How Do You Value Your Performance Metrics?

Return on investment of social media campaigns was a big topic a few weeks ago at the Social Ad Summit in New York. As brand advertisers are venturing further into the space, the instinct to put an ROI on their six-figure marketing efforts is only natural.


As an analyst, I'd say the method for measuring traditional online advertising is pretty baked.  We measure impressions, clicks, click-through rate and conversion. What are the metrics for measuring efficacy in social media, though?   As the shift of ad dollars within online to social media happens, the most relevant models emerging for advertisers focus on performance metrics. You "direct to response" advertisers know exactly what I am talking about.  For brands, the value is in the impression, but how does this mindset shift to valuing friends and fans or other social media actions?

Just a few of the examples of pay-for-performance metrics are as follows:

  •       Cost per click (CPC) - I am sure you are all familiar with this one.



  •      Cost per view (CPV) - I am specifically referring to video and sometimes to specific levels of watch-through, such as 10 or 20 seconds into the video clip.

  •       Cost per install (CPI) - this may apply to widgets or social applications.

  •       Cost per action (CPA, but not in the traditional sense) - this metric is configurable based on unique actions such as friending or fanning on Facebook, sharing, commenting or ranking.

    So what you are willing to pay for each one of these performance-based actions?  And what measurable value will they bring back to your organization? Tying the value of the paid action back to the value that you get from having a user interact with your brand is a still-evolving process for most marketers.  It is a way for brands to have a dialogue with their customers and be part of the conversation. In many organizations, these campaigns are still coming out of the "testing" budget - albeit a larger allocation each quarter.

    Getting to that ROI is not an easy problem to solve. For example, have you ever asked yourself if you can you put a value on a friend? Some friends you value much more than others because they "get you." Other friends fall into buckets of "a good person to have dinner with," "a friend that makes you laugh," or "a good business contact." You can probably rank-order the importance of each of those categories, but can you put an intrinsic value on them? 

    In many cases you cannot, unless you are specifically tying the lifetime value of that "friend" specifically to how much they spend with your company.  The value comes from what your organization sees in having a user engage with your brand in a positive or negative manner.  It comes from knowing that the positive interaction resonating inside a user's social network to influence others cannot always be measured -- but we know it happens, as research has proven it.

    The market has determined the value of an impression -- check!  The value of a friend, a fan, a post or install is still a little up in the air, but the market will help determine that as well.  Transactions are taking place and the ability to measure the actions of users is there, but the "true" value of how much a brand is willing to pay to acquire their friends and fans doesn't start with the action. Instead,  it extends into how brands build value with that relationship that they have created. How are you measuring the value of a friend or fan? 

  • 6 comments about "How Do You Value Your Performance Metrics?".
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    1. Laurent Bridenne from Sun Microsystems Inc, October 30, 2009 at 2:45 p.m.

      There are also many more methods to measure video (and multimedia) ROI -

    2. Pat Mcgraw from [mcgraw | marketing], October 30, 2009 at 3:24 p.m.

      Actually, getting to ROI is an easy problem to solve...actually, it's not a problem if you set the campaign up properly at the start.

      The result of your work has to have a measurable outcome. Then you have the have the processes in place to capture that outcome, assign it to the individual, analyze and act.

      For example, I offer a free white paper or video - but I require you to register in order to access it. Existing leads and customers have an existing account name and password so I simply track that interaction as part of the lead nurturing or customer retention campaigns.

      And if you are a new contact, I simply track you as part of the lead generation program - which may lead to you becoming a qualified or unqualified lead.

      Dell has figured it out - they Tweet a special offer that drives you to a special landing page with a code so they can track the impact of the campaign.

      Others don't understand how to track so they throw content out there and hope to God that, at the end of the quarter, revenue will surpass expense.

      For example, when you ask "...have you ever asked yourself if you can you put a value on a friend?" my response is "That's not what you want to measure."

      Company A establishes a Twitter account. The cost is 50% of a FTE to track and post content, respond to questions and concerns. Within a week, you have 5,000 friends - but you haven't done anything worth measuring yet.

      What you need to do is [ex] extend an offer that requires some mechanism to track back to the Twitter account. For example, a source/discount code or 'enter your screen name here'.

      If it's a free offer, you ask for name, email and code/Twitter screen name. You then go back to them after they have had time to enjoy the free download and ask if the item was valuable - and you ask if they have ever done business with your company and, if so, you ask for information that links the account information with the Twitter offer information.

      If it's a discounted offer, you have billing information and Twitter screen name - and you can either attach it to the individual's existing customer account or create a new customer account.

      Either way, you have mapped the action back to measurable data which leads to ROI calculations.

      Might some people not provide the information - yup. But nothing is perfect now, and nothing will be perfect in any scenario so you have to grin and bear it.

      But right now, too many companies are tossing out resources into social media activities without any attempt to figure out how to capture the right data in order to determine if there is a positive or negative ROI for that action/investment.

      It can be done - you just have to think it through.

    3. Alexei Milgram from MAI, October 30, 2009 at 3:32 p.m.


      What you are doing is measuring the impact of the offer not impact of Twitter. If you want to measure the impact of twitter, you need to figure out how much revenue (immediate or future) the 'social' work of 1/2 FTE generates. Putting an offer in and tracking its outcome only measures the effectiveness of said offer on Twitter, not Twitter itself.

    4. Thomas Trumble from Jack Morton Worldwide, October 30, 2009 at 5:09 p.m.

      The issue seems semantic. I may not be able to place a value on a personal friend, but determining the ROI on a social media friend of a company shouldn't be too difficult. Chris Penn's presentation at IMS'09 describes it more simply and easily than I ever could.

    5. Kevin Horne from Verizon, October 30, 2009 at 11:09 p.m.

      "six-figure [social media] marketing efforts"

      who? where?

    6. Howie Goldfarb from Blue Star Strategic Marketing, November 2, 2009 at 1:20 p.m.

      I truly think it is the activities that are important. Companies like USocial allow one to buy 1000's of friends at a shot. If these 'friends' don't actively do anything what is their value? If someone becomes a fan then doesn't come online for 4 weeks, or never goes back to the fan page, or if every time you send out a tweet or a news feed update this fan doesn't see your post. There is no value in that association. And with advertising everyplace, everywhere we look what is the added impact of social media if any in driving sales?

      If one could truly see activities properly to measure traffic and conversations that is the key to measuring success.

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