Attributing Social Media to Sales Revenue

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Today's social media networking sites are conduits to build, expand, and reinforce brands' relationships with its target audience. Social media in today's brand management arena is not just about setting up a Facebook Page and post content that is no different from similar editorial material found on the corporate website. It is about brands building an online relationship with its customers that encapsulates trust, reliability, and service-centricity. Indeed, the intent of any social networking strategy must mirror the same focus and attention that offline relationships are built on over the years.

What this means is that it takes time for companies to create a profile on the social media environment to engage with the online community. Invariably, this approach raised questions on how brands should measure the success attributed to social media. This is especially tricky. Some brands perceive social media similar to the many digital channels available to advertisers, whereby there's an implicit perception that measurement standards adopted for online advertising applies in social media.

In my opinion, the success metric from social media networking is improved sales revenue, and it has to be clearly attributed to the social media strategies implemented by the brand or its appointed agencies. This approach builds on the belief that discussions that that originate from social media networking will lead to revenue opportunities for brands and advertisers.

The problem centers on attributing the brand's sales activity. Let's assume that a brand wished to attribute 1,000 online sales transactions over 3 months (e.g. one quarter in a financial year) from social media. One approach involves tracking all referral addresses to an independent microsite owned by the brand where one assumes that the site's navigation (on a computer or mobile devices such as smartphones) is optimized to drive sales conversions. These referral addresses will indicate which social media executions (based on the unique URL attributed to each social networking site) was responsible for directing a supposedly converted consumer to the client's microsite to close the sale.

Inevitably, brand owners may challenge the use of the referral address to justify a social media campaign's merits as it's no different from using search marketing on Google or placing banner ads on high traffic sites such as Yahoo or YouTube. This argument assumes that a user searching for a specific keyword or clicking through an ad will enter into a transaction on the brand's independent microsite. However, consumer research points to search marketing and to a lesser extent, online advertising, as the start of the buying cycle where users are only starting to conduct their own research on the client and compare its value proposition against competitors and substitute products.

In contrast, a properly executed social media campaign should build consumer trust in the brand's proposition. That includes responding to customer feedback to mitigate the risk of a consumer choosing competitors over the brand. This would suggest that any incoming traffic from the unique URLs attributed to social media executions carry a higher probability of converting into a sales transaction, vis-à-vis users being directed to the microsite from a search on Google or via online banners where the user is likely to be at the start of the buying cycle.

Assuming that my argument is accurate, the brand will be able track the route of the IP address that begins at the incoming traffic from the social media executions (i.e. referring addresses) to its targeted end where the transaction is complete. This will clearly attribute the social media campaign to the sales success of the client.

This column was originally published on ClickZ.asia on Feb. 23, 2012.