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RSSExpert 1, whose title is "Social Media Strategist" at a computer and peripheral manufacturer, said (with words excerpted and edited to preserve anonymity):
"... on the public relations side, we use share of voice. We're able to show how our social media efforts affect that. Fortunately a lot of social media has really good search engine optimization results, so we've had a lot of good success there as well with specific keywords and topics.Web 2.0 tools are pretty cheap. So one of the things I try to quantify is, 'How much money are we saving doing something in a new way versus doing it the traditional way?' We're able to cut out a fair amount of agency expenses. Getting a handheld camera, shooting a video, and posting it to a blog can have a lot more reach than hiring an agency and spending hundreds of thousands of dollars to produce a five-minute clip.
all some executives care about is hard-line sales. And if that's what you need to know - how does a customer making a comment on a blog drive more sales- that executive is probably is not ready to have the conversation yet about social media."
Translation: I don't really know, but I have quite a few Web metrics. Besides, if you have to ask, you obviously don't get it. Anyway, I'm saving the company money -- this last comment being made likely before taking their own salary and benefits into account.
Expert #2, whose title is "Manager, Web & Social Media Marketing" at another of the better-known high tech companies, said:
"Social media is a type of word-of-mouth marketing. So the best way to measure is to look at share of voice online. That's one of the biggest measurements that we're looking at.For example, we did a push for a tournament for an online game that we created, and we got more than 35 press and blog hits about it. The amount that we would've had to pay for banner ads or email campaigns to get that same coverage of the promotion would've been high. That's where you can really see the cost benefits and the ROI."
Hmmm... sounds like the old PR measurement strategy of quantifying the value of the exposure you received as if it were paid media. Unfortunately, unless you actually reduced your media budget by at least some substantial portion of this amount in favor of relying on the social media buzz, then you saved nothing and gained nothing truly incremental. ROI is likely negative.
Expert #3, "Social Media Strategist" at another tech firm, answered:
"It's tough. How do you assign a value to a conversation? As an industry, we're working on it. At [our firm], it's even more difficult because we're an ingredient brand and we don't sell directly to the consumer. We're trying to assign value to different actions that happen in the marketplace or in the social media landscape, such as posting a blog comment or joining a community."
Translation: It's difficult, and we don't know yet.
Thank you, #3, for being honest and not trying to "spin" social media as something that's too subtle or complex for us financially oriented types to grasp. We grasp it, but we're looking for evidence of impact on value creation. Not just the number of blog post responses, or the share-of-voice in the online world, but actual correlations to incremental customer acquisition, retention, and purchase behavior. Show me the model of what you think will happen, how you'll try to measure it, and what the implications would be if your assumptions were right. Then show me that you've methodically assessed the risks of being wrong (even if they are negligible).
Social media has attributes that are truly unique in the evolution of marketing. It has revolutionary potential. And it needs lots more development to mature. But we marketers don't do ourselves any favors by trying to disconnect it from financial value just because it's hard to make the links. Maybe we should take a page from how our companies decide to invest in R&D -- with clarity of purpose, explicit assumptions, and rigorous experimentation in escalating risk scenarios. In the end, that will accelerate corporate adoption of social media much faster. So rather than trying to spin the tangential metrics, help those of us grounded in the P&L to "get it." Remember, if we don't "get it," neither will you -- budget, that is.
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Judging from the responses posted, your article touched a nerve.
The mix of reactions highlights just how early we are in the social media marketing cycle. Some people are defensive to the fact that you issued a challenge to measure results and others dismiss the importance of measurement by tossing SMM into the mix with traditional forms of marketing expenditure and claiming the impact on consumers and purchases to be collective and nearly indecipherable.
I think the point is that we have to try different approaches to measure the impact of all our marketing spend. CFO's appreciate the effort (I've been in that chair) and, if you can convince of assumptions and methodology, you have a chance to win.
Bill Hanifin
cycle of adoption of internet based technology and marketing strategy follows that the business of social media
Once you quantify how important (or not important) word of mouth in your customers purchase behavior, your ability to measure and report conversation increases are easier to align with sales.
Its seldom that any 1 marketing tactic "drives a sale". I think knowing more about how all communications work together to drive purchases helps deMystify how to determine whether things work.
Demonstrating rigor on how you go about uncovering this stuff and tying your seemingly disconnected metrics to the big picture might help win over appropriately skeptical CFO's.
I'm fascinated every day that I find a new and interesting vertical channel to explore, and am eager to see how measuring social media efforts evolves. Thanks for the insights!
Maureen Streett What's Up Interactive www.whatsup.com
The question of how to measure the impact of a social media presence is a problem that many of our clients are struggling to solve. We have found that the one way to do this with some degree of success, is to assign very specific strategic objectives to the social media presence and then build measurement systems combining surveying techniques with web analytics.
For instance, we are working with a client who wants to know if their brand focused mini-site on a major social network is providing a satisfactory experience to mini-site visitors, whether the mini-site experience influences their brand attitudes, how likely they are to visit the main brand web-site, and to recommend the mini-site to others by send a link. By surveying a sample of mini-site visitors and then linking the survey results to specific on-line behaviors (captured by web analytics), it is possible to build a ROI estimate.
We have been quite successful using this methodology to standard web-site applications, and are applying it as a way to measure the success of brand oriented mini-sites embedded in social networks.
Russ Merz Research Director Foresee Results www.foreseeresults.com
I do agree with the general premise that the social media channel is difficult to measure. But I applaud those who have the energy and guts to explore the social media channel.
Like most of the people I have met that write about online marketing you seem to lack real time experience. Those who can do; those that don’t write or teach.
Vince Naughton www.ResponseRate.us
How many people visited the website via social media (referrers) and filled out the contact form? (website analytics) If I'm speaking specifically about B2B.
that's the only way I would measure success.
However social media can raise awareness and branding... and as with most traditional media, outdoor, print and broadcast, you may not be able to do the EXACT ROI you can with web metrics. So the fact that a video has 10,588 views on youtube in the last 90 days doesn't mean you made 10,000 sales.. now IF... you apply the ever decreasing rules of ten, as in.. 1,000 visited website and 100 filled out contact form. then that social media got you 100 leads, but how can you put a price on a lead in the long B2B sales cycle?
Doug, I think we could shrink the news headline to "Survey Finds Some CFOs Skeptical of Everything", but then that wouldn't be news ;-)
1) Contract the above replies with the consensus that word-of-mouth advertising is worth 50 cents a conversation. True or not, at least that channel is making an attenpt to quantify their results.
see: http://www.brandweek.com/bw/content_display/news-and-features/crm/e3i3a6a726c3dd89a14022bf301483c9241
2) of course, CFOs apparently do not believe the numbers produced by CMOs to justify their advertising spend. It is no accident that advertising is treated as a cost, and not as an investment. It's an ROI issue.
From Adage (Jul 16, 2008) article titled 'Survey Finds CFOs Skeptical of Their Own Firms' ROI Claims'
"six in 10 financial executives believe their companies' marketing departments have an inadequate understanding of financial controls"
"seven in 10 said their companies don't use marketing inputs and forecasts in financial guidance to Wall Street or in public disclosures."
"nine of 10 finance executives said they don't use return-on-investment metrics to set marketing budgets in the annual budgeting cycle." (Two-thirds instead take a predetermined percentage of revenue or simply adjust last year's budget.)"
"They don't believe the numbers," said Jeffrey Marshall, the retired editor in chief of Financial Executive magazine" The article goes on to note that CMOs frequently don't believe the numbers, either.
So it's up to the marketing industry (us!) to figure out how we are going to show enough impact to justify our indusrtry's collective heavy spending. Untill we do, I fear marketing spend will take the first hit in any kind of economic downturn.
DRG
Frankly, ROI is difficult to track for most things -- even search is dependent for metrics on the last action -- the click. How do you know what influences were in play prior to the click? You don't.
The tools will continue to mature as this kind of feedback gets incorporated. But, frankly, for many of those that you quoted above, this kind of fuzzy metric is standard across other communications tools as well, from PR to advertising.
Paid search is really the culprit here. Advertisers want all other marketing to be as easily definable.
Step one: someone searches a keyword. Step two: My ad is clicked Step three: 3%-5% of the time I earn a lead from the click pool
If the intangibles of paid search were monitored as if it were a social media campaign, it would fail 100% of the time.
Am I gaining online mindshare with paid search? Most likley never Are key industry influencers talking about my product? It would strictly be by chance if Search propogated this. Is my positive sphere of influence trending upward? Again, good luck purposely accomplishing this with Search.
The question here boils down to 'Is there value in social media?' If you are answering 'no', or 'I dont know' than you were sleeping or hungover in your Marketing 101 class.
Branding IS important.
The ability to precisely target your demographic profile and market WITH, rather than AT, your prospects is monumental. Never has a branding opportunity afforded this.
Cut to the chase, Dan.
Where do I see ROI?!?!!? It's portfolio wide, as you can expect with any good branding campaign.
1) It could rear itself as improved SEM conversion rates 2) or Direct/branded traffic gaining momentum. 3) Improved customer satisfaction (retention) 4) Lessening the days to purchase or increasing visitor loyalty
And at least 100 other valuable benefits that could just as easily go unnoticed if they aren't earmarked.
Thanks for an excellent post and sharing the importance of financial attribution of social media. We're in the middle of evaluating the impact now and if/how much the programs we're evaluating will move the needle and this article was helpful. Similarly, I read the TechCrunch 50 interview with Marc Cuban and he hit the nail on the head, discussing the entrepreneurs of today versus old school, like elison, jobs and gates. While today's entrepreneurs seem to build products without much thinking into the business model and how they will make money, past entrepreneurs were more focused on how to make money and honestly, get rich.
And to be fair, the people that are spinning the 'lack of financial attachment ability' are probably fully capable of doing so if they took the time to think hard about how to do it. Rather they are probably enjoying the uncertainty and newness of social media and taking advantage of this to avoid direct accountability. Why sign up for a commitment when they don't need to?
Best!
-Robb Lewis www.retrevo.com matching people and electronics
You've got to want to get social media. It isn't a data-driven sale, just as better customer service isn't.
For a general measurement question seems to me you need to know what instruments and metrics are in place currently and which are trusted and respected in the organization. Then frame your social media measurement analysis against that. Trouble is, most companies don't have a rigorous measurement methodology to begin with, so tough to make up how social media will add value.