• by Laura O’Shaughnessy , August 24, 2012

As advertising has evolved to become part of the digital landscape, so have the ways in which its success is measured. With two decades under their belt, digital display and direct response ads come with an established set of metrics used to evaluate the success or failure of a placement or campaign.

Metrics such as click-through rates, conversion rates and impressions have been put in place to gauge the power of online ads. Advertisers use these landmarks to monitor sales, new customers, requests for information, phone inquiries, retail store traffic and Web site traffic.

The details uncovered from these tactics have uncovered value in digital advertising, even more so than traditional print ads. Advertisers can quantify the success of an ad based on actions taken. Through behavioral targeting, advertisers can even understand who is captured by their ads, how many times they have visited asite, if they are prone to converting, abandoning their shopping cart and more.

Now as digital advertising expands into the new frontier of social media, the industry is faced with defining the value of an ad on these unique platforms, including Facebook, Twitter and LinkedIn. Advertisers learned early that Facebook “likes” and Twitter “follows” are desirable. They indicate users are interested in their brand, use their product or follow their news. They also realized that when it comes to evaluating the value of fans and followers, likes and follows don’t mean much more.

How do they know if fans are engaging with content and the brand? Or more importantly, how do they know if their engagement will lead to a valuable transaction — a new customer, a sale, the completion of an application or sweepstakes submission?

After the initial thrill of obtaining 8 million ‘likes’ and followers subsided, the introduction of social media platforms left many advertisers questioning the worth of their social investments.

Three years later, it is clear that social advertising is not a race to win the most likes, fans or followers, but a steady climb to build a quality social community—one that goes on to engage with and become customers of a brand.

Once the community is established, it is important to measure and quantify fans or followers' affinity for that brand and their success at generating earned media. The ROI can then be calculated to realize the true value of fans/followers and social ad investment.

By monitoring the downstream activity of users who engage with an ad, advertisers can learn which user has affinity for a brand and will likely take repeat action. What’s more, while the cost of each community member is known, it becomes possible to calculate the ROI by tracking the initial cost against later engagement and conversion.  

Our research on campaigns across all verticals suggests fans and followers tend to convert 2-5 times the rate of non-fans/followers on downstream actions. As a result, the cost of buying each quality fan/follower is significantly less than the cost of converting a non-fan/follower.

By tracking downstream engagement of fans and non-fans, advertisers can also learn which messages prompt users — and the right users — to continuously engage. From there, it is possible to focus engagement based on audience profile to optimize the appropriate message and encourage the highest level of engagement for a community.

Impressions earned from a social community should also be quantified—both those derived from community members and those that come from non-fans/followers as a result of recommendation. Both organic and viral impressions can be quantified by applying a cost-per-thousand value to them against initial cost-per-fan to calculate total ROI or annual value per fan.

By quantifying these two key aspects of social media advertising — fan affinity and earned media — an advertiser will be equipped to measure the actual value of their social campaign. With these metrics in place, advertisers can confidently adjust social ads and messages to achieve the highest ROI as well as individual campaign goals.