Now that companies are collectively spending hundreds of millions of dollars on social media marketing, advertising and earned media campaigns, more and more number crunchers are demanding marketers prove the value of all those "Likes", retweets and check-ins.
Let's say a few of your clients are holding off on that social media spend until you can prove your ability to measure ROI across these popular platforms. From my perspective, challenging the efficiency of social media based on number crunching is wrongheaded, but marketers still need to demonstrate to the people controlling these budgets that there is a proper way to go about effectively measuring ROI.
After participating in the OMMA Global Social Media track this week in New York City, I've gleaned a few insights from Facebook reps, Foursquare biz dev mangers and even Google engineers (among a myriad of marketing professionals anxious to share their opinions) on the best ways to measure returns on social marketing spend.
Translating Clients' Non-Monetary Goals Into Dollars
"We are in a world where owned, earned and paid media is coming together more than ever before," Michael Lazerow, CEO of Buddy Media, said during an entertaining session titled 'Is Social Media ROI for Real, Or Is It a New Oxymoron?' "It's still very early but there is an ability to attach ROI to social media."
In other words: The days of spray and pray are over when it comes to launching social media campaigns, and the best efforts not only engage a wide audience effectively, but provide measurable metrics for CFO's. While social media shouldn't be done only with the goal of making direct conversions, having a firm understanding of a client's bottom line before implementing any social media program is the first step in truly understanding this future ROI.
First examine these basic business metrics:
- Online traffic
"Make sure you are being efficient in testing and learning," said Jennifer Kattula, Head of Agency Marketing at Facebook. "Make sure you know what those KPIs are and what success looks like. Paint picture and build a roadmap."
As a professional marketer you already know how to engage (Return on Engagement 'ROE' is your specialty!) but many pros seem to have trouble expressing this in monetary terms for clients. Because Facebook is the biggest platform - it accounts for more than 12 percent of all time spent online, and 38 percent of all page referrals - we will use it as our social template.
Let's say client A wants to know how to find the correlation between the percentage of Facebook Fans who make purchases and those who aren't fans but still buy. What you'll also want to know is if your Facebook's fan-base grows by let's say 1o percent then what's the corresponding increase in frequency of transactions.
Actions to take:
- Identify users that engage through social media.
- Assign the appropriate value to social media interactions.
- Determine if the social media user converted to a sale.
- Track goal conversions for your website in Google Analytics.
- Analyze only social media referral traffic in a customized segment.
- Measure the correlation between social media referral traffic and goal conversions.
Another great way to measure is incentive-based planning. Offer various incentives to track people from online to offline. For example, provide Facebook fans special deals that can be used offline and then measure the results of those activities.
Use these metrics to demonstrate usability and measurability for other clients. After you have collected this data, you will be able to make pretty good predictions about how different social media activities influence monetary goals. If client's sales are mostly online then it is easier to measure all those metrics.
Note: Keep experimenting. Use a percentage (around 5%) of a marketing budget for experiments.
Using Measurable Analytics to Improve Retention and Generate New Clients
According to a report released earlier this month from the Pew Internet & American Life Project, 28 percent of American adults use some form of location-based service, either on a mobile device or via a social network.
That's a pretty hefty number of people checking-in and checking-out locations. So it's no wonder Foursquare Director of Business Development Eric Friedman told a packed OMMA session that "Foursquare its not just a fun play tool anymore."
If you're running a digital marketing campaign consider adding mobile to the marketing mix by designing location-targeted messages. Perhaps more so than other other social media, Foursquare is demonstrating unequivocally that you can measure results in amazing, consumer focused ways.
Fast Foursquare facts:
- Three million check-ins per day.
- One billion check-ins to date.
- More than 500,000 verified merchants.
- Available on all mobile devices and in 11 languages.
Let's consider the company's deal with RadioShack (RS) to demonstrate the numerous ways including Foursquare in a social marketing mix can directly assist in measuring ROI. The electronics retailer signed up all of its 5,700 locations last year and began offering what Foursqaure calls Holiday Hero discount, an incentive program designed to bring new users into locations and lure repeate users back with extra loyalty incentives.
Customers that checked-in to different locations across the country were offered discounts of up to 25 percent on products. Existing customers were sent aditional incentives when checking-in at other places in the vicinity of a RadiShack outlet. Segmenting these users with Foursquare's four analytics dashboards immediately allowed RadioShack to view important, implicit data including: busiest times of day, busiest stores and least busiest stores, and days of week with the most traffic among many other measurable factors.
"You can really dig in and feed into your business intelligence system," said Friedman, who also noted that the same tools are available to Joe's Coffee Shop that Starbucks uses.
The measurable results:
- RS gained 20,000 new followers by broadcasating out to social channels.
- Consumers following location-based messages bought 350% more than people coming in off the street.
- Tracked over 50,00 followers (end of last year).
Interesting ROI point regarding this campaign: For its next social initiative RS now has a large trove of data and an increased presence to come back to in the future.
- Traffic: Google Analytics,
- Leads: HubSpot
- Reach: Facebook Insights, Twitter Counter, HubSpot
- Buzz (Mentions): PostRank
- Customer Support: CRM, Salesforce.com