Web 2.0 Return on Investment (ROI)

There seems to be a lot of discussion around Web 2.0 Return On Investment (ROI) at the moment. ROI almost seems to be becoming a dirty word in Web 2.0 – and seen very much as 1.0 language and thinking, as argues Louis Suarez.

I actually think this is quite dangerous, and is more .com bubble than Web 2.0. It’s the sort of thinking that allows over-inflated evaluations of companies that make losses and have no customers – boo.com all over again. Dennis Howlett argues the case somewhat in his blog – ROI is no Business 1.0 : Not.

A friend of mine at McKinsey is adament that everything in business (actually, he has a rather extreme view where he would argue everything – both in and out of business!) can be reduced to a number. For exmaple, if Web 2.0 is a good idea because it builds more brand loyalty this can be measured. You can then analyse how much time individuals may need to blog in order for this to happen and deduce whether their cost (both in terms of time and opportunity cost of the fact they’re not doing what they would usually do) is worth the benefit. You can even take into account employee retention in terms of costs of recruiting replacements.

We should not forget that whilst Web 2.0 may be fun and interesting, this is not why companies do it. They do it in order to make money. As someone who makes their living out of advising companies on Web 2.0 strategy this is always at the forefront of my mind. Unless it can bring value to my customers, they will not be interested.

This entry was posted in roi, Web 2.0, web 2.0 roi. Bookmark the permalink.

One Response to Web 2.0 Return on Investment (ROI)

  1. Dennis Howlett says:

    Putting on an extreme CFO hat, I can make the same argument as your McKinsey colleague. But…I would not go that far. I do believe however that attempting to side swipe the issue as many social computing mavens do is suicidal.

Leave a Reply