Marketers should approach social media marketing the same way they approach other channels - expect an ROI and make investments to measure it.
This presentation explores six social media ROI models. Learn new methods to measure social ROI and tactics for mapping your social campaigns to core business metrics.
2. Who’s presenting?
Tom Webster
Jim Tobin
VP, Marketing
Edison Research
@webby2001
Founder, President
Ignite Social Media
@jtobin
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3. Details
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•
•
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Jim & Tom will lead Q&A at the end of the call.
Tag your tweets with #igniteroi
We’re recording the show.
We’ll send an email follow up to everyone.
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6. The Models
1.
2.
3.
4.
5.
6.
Amplification
Value of Social Traffic vs Display
Quality of Visitors From Social
Revenue From Facebook Fans
Revenue From Social Media Marketing
Social Promotions Sales ROI
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10. Amplification Step By Step
Calculate social
impressions,
actions
Facebook impressions and clicks, Twitter
impressions and clicks, YouTube views,
Online mentions, etc.
Sum value of
impressions,
actions
Assign value to impressions and actions,
weighting actions more heavily that
impressions.
Compare to total
social media
spend
Map social impressions and actions to
paid marketing value equivalency.
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11. Amplification Model Example
Social Impressions, Actions
Paid Advertising Equivalent
Value
2,000 Facebook impressions
$10 CPM
$20
100 Facebook clicks
$0.50 per click
$50
100 YouTube Views
$0.20 per view
$20
Total Value:
$90
Social Budget:
$30
Social ROI:
300%
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12. Likely Questions & Considerations
• Most of the social data inputs are available for free.
• The model is complex. It requires proxy values for
social actions based on non-social comps.
• The model aggregates cross-channel social data and
maps it to familiar marketing metrics.
• The output is a relative comparison, not an actual
sales return on investment.
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14. Example Traffic Comparison
Description
Display
Social
Delta
Net New Visitors
30,000
170,000
Social drove 5.67X
more visitors
Cost
$150,000
$130,000
Social cost only
86.7% of display
Cost per visitor
$5.00
$0.76
Social generated a
6.5X better return
Above baseline
This data reflects actual performance from an Ignite Social Media client.
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15. Likely Questions & Considerations
• This approach is less complicated than others, it
requires fairly simple inputs.
• The model works well if you have an active display
advertising campaign as a basis for comparison.
• The model doesn’t incorporate impression value,
only traffic value.
• The channels are the variable, so try to keep other
variables constant.
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17. Example Traffic Quality
Comparison
Description
Display
Social
Delta
Pages per Visit
1.57
2.84
Social drove 1.8X
more pages per
visit.
Time on Site
0:40
2:18
Social visitors spend
3.45X time on site.
Bounce Rate
81.40%
45.46%
Social visitors had a
44% lower bounce
rate.
Social drove 4X
conversions.
This data reflects actual performance from an Ignite Social Media client.
Goal Conversions
3,098
12,603
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18. Likely Questions & Considerations
• You can compare social traffic against other
channels or “average” site traffic.
• Choose the most meaningful metrics, don’t
worry about comparing all of them.
• Factor in all costs related to social and other
channels for a final calcuation.
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20. The Facebook Factor
Brand
Purchase in Last
12 Months
Likely Consider
Likely Recommend
Fan
Non-Fan
Fan
Non-Fan
Fan
Non-Fan
Bust Buy
79%
41%
78%
47%
74%
38%
Coca-Cola
95%
71%
85%
58%
83%
47%
Blackberry
55%
10%
69%
17%
62%
16%
Walmart
94%
74%
85%
56%
77%
39%
Source: Forrester Research, The Facebook Factor, April 2012
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21. Example Calculation
283,786
For a year.
% Likely to Consider, Fan
69%
Blackberry is closest comp brand in
this example case.
% More Likely to Purchase
Since Becoming a Fan
16%
Conservative estimate from 2011
Chadwick Martin Bailey data.
Price of Product
$250
Fictitious.
Purchases per Year
0.33
Fictitious.
31,330
New Fans X % Likely to Purchase X %
More Likely Since Becoming Fan
$2,584,723
New Fans Who Are New Customers X
Product Price X Yearly Purchases
Net New Facebook Fans
# of New Fans Who Are
New Customers
Total Estimated Revenue
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22. Likely Questions & Considerations
• This is an admittedly rough estimate.
• Additional data from comScore further
indicates that Facebook influences purchase
behavior.
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24. Example Calculation
4,830,827
For a given time period
345,324
For the same time period
Goal Pages per Sale
13.989
For the same time period
Social Traffic to Goal Pages
27,716
Visitors from social who landed on a
goal page during time period
Social “Sales”
1,981
Social traffic to goal pages / (goal
pages / sale)
Avg Transaction Value
$135
Revenue from period / transactions
during period
$267,435
Social transactions X Avg transaction
value
Visitors to Goal Pages
Products Sold
Social Revenue
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26. Likely Questions & Considerations
• This is (also) an admittedly rough estimate.
• For considered, offline purchases, digital
marketers have limited visibility to impact.
• This model becomes more valuable the more
you know about your buyers’ aggregate web
behavior.
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28. Example Calculation
$195,404
Including ads
# Goal Page Completions
34,812
Use actual if possible
Goal Pages per Sale
13.989
From model
2,489
Goal page completions / goal pages
per sale
$336,015
Social sales X average transaction
value
$0.72
(Revenue – Cost) / (Cost)
Total Cost of Promotion
Social “Sales”
Social “Sales” Revenue
ROI
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29. Likely Questions & Considerations
• This model works well when you want to map
a specific promotion to purchase intent.
• Remember that you’re comparing the
effectiveness of marginal marketing spend – a
“low” ROI might not be a bad thing.
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31. Thanks for attending!
Tweet your questions
@ignitesocialmedia.
We’ll email you the slides, the whitepaper,
and the presentation recording.
Editor's Notes
Models are much more sophisticated that previous methods…but still not perfect.We would encourage you to do two things: 1) Analyze your own business performance in new ways to plug in as many metrics as you can that are specific to your brand(s); and 2) Question these models. Ask the tough questions. Let us know what you learn as you apply them. We consider these very much a work in progress, and your comments on our blog will help us immensely as we work toward version 2.0 and beyond.
Social media marketing, however, is the application of a complicated mix of tactics, including content marketing, influencer outreach, owned channel management and much more. And these tactics are then applied to solve a wide array of marketing issues, from brand awareness to improved SEO to brand loyalty to ecommerce traffic. Models continue to evolve…Models are not plug and play…
Social media marketing, however, is the application of a complicated mix of tactics, including content marketing, influencer outreach, owned channel management and much more. And these tactics are then applied to solve a wide array of marketing issues, from brand awareness to improved SEO to brand loyalty to ecommerce traffic. Models continue to evolve…Models are not plug and play…
Our Amplification Model can also be called a Purchase Equivalency Calculator in that it measures and quantifies the value of social impressions and social actions and compares them to the cost of buying that same level of activity through traditional advertising means. With social media, we have channels that are largely opt- in (like Facebook and Twitter), and we can often use those to reach friends of fans. We know from lots of research that fans and friends of fans are more likely to buy, so reaching these folks is every bit as valuable as advertising. If anything, it’s even more targeted.
Calculating:Impression data is available in social platform analytics.Valuing:Impressions:For a highly targeted online media buy, you could easily spend $10 CPM, so for Facebook and Twitter impressions (highly, highly targeted) we use a $10 CPM. Other brands might use different numbers, such as $8 or $12 for a highly targeted buy.Clicks:We can already measure the value of a click, since many of us spend thousands of dollars on Google pay-per-click advertising, trying to get our prospects to click over to our site. Of course, keywords vary dramatically in price, so use a simple average by taking the total you spend in a period on all keywords and dividing by the number of clicks. YouTube views: YouTube. You can use what you pay for Promoted Videos, or use our average estimate of $0.20 per view. Blog views and mentions: We built on the work done by Tourism Ireland in its Social Equivalent Ad Model paper. In that, Henry and Harte argue that these activities are deeper interactions than page views. While they can’t be directly quantified, Henry and Harte argue that they are at least as valuable as a click on a Google CPC ad in terms of involvement with a brand. Comparing:By aggregating impressions and actions and then assigning a value and then summing – you’ve calculated a paid marketing value equivalency.Compare this paid marketing equivalency to your social budget to back into an ROI.