How to measure social media marketing ROI

I thought this was an excellent article on Social Media and why it is difficult to measure ROI on Social Media.  It really comes down to social media is a a new marketing channel, conversationally based, and the standard tools to measure ROI on this type of marketing have yet to be fully developed.

In time I am sure something will be developed, until then we are all Social Media Explorers, charting new paths through a new Marketing sea.

From The WiseMarketer.com


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. jquandt This article is copyright 2009 TheWiseMarketer.com).

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).

More Info: 

http://www.demandromi.com

Source: DemandROMI

About Jeff Quandt

Jeff Quandt is an Inbound and Digital Marketing Strategist and owns On-Q Marketing LLC. He helps businesses get found in a Google Search bringing prospects to business' website to generate leads.

Then through Inbound Marketing tactics qualify the lead, nurture the lead, and ultimately converting the lead/prospect into a customer.

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