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Is there a downside to social media metrics?

5th Mar 2010
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MyCustomer.com

Businesses are increasingly imposing metrics on social media activity to make it measurable. But is there a danger that this will ultimately undermine its real value? Mark Stuart, head of research at the Chartered Institute of Marketing, explores.

One of the key advantages of the internet is how measurable it is. You know exactly how many people visit your website, and you can tell exactly how many of these visits convert into sales. The same theory applies to social media. Fan pages on Facebook, or special offer alerts on Twitter, can be measured so that you can see how many of your followers become sales leads. Dell reportedly made $3.5m in under six months from Twitter; its DellOutlet page has almost 1.5 million followers, which the company uses as a viral system. Discount offers are posted daily, and these posts are often re-tweeted.

This, the argument goes, is how you prove that time spent on social media sites is time well spent. There's still a level of suspicion about social media sites; whether or not they are a fad, and whether or not companies should really be spending time there when there are other things they could be getting on with. The fact that web metrics can be precisely applied and the value (or otherwise) of a particular campaign monitored is seen as a key advantage of proving whether or not social network usage works for business or not.

However, this misses an essential point - which is that imposing such precise metrics on the internet reduces it to a mere acquisition tool. Most companies would accept, when they run a TV or radio campaign, that much of it is impossible to measure; and understand that just because something cannot be specifically evaluated, it does not therefore mean there are not valuable reasons for being there. The same should hold for social networks.

Building the brand means creating a presence on the sites that people regularly use - Facebook, Twitter, MySpace, Yahoo! Answers, MySpace, etc. Invest in the brand in this way, and profits will follow. However, if you try to measure the brand, you might mistakenly conclude that it is not worth creating a presence on social network spaces.

Skewed measurement

The reason this is a mistake is that to become a brand customers trust and keep returning to, you need to have a presence in the places customers inhabit. That used to be newspapers, posters and TV and radio; today, it's increasingly digital spaces, and social network sites are arguably the most important of all. This theory is borne out by the statistics.

Recent research from The Chartered Institute of Marketing conducted by Ipsos MORI reveals that whilst advertising across offline channels is delivering lower returns, digital marketing continues to report growth and increased return on investment. 17% of the companies surveyed in the latest wave of the Marketing Trends Survey say that online spend has overtaken offline, and a further third expect it to do so in the next three years.

There are several insights for companies to take away from this. First, whilst measurement can be useful to prove the value of marketing, companies should not become obsessed with the idea that metrics must be applied to all activities. There are areas that are easy to measure, and areas that are harder. Equally and oppositely, some areas are important; others less so.

The problem is that the measurement inevitably gets skewed in favour of what's easier to measure (such as awareness of a particular advert) instead of what really counts (such as the long term customer value accrued from a strong brand). Resolving this dilemma involves balancing a portfolio of activities; evaluate your social marketing by all means, but if the results do not instantly create a spectacular leap in sales, don't conclude that it's not worth being there.

Exploding myths

There are one or two other myths about social networking that need exploding too - such as the idea that it's predominantly young people who use them. In the US, usage of social network sites amongst over 55s leapt from 6.4% in the second quarter of 2008 to almost 19% a year later. In the UK the rise has been less dramatic, but still shows a consistent upward trend. Nor is it the case that customers necessarily see advertising or brand-building online as intrusive and unwanted.

According to research from Performics and ROI Research, 44% of Twitter users are happy to be alerted about promotions and special offers on the site. 48% had responded to an ad they'd seen, and perhaps most surprisingly of all, 44% of those surveyed had themselves become endorsers by recommending products they'd seen to other users.

The key to this successful usage of social networking is to use the sites in the way customers want you to use them. Offers like Dell's that respond to areas the customer is interested in are not seen as invasive; advice that builds the brand subtly (such as a supermarket posting recipe suggestions to threads on Yahoo! Answers) is accepted and liked, and will subtly lead some customers to additional purchase.

Yet the famous example of American Apparel opening up stores on Second Life, only to find a group calling itself the Second Life Liberation Army shooting anyone wearing AA clothing and setting fire to the virtual stores, shows how easy it is for companies to get it wrong. Respond to what the customer likes, and create a brand presence, and profits will follow. In the future, social networks will be seen as important a channel as any other for brand building; and won't face the same demand from unconvinced or suspicious execs to prove its worth by means of metrics or direct leads to sales.

Mark Stuart is head of research at The Chartered Institute of Marketing.

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