This week, I’d like to share some informative articles, resources, and opinions about measuring the value of social media. Besides death and taxes, I think the only other sure thing in life is your own opinion, so I’m going to exercise the blogger’s prerogative and start by sharing my own opinion about measuring social media.
Some of the articles noted below bear the term “ROI” in their titles. ROI, or return on investment, in terms of advertising, is the sum of all of the campaign costs divided by the revenues derived from sales made as a result of the campaign. ROI of campaigns usually includes a timeframe over which these sales occur. Viewed this way, different campaigns can be compared and the most effective/economical one chosen.
Campaign ROI is a great and wonderful calculation to achieve. However, as you can imagine, it’s a difficult calculation to make, even with the most calculable of business models. And because everyone’s cost structure is different, ROI is not transferable from one industry to another. It’s probably not transferable from one organization to another either. That said, responsible marketers still strive to measure campaign ROI, and in some ways, web analytics has made this easier for the digital marketer.
Enter social media.
Social media is an example of “inbound marketing,” where the focus is on getting found by customers rather than finding them. This concept, put forward by Hubspot, differs from traditional “outbound” marketing in that
“Instead of driving their message into a crowd over and over again like a sledgehammer, they attract highly qualified customers to their business like a magnet.”
“Instead of interrupting people with television ads, they create videos that potential customers want to see. Instead of buying display ads in print publications, they create their own blog that people subscribe to and look forward to reading. Instead of cold calling, they create useful content and tools so that people call them looking for more information.”
So by putting more power into the hands of the customer, social media contains aspects of both permission-based advertising and viral advertising. While permission-based advertising can be quantified in terms of impressions, clicks, prospects acquired, and even sales made, the effect of viral advertising is more difficult to measure.
For example, potential customers may subscribe to your blog’s RSS feed to hear about new products. As a result, they may eventually become a customer. They’ve given you permission to distribute your sales pitch to them and they may reward you with a sale. This is permission-based advertising. You can calculate the cost of promoting your product through channels that include the blog and divide that by the revenues received.
These same individuals also may email a link to the video in your blog to their colleagues. And those people may send the link on to others, some of whom may reward you by becoming a customer sometime in the future. This is viral advertising*, and it is much more difficult to measure because some of the work is being done by people who don’t work for you over an extended period of time. How do you measure word-of-mouth? How do you measure increased exposure? How do you measure influence? How do you measure the “long tail*” effect? In this regard, social media is very similar to public relations.
*For more information on these concepts, see Wikipedia:
The following articles take a stab at helping us solve the thorny problem of measuring the value of social media. I hope these are useful to you.
The Interactive Advertising Bureau (IAB) is comprised of more than 375 leading media and technology companies who are responsible for selling 86% of online advertising in the United States. They are probably best known for defining standard sizes for online display ads. This downloadable PDF specifies standard definitions and metrics for social media sites, blogs, and widgets and social media applications. Whether you use their definitions or your own, defining the characteristics of your social media tool is an essential first step in calculating its ROI.
A great presentation with use cases. Topics include:
- Define relevant success metrics that translate into a business context
- Set campaign goals based on these metrics
- Implement campaign, review metrics and goals
Jeremiah Owyang’s blog archive of articles about Social Media Measurement. Jeremiah is a thought leader in social media.
Sampling of blog topics:
- Measurement, A Priority for Online Communities
- Community Managers Must Deliver ROI: Commandments for Surviving a Recession
- Findings: Why You Don’t Need to Tweet to Get Traffic from Twitter
- Understanding HP Lab’s Twitter Research
- Retweet: The Infectious Power of Word of Mouth
Debbie Weil’s blog post, “More on the ROI of Social Media: Return on Influence” makes the point that social media is both a response medium and an influence medium. Both need to be taken into account during measurement.
This article is featured in the May/June 2009 edition of Communications World, the magazine of the International Association of Business Communicators (IABC). IABC requires you to subscribe and login at their web site to read these articles, but it is available as a downloadable PDF here. The author, Lawrence Ampofo, argues that no standard set of metrics can be applicable to PR measurement in the era of online and digital media. Lawrence provides some fascinating insights on relevant metrics for social media and networks in general and Twitter in particular.
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