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Connecting the Dots From Social Media to Revenue

  |  April 6, 2011   |  Comments

Marketers require a strong analytical link between spend and delivery against business goals to have the confidence to invest.

Social media is a highly effective channel for numerous business objectives, including driving revenue, but it remains a challenge to directly demonstrate revenue impact in the way that more straightforward sales efforts can claim through, for example, search. While marketing budgets (especially digital budgets) are bouncing back in the post-recession era, marketers still require a strong analytical link between spend and delivery against business goals to have the confidence to invest. That combination of spend and delivery against goals is what defines performance, but it requires that you can define both spend and delivery individually. Those definitions remain a challenge for social media.


It's hard to quantify the spend on foundational aspects of social media. Spend might include overhead for internal personnel involved in customer service or promotions or sweeps designed to attract new followers. It might include training or new staff, the build of new creative or channels for communication, or a host of other expenditures that can't be tracked to immediate sales. For instance, how do you measure the time value to tweet against your sales in that period? How do you factor in qualitative differences, i.e., doing it well vs. poorly or the cumulative effect of positive exposures on the propensity to recommend or buy? Earned media pros have tackled these questions for as long as the professions have been around.


Social media has born a whole new set of engagement and influence markers that we know are valuable but are hard to put a value on. You can certainly measure lots of impact from social media. You can infer awareness from metrics like page views, visitors, "likes," and followers. Intent might be derived from metrics like email opt-in, request more info forms and even time spent on site, coupon downloads, or sharing button clicks. Conversions in social commerce situations could in fact be a purchase but could also be defined as an email opt-in, depending on the goals. When revenue is your primary goal and you have other, relatively more straightforward channels like search to weigh it against, the safe marketer might stick with the straighter measurement path. But choosing your strategy based on its ability to return metrics – not results – is flawed thinking.

Studies that can benchmark the value of a Facebook fan, for instance, help us to connect the dots between our social media investment and the eventual return on that investment. But like all marketing endeavors, social media can be used for many different business goals. Not all of those paths lead to short-term sale, nor should they. If every marketing tactic is direct response-driven and we spend no time cultivating customers, then we will only succeed in closing sales of a) those that know and trust us already and b) those that are in market or have immediate need of our product or service. We can all see where that would be limiting.

There are few verticals more revenue-focused than retail/etail, and many in that industry have jumped into social media, glad for the opportunity to open communication channels with consumers, get them engaged, establish credibility, nurture advocates, and, oh, by the way, deliver timely brand and product messages. The promotional aspects of social media are a good fit for etail customer acquisition goals where they can define a lifetime value of a customer. Sweeps or contests are a popular social media tactic to deliver traffic and build email and fan lists and often have defined budgets so you can do a pretty good post review that maps those metrics as well as direct sales from the promo against the cost to develop, build, and run the promotion. While the promo often gets the credit, the costs and results of that promo are intertwined with the costs and efficacy of the social media foundation you have laid in advance of that effort.

In many ways, the upfront and ongoing investment in social media is not very different from the foundation required to establish a platform for profitable e-commerce. Measuring traffic and sales-driving efforts like display media and search is deceptively simple – except that it's not, and we won't even touch here on the myriad attribution issues that muddy the waters on assigning credit for online sales. Drop qualified traffic on a page that is not optimized, has out-of-date merchandise, or a product that is low in inventory and your results will suffer. Likewise, if you haven't opened genuine channels with your customers, responded in a timely and appropriate manner, and earned their trust and time, then you won't earn their dollars.

While most of us intuitively understand that engaging our customers and prospective customers, listening, and responding supports the long-term goal of brand building and all marketing goals – many don't yet have the confidence to declare social media a revenue channel. We are missing a comprehensive set of tools to justify a social media investment for those marketers focused primarily or exclusively on revenue generation and metrics. We're simply not used to thinking of revenue production in a longer-term window in digital marketing. We're usually measuring sales against the marketing tactics in the same period or shortly thereafter within a given cookie or measurement window. Social media, in that sense, is more like SEO in that it is an investment in the longer-term brand health and in audience growth. Those lead to sales – directly, even if we can't always measure them directly.

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Robin Neifield

Robin is the CEO and cofounder of NetPlus Marketing Inc., a top 50 interactive agency established in 1996 to focus exclusively on online marketing and advertising best practices. Robin brings innovative strategy and a depth and breadth of marketing experience to the agency's practice and management. As one of the industry's pioneers, she is a driving force behind NetPlus Marketing's ongoing success with a diverse and discerning client base that considers online results critical to their business success.

Robin is a frequent speaker at national industry events, including ClickZ, internet.com, OMMA, Ad:Tech, SES, Online Marketing Summit, and Thunder Lizard conferences and is a sought-after resource for industry and business publications for her insight and advice on such topics as digital strategy, social media marketing, and behavioral targeting.

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