Do we need another model of measuring social media ROI?by
In this series of Smart Insights Best Practice Advice, Danyl Bosomworth of SmartInsights.com shares tips on best practice to get better results from digital marketing. This month Danyl looks at new research into measuring social media ROI.
Social media ROI is a messy business. How do you bring some order to it? There’s no getting away from it. The higher up the sales funnel, the harder and messier it is to make decisions on measuring ROI. Social media is, like any channel (if you choose to view it as one) not perfect to measure, though far from hard to get a good handle on it, and to compare channels with channels using techniques like Google’s Multichannel funnels or social reports. It’s the scale of choices that become complex. It’s much easier to post rationalise and retrospectively connect the dots, but not easy to plan for it – otherwise why is ‘viral’ still so remarkable in social media – and why we don’t see the experts doing amazing campaigns repeatedly.
It’s always been a challenge, attributing the value of visitors through multiple channels, social media has made that more complex. Certainly when compared to lower down the funnel the touchpoints are more measured and explicit, visitor-to-goal completion is relatively simple to monitor and quantify.
IAB suggests 3:1 return on social media investment
We’re reminded it’s a worthy mission from some fairly extensive new IAB research, where around 4,500 survey responses were collected, and supplemented with a further 800 research panel interviews.
The research revealed that, four out of five consumers said they would be more inclined to buy a brand more often in the future after being exposed to a brand’s social media presence, while 83% of consumers exposed to social media would trial a brand’s product. All three brands experienced uplift in sentiment after implementing their social media campaigns, Heinz 22%, Kettle 17% and Twinings 19%.
For every £1 spent in social media, a potential value of £3.34 could be generated.
Unfortunately it’s impossible to dig into the detail to get a perspective on the research validity since the report is behind a paywall, though the general messages are encouraging and tie into wider research, such as this Rotterdam School of Management white paper which suggests that after seeing a friend’s social signal (like, re-tweet, comment), 7% of her acquaintances will consider the brand in conversation, and 42% of her close friends will want to buy.
Put a tangible value on consumer’s attention (time)
If you genuinely value consumer engagement, then this is an obvious place to start to consider an ROI. Each time friends share a brand experience, they invest time and trust in their relationships. Each brand touch-point, dependent on the sentiment, between those consumers about your brand represents a commercial value to your brand that – and at some point you’d have paid for through conventional media channels. As Jaap Favier says in his post:
“Add up the value of the thousands or millions of touch-points between friends, acquaintances, and strangers in your social media program and you get the total brand premium that consumers are collectively willing to pay (with their time). By definition, this collective premium is the rise in (your) brand equity: the return on investment of the social media program”.
I think Jaap Favier’s simple perspective above, of focussing on the value of consumer attention, is a very logical start point if your business is used to valuing consumer attention and engagement, in fact do you need another model at all? His free Excel based model to quantify and compare your campaign to other’s is equally worth digging in to.
No one way to measure ROI
If you were to Google ‘Social Media ROI’, you’ll see that there’s lots of ideas, variations on a theme. The good news is that there’s no one way. We’d always suggest that you first consider how you already measure ROI in other channels, and seek to develop an ROI model that incorporates social media, rather than making social media so different. Of course it is different, there are so many more potential KPIs, but to appease a management team hungry to compare, you have to start somewhere. If a pure consumer engagement measurement doesn’t cut it, to enable a like for like comparison consider developing a simple dashboard that shows an ROI from more than one perspective.
We like this approach to create a social media dashboard for its simplicity and practicality – any organisation can create this without a sophisticated social media monitoring tool. The six measures to include on the dashboard are:
- Gross views on main networks network and own blog/community
- Connections or subscribers on main networks
- Engagement – comments and interactions
- Social media referrers – visits to site measured through web analytics and where necessary campaign tracking tags
- Social media conversions – conversion to goals or sales measured through web analytics
- My engagement – a different class of measures to the others – how the brand interacts through posts, videos, comments, etc
Similarly, through the IAB Social Media Council back in 2010, we shared the 4 As framework, a bit more involved but seeking to compare social media in simple media costs terms:
- Awareness: Cost per Impression
- Appreciation: Cost per Engagement
- Action: Cost per Lead
- Advocacy: Cost per Referral
You can see their slide deck here: A framework for measuring social media activity
A case of evolution?
We’d suggest that ROI is ultimately down to how you measure other channels and what makes sense to your organisation. It’s also a case of evolution, the more embedded social media is within your organisation, then the more those metrics become multi-disciplinary and include customer service and product support, and so the ROI measures much wider.
You might read this Altimeter report where the authors, Brian Solis and Charlene Li, describe seven common success factors for companies achieving success at each stage. They outline six distinct stages that most organisations will have to traverse as they mature their social business strategies. The six stages are defined as Planning, Presence, Engagement, Formalised, Strategic and Converged. It might sound complex, but I think useful context to evolving social media beyond that of social media and content marketing.
Danyl Bosomworth is co-founder of Smart Insights and a digital marketing contractor. His experience spans brand development, direct marketing and digital marketing, with roles both agency and client side over the last 12 years.