Does anyone have the actual answer to the value of social media? Can we figure it out with a formula? Or is it simply part of the cost of doing business?
The question seems to be built into every marketer's mind. What is the value of social media as it relates to hard cost for a monitoring tool or soft cost in time and resources to properly man a blog or Twitter handle?
It's cropped up in recent research, educational workshops produced for the Online Marketing Institute, and even in presentations submitted to ClickZ's Online Marketing Summit Virtual Event. In essence, it's everywhere, and rightfully so.
What we don't hear much of is the actual answer. We hear about tactics to use or being used on Twitter, or we hear about platforms people are using more of; but not "what is the value?"
So, here's my attempt at the answer. The "Value of Social Media Formula" is: the amount of reach increased + the amount of time saved (e.g., customer service) + percent attribution of sale touch point - the total time and cost spent on such efforts. So, social media value = (reach + time saved + sale percent) - (time spent + cost). Right?
Wrong. Yes, we can come up with some formulaic answers like this and commend those that can get some comparative data for such, but social media channels are (save specific campaigns like the new Promoted Tweets) part of the cost of doing business...period.
Think of it this way. What's the ROI (define) on your phone service? E-mail usage? Fax machine? These are hard costs that are baked into being a company. And to that, the non-campaign elements of Facebook, Twitter, blogs, etc., is really the new cost of doing business.
For some, it's a place to start delegating existing resources to. For example, call center support can take a few bodies and man some Twitter monitoring and support handles. The marketing team can take a body or two in PR (or agency) and have them make sure all communications get properly socialized through the social channels. The sales team will need to add these outlets to their arsenal in getting communiqué out in a more intimate and personal way so they can take advantage of the new "relationship" starter or builder. E-mail is no longer sufficient.
And again, campaigns are different. If you advertise on Facebook or even leverage blogs for links and content on the SEO (define) front, some true analytics will tell you results.
Even the new Promoted Tweets product will be highly measurable. And to that I must say, get over it, Twitterati! We live in a commercial world and Twitter isn't UNICEF - out on a mission to save folks. It's high time Twitter monetizes and has ads. As a media channel, nothing more can be expected. Yes, I understand the "growing pains" of social are sometimes sensitive, but it's a fait accompli and we all must be willing to mature with the market.
OK, back on topic. Almost all others are simply communication channels and need to be treated as such. Much of the brand efforts, per usual, will be highly immeasurable beyond views and uniques; and that's the same game it's always been.
For marketers, the big hint here is to start getting shared budgeting dollars from the customer service team, PR, communications, research and development, and even operations. This cost shouldn't be a pure marketing expense, as it has the propensity to fall into.
Lastly, we all look at analytics and metrics. Anyone who has spent any significant time on them knows that analytics in any world are never absolute. So, using such as comparative data in brand lift, lead generation push, shortening average sales cycle, as well as the basics of just traffic and downloads and transactions on sites will be helpful to prove value. Remember, you need to prove value, not measure it in it's absolute form.
After selling the Online Marking Summit (OMS) event company in 2011, Aaron is now leading the charge of the newest venture, the Online Marketing Institute - an e-learning platform and training destination for digital marketing education.
Kahlow is one of the most recognized thought-leaders in the digital marketing and social media space. Having founded, funded, and built three prolific and highly profitable digital marketing companies, Kahlow has also delivered hundreds of marquee keynote speeches around the globe. He is a recognized author, columnist (ClickZ, NYT) and authority on social media marketing, sales and marketing integration, demand generation, business-to-business marketing, search marketing, usability, analytics, and digital marketing strategy.
Today, Aaron can be found in his new home city of San Francisco, working on the global expansion of "Teaching the World Digital" in his e-learning technology venture, the Online Marketing Institute. Facebook and LinkedIn are his preferred places to connect.
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