How do businesses demonstrate value in social media? Here are some ways.
There is an unspoken competition between brands to see who has the most Facebook likes or Twitter followers. Why? One would suspect looking at targets set in client briefs that it's because this metric is one of the key measurements set to determine just how successful the platform really is.
Research has shown that fans and followers on Facebook and Twitter are much more likely to purchase from a brand they currently follow in addition to recommending their friends to it; this is somewhat expected because they are already favourably predisposed by the sheer action of "liking" the brand. While it is true that a quality following allows businesses the opportunity to build brand preference and consideration and drive consumer advocacy, it is difficult to use these metrics to measure actual contribution to business results.
The question then becomes how do we put a tangible business value on our social media efforts? Is it possible to measure and compare this with the rest of our online marketing initiatives?
Many social media practitioners may argue this is what separates a corporate website from a social platform and that brands shouldn't dilute it by pushing marketing messages and sales agendas. A social platform fulfills a very different objective; it is an opportunity to grow a community of customer advocates, listen to their concerns, and discover new business and product development opportunities. These are the softer benefits of social media engagement and I agree with them 110 percent.
However, branded social platforms do help facilitate purchase intent and research has showed that most people following brands do so to receive discounts and promotions. This presents opportunities for businesses to put together the necessary analytics framework to track responses (sales, lead generation, etc.) to these marketing messages and see how they measure up against the rest of their online marketing initiatives (banner ads, paid search, etc). Integrating such conversion data together with existing social media analytics and insights allows a brand manager to demonstrate the true value of the social platform(s) to senior management that goes beyond metrics such as number of followers and user interactions. After all, any marketing tool that is able to show some form of return of investment (ROI) then starts to become a sustainable one.
There are many brands that do this very well and in different ways. P&G, for example, has teamed up with Amazon to sell products from its Pampers brand directly on Facebook. Dell, on the other hand, generated over $6.5 million worth of sales via links from its Twitter accounts.
The common denominator here is how these brands are able to measure actual sales down to the dollar value and attribute them back to their individual social media efforts. However, not all businesses are able to drive sales online. Depending on the nature of your business, you could look at other conversion metrics such as leads generated, event registrations, or online applications. These should be similar to the existing metrics you are currently using to measure results from your other online marketing initiatives.
To be able to accurately attribute conversions back to the source, you would need to ensure that the proper tracking mechanisms are in place; this could be in the form of tracking tags embedded onto all links published on your Facebook posts or Twitter feeds that bring users back to your website. That way, you could use your existing site analytics tool to track the user journey all the way to conversions.
Just as how search marketing has evolved to become an extremely accountable way of driving online conversions and ROI; done with the same due diligence and attention to tracking, I believe that the same can be achieved from social platforms.
Another way of quantifying the value of your social platform is to look at the value of your community. A study conducted of Facebook fans by social media firm Syncapse used attributes such as (increases in) product spending, loyalty, propensity to recommend, and brand affinity to extrapolate the monetary value of each follower.
Vitrue, another social media technology firm, looks at measuring the value of Facebook fans the same way you would compute the cost of paid online media; by the value of the social impressions generated. I believe this may be a more accurate way to equate value because a branded Facebook page is essentially an owned media channel that you can leverage on again and again.
However, I would like to make a few small adjustments to the variables in their model of computation: Let's take the example of a Facebook page with 50,000 fans.
In this case, every post that the brand publishes goes into their fans' news feeds and generates an equivalent of 50,000 media impressions. We can even consider these targeted impressions because this is an audience that have made an active choice to 'like' the Facebook page, much akin to targeting users who have opted in to receive marketing promotions from a brand.
If a brand publishes just one marketing post a day, over the course of one year, the figure comes up to 13 million targeted impressions (taking into account that this is done five days a week over 52 weeks). To put a dollar value to this, let's assume that the cost of targeted media impressions in Singapore hovers around $20 CPM (cost per thousand impressions). That would mean over a year, the branded Facebook page would have generated S$260,000 worth of media impressions for the brand (13 million impressions/1000 x $20 CPM = $260,000). With some simple math (value of media impressions generated divided by number of fans), the value of each fan over the year works out to be $5.20.
Businesses face an ongoing challenge trying to demonstrate value in social media. In reality, this value covers a broad spectrum that could range from actual sales to the value that it presents as a crowdsourcing resource. The industry as a whole will have to come up with a standard set of metrics that can provide true accountability to social media investments.
How does your business measure social media ROI?
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December 2, 2015
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