
asynchronous, unilateral, bilateral?
• What does this medium enhance?
• What does this medium obsolesce?
• What does this medium retrieve?
• What does this medium reverse? What happens when this medium is pushed to its
limits?
• What happens when a person encounters this medium?
• How does this medium relate to other media?
• How might this medium change the world?
• How should this medium be enframed?
•
These are simple but difficult questions (I will expand on them in future posts). When was
the last time you asked any of these questions? What have you done to acquire an
orientation about new media? That’s the purpose of the above questions: to get you to pan
back from your accustomed views and assumptions and experiences and re-frame things in
clearer contexts.

7. It’s also important to understand the different kinds of connections between media and
people and things. Social isn’t the only connection. People have connections with products
and services – but those connections aren’t social. For example, the connection between a
customer and a brand isn’t social. It’s something else – knowing what that connection binds
medium to medium or people to products helps you determine what media you choose.
For instance, by understanding what a medium enhances, obsolesces, retrieves and
reverses, you can better compare novel media with familiar media. You can develop insights
into what features of traditional approaches can and can’t be ported into new media. If
you’re unfamiliar with McLuhan’s Tetrads, you can learn more here.
If you work in an agency – PR or Marketing – you need to answer these questions so that
you can equip yourself with the resources to properly view emerging media. It’s no longer
enough to “get” Twitter or Facebook or Blogging: you must have a fresh philosophy about
media in general because the Web is evolving. You need to hone an intuition about
emerging media and these questions offer a good practice for you.
THE LESSON OF THE TWEET
The lesson here is that there is return on the tweet. But before you get to return you
must get to re-frame. This is going to be a turbulent century. It’s easy to get tossed
about and disoriented. Assumptions and methods which were once effective may no longer
give lift. Orienting is itself a skill to be treasured.
Focusing on one narrow objective like financial ROI before fully understanding an asset is
not all too wise. Not when your competition has figured out things you haven’t even
considered.
I have tried to address the legitimate concerns of “old-school” executives who rightly
question the expected returns of social media. I believe they are entitled to an honest
accounting about the limits of media. The smart ones will see the folly of attempts to port
assembly-line thinking into territories in which it makes no sense to do. The smart ones will
also then be able to see things aright and perhaps your organization or client will
understand the proper context and enframming needed to be remarkable.
You can go the brute-force method and miss a much larger party. Or you can be something
far more interesting and ultimately financially rewarding. My advice on Twitter is to be a
Lovable Peacock: someone with the goods worth showing off but with a warm heart for
the flock. Many executives won’t like that metaphor. But then, not many businesses here
today will be around in 2020.
So, what’s your take? Is my brute-force analysis flawed? Does it help to demonstrate and to
admit up-front that Financial ROI isn’t a wise enframing of Twitter? Does it advance the
conversation?
Will you re-enframe everything you think you know? Will your Corporate Philosophy take to
wing…or fold?

8. @PhilBaumann
PhilBaumann.com
February 2010