Six Social Media ROI Models
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Six Social Media ROI Models

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Marketers should approach social media marketing the same way they approach other channels - expect an ROI and make investments to measure it. ...

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.

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  • 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.

 Six Social Media ROI Models Six Social Media ROI Models Presentation Transcript

  • Six Social Media ROI Models We’ll begin show shortly…
  • Who’s presenting? Tom Webster Jim Tobin VP, Marketing Edison Research @webby2001 Founder, President Ignite Social Media @jtobin #igniteroi
  • Details • • • • 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. #igniteroi
  • Download the White Paper http://bit.ly/ignite-roi
  • We’ve come a long way.
  • 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 #igniteroi
  • None of the models are perfect.
  • All of the models are better than nothing.
  • Model 1: Amplification
  • 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. #igniteroi
  • 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% #igniteroi
  • 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. #igniteroi
  • Model 2: Value of Social Traffic versus Display
  • 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. #igniteroi
  • 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. #igniteroi
  • Model 3: Quality of Visitors From Social Media
  • 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 #igniteroi
  • 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. #igniteroi
  • Model 4: Revenue From Facebook Fans
  • 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 #igniteroi
  • 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 #igniteroi
  • Likely Questions & Considerations • This is an admittedly rough estimate. • Additional data from comScore further indicates that Facebook influences purchase behavior. #igniteroi
  • Model 5: Revenue From Social Media Marketing
  • 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 #igniteroi
  • Calculation Continued Social Revenue Social Marketing Cost ROI $267,435 From previous slide $97,500 For the same time period $1.74 (Revenue – Cost) / (Cost) #igniteroi
  • 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. #igniteroi
  • Model 6: Social Promotions Sales ROI
  • 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 #igniteroi
  • 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. #igniteroi
  • BONUS MODEL 7: Show Me Yours
  • Thanks for attending! Tweet your questions @ignitesocialmedia. We’ll email you the slides, the whitepaper, and the presentation recording.