Social media ROI is a hot topic in the marketing world, and the phenomenon is already changing the way the world looks at itself. A new white paper by Guy Powell of DemandROMI explains how marketers can take advantage of it, measure it, benchmark the results of marketing activities against it, react to what consumers are saying, and even predict campaign results.
The white paper, entitled 'Social media metrics and ROI', describes how marketers can start to classify their actions and look at the key marketing metrics relating to social media.
When embarking on a new marketing channel, marketers need to ask themselves many questions to make sure they understand the implications for their brand - relating to the channel, how they can track results, and how they can diagnose potential problems. As with any marketing investment, the marketer's goal is to help the company drive revenue, profit, share, and brand value at the lowest possible cost and risk.
Similar issues were voiced by marketers when the internet itself was just coming online. As with any media, marketers have learned, reacted and responded. They have learned how to measure the response to marketing investments on the internet and, having progressed from early reticence to join the internet revolution, smart marketers are now doing everything they can to move their companies into social media in order to capitalise on early opportunities - before the media becomes saturated, prices go up, and returns decline.
One of the biggest challenges marketers face with social media is the thought that the brand will lose control of its identity. That is, it will be driven by customers and non-customers as they talk about the brand in the social media ecosystem. On the other hand, it's only a matter of time before marketers realise that, through active participation in the community, they can start to regain a little of that control.
Senior executives are asking questions about how much revenue this channel will deliver, and whether or not marketers can predict the level of revenue before the company takes the risk. But measuring the value of social media comes with a number of challenges. Because the messages are uncontrolled they can be positive, neutral or negative in tone, or they can incorporate emotions that may or may not be in line with the marketer's vision of the brand's desired image.
From a technical perspective other challenges include:
- Separating out the effects from an active campaign (e.g. a contest) versus the ongoing background 'noise' that consumers are generally saying about the brand in an either prompted or unprompted way.
- Distinguishing the effects from social media from the noise (sometimes thought of as baseline) against the sometimes massive weight of traditional mass media. A major brand may have 10,000 posts per month, but a TV ad campaign can reach tens of millions of households through the purchase of the right amount and placement of TV GRPs.
- How can we use the metrics received from social media monitoring packages (such as BuzzMetrics from Nielsen, SM2 from Alterian/Techrigy, and others) to help diagnose potential problems to improve execution in the social community.
- The data. There is a reason why this is a four letter word when it comes to measuring the success of social media campaigns. Actually, there may be too much data. The issue is to obtain the right data and then how best to present it as relevant information.
Social media has many components mirroring traditional media, as well as others offering new dimensions. For example:
- Social and traditional media both have reach, measured through the number of impressions (traditional), posts and the popularity of those posts (social).
- Social and traditional media both have fre-quency, defined by the media plan (for both traditional and social), or measured through the timing of those posts and the timing of the brand's posts (for social).
- Social and traditional media both can drive click-thru to a specific call to action or, more generally, to the brand's website.
- Social media contains consumer generated mes-sages with sentiment defined as tonality and emotion. Traditional media can influence the content and sentimentality of consumer generated messages.
- Social media drives engagement with the brand by the blogger and the reader. The blogger (of which there are few) is generally highly engaged whereas the reader (of which there are many) is less engaged. Traditional media drives engage-ment with the brand by all who hear, including bloggers and readers in equal measures.
- Social media is influenced by traditional media (mass and direct) and social media influences the response to traditional media.
- Social media has varying levels of influence over the reader depending on the relationship, credibility and authority of the blogger. Traditional media has an equal one way relationship with the blogger and reader.
- Social and traditional media have a short and long term effect (potentially, infinitely long for internet media, assuming that the Internet will be backed up forever).
When determining the ROI of traditional media it is typically purchased and then measured, and modeled along several dimensions in the traditional media measurement framework. The three main dimensions are based on reach, frequency and quality. With social media, marketers must reference the same metrics but also add sentimentality.
Compared to traditional media - where the marketer is in control of the message - social media makes the consumer's interaction and response an integral part of the brand message. As a result, when measuring social media, understanding the sentimentality of consumer conversations about the brand is critical to being able to determine their potential impact in the market-place.
The full white paper has been made available for free download from the DemandROMI's Marketing Calculator web site - click here (PDF document; no registration needed).