I am glad to share my exploratory research work, which was published in IJAR.
The CFO, CEO, and CMO of any organization
would be remiss if they did not account for spending and resource allocation
for social media. MarketingProfs published a study in 2009 by Bazaarvoice and
the CMO Club that revealed the true expectation of chief marketing officers
(Figure 1, below). The bottom line was – They wanted measurable results from
social media. This shows that Social Media needs to be measured to know whether
it is serving benefits to an organization or not. It was found in the above
stated study that 53% are unsure about their return on Twitter, 50% are unable
to assess the value of LinkedIn or industry blogs. Most importantly, about 15% believe there is no ROI associated
with Twitter, and just over 10% cannot glean ROI from LinkedIn or Facebook.
This study significantly shows that there is
disconnect between
social media activity and a clearly defined end game. Companies must establish
what they want to measure before they engage. By doing so, companies can answer
the questions like, “what is it that they want to change, improve, accomplish,
etc? Defining a clear strategy can help reach social media goals, including
Sales, Registrations, Referrals, Links (the currency of the social web), Votes,
Reduction in costs and processes, Decrease in customer issues, Lead generation,
Conversion, Reduced sale cycles, Inbound activity,
ROI represents Returns on Investment. Marketers have explored
ancillary elements to address the socialization of media, marketing, and the
resulting dynamics of engagement. These adaptations include:
Return on Engagement: The duration of time spent either in
conversation or interacting with social objects, and in turn, what transpired
that’s worthy of measurement.
Return on Participation: The metric tied to measuring and valuing the
time spent participating in social media through conversations or the creation
of social objects.
Return on Involvement: Similar to participation, marketers explored
touchpoints for documenting states of interaction and tied metrics and
potential return of each.
Return on Attention: In the attention economy, we assess the means
to seize attention, hold it, and measure the response.
Return on Trust: A variant on measuring customer loyalty and
the likelihood for referrals, a trust barometer establishes the state of trust
earned in social media engagement and the prospect of generating advocacy and
how it impacts future business.
Besides these
ancillary adaptations of returns, for many businesses, the case for new metrics can’t be made without an
intrinsic understanding of how social media engagement affects at the every
level. It’s not as simple as counting subscribers, followers, fans,
conversation volume, reach, or traffic. While the size of the corporate social
graph is a reflection of its participation behavior, it is not symbolic of brand
stature, resonance, loyalty, advocacy, nor is it an indicator of business
performance. Brian Solis, CEO of new media agency FutureWorks, has conceptualized the 10 stages of Social Media Business integration that businesses
experience as they travel the road to full social media integration and in the
10th stage he has defined the business performance metrics to be
used for social media measurement. Stage 10 reveals
the meaning and opportunity behind the numbers and allows firms to identify
opportunities for interaction, direction, and action.
The metrics that
measure social media ROI should be understood first. The right metrics will
lead to success. These are:
1) Exposure to media
and/or website: Impressions,
Clicks / Visits, Page views, Referrers / Sources, New vs. Returning, Frequency.
2)
Level of Engagement: Pages viewed per visit, Time on site, Reading blogs /
Participating in discussions, Viewing Videos or Photos, Uploading content,
Telling friends, Inquiries / Registrations, Transactions.
The important
question which arise is that how do we value Engagement? For that one has to
determine how actions be converted in to intent. Actions have certain values (See
Figure 2, below). Next question is, one has to determine how intent be
converted in to revenue (value). Values will vary based on the actions.
The model
conceptualized by Steve Latham of Spur Digital in 2008 is shown in Figure 3,
below. According to Steve, ROI methodology should be clearly defined
strategically. The companies have to define the metrics that indicate intent.
Project conversion rates and expected value should be defined for each type of
audience and each type of actions. One should use rates and values to project
expected revenues for each audience. It should then be normalized by averaging
expected values.
Social Media metrics
are increasingly tied to revenue. Companies like Dell are not only tracking the
impact of social media on revenue, but expanding
lessons learned across the entire organization. Dell’s @DellOutlet is close
to 1.5 million followers
on Twitter and earned $3 million in revenue from Twitter. In total, Dell’s global
reach on Twitter has resulted in more than $6.5 million in revenue. Today it’s
not just Dell Outlet having success connecting with customers on Twitter. Many
other brands have monetised Social Media with right metrics and right attitude.
The need of an hour is to focus on “R” of ROI, as
it relates to business goals and performance indicators. Even though much of
social media is free, one does know that there are costs involved such as the
cost of engagement – as it relates to employees, time, equipment, and
opportunity cost. Tying these costs to the results will reveal a formula for
assessing the “I” as investment.
- Bazaarvoice (2009). The Business
of Social Media, published by MarketingProfs, Available atMarketingProfs.com
- Brian Solis (2010). The Maturation of
Social Media ROI, Available at Futureworks.com
- Brian Solis (2010). The 10 Stages of
Social Media Business Integration, published by Futureworks, Available at http://mashable.com/2010/01/11/social-media-integration/
- Dave McClure (2010). Startonomics,
Available at www.slideshare.net
- Mzinga and Babson Executive Education (2009). Social Software in Business, Available at www.emarketer.com
- Olivier Blanchard (2009). Social Media ROI, published by Brand Builder, Available at www.thebrandbuildermarketing.com
- Yongfook (2010). Social Media ROI - Measuring the
Immeasurable, published by Egg.Co., Available at http://www.rippl3.com
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