MISSION IMPOSSIBLE: MEASURING SOCIAL MEDIA RETURN ON INVESTMENT INTRODUCTION Harry Dresden, a digital strategist at Online Advertisers, looked up at the wall in front of him. The wall was full of temporary marker notes, arrows, bullet points and dates. Matthew Bilbilly, one of the co- founders of Online Advertisers, and Dresden, had created the wall to visually map out Online Advertisers’ new social media division, Online Advertisers Social. After three weeks of research, Dresden and Bilbilly had devised a potential value proposition and completed the competitive industry and internal analyses to identify a potential path forward. As a new social media company, management wanted Online Advertisers Social to carve out its own niche, rather than competing directly with other social media companies with more money and experience. Offering a value proposition that leveraged Online Advertisers’ strengths while creating a unique point of differentiation was crucial. In devising this, Dresden needed a solution to the existing dilemma, social media metrics. Dresden’s research on the social media marketing industry revealed that proprietary analytics and success metrics were two major client concerns. Marketers were clearly starting to appreciate the value in marketing through social media; however, few understood how to define or quantify that value. The nascent and complex nature of social media marketing had made corporations wary of social media marketing firms with value propositions that pushed creativity on the implementation side without solid metrics and reporting. The general client sentiment was that creativity alone could not justify marketing spend, especially when comparing social media marketing with other marketing initiatives competing for the same dollars. There had to be a legitimate and reliable way to measure social media effectiveness. More and more corporations wanted an easy-to-read return on investment figure in exchange for their business. A large number of products online claimed to have the ability to calculate social media return on investment. After a closer inspection, Dresden had discovered the claims were not convincing and all lacking in one way or another; none of the products encompassed the entire, complex picture of social media. Dresden summed up his views on social media measurement in a conversation with Mitchell Wong, head of affiliate marketing at Online Advertisers: Social media measurement is a huge bubble in this industry. So many companies are saying, “Here is how you figure out your social media ROI in a few easy steps, now buy my tool today...” They know corporations want an easy answer and they’re preying on that weakness. However, the answer isn’t that simple. How do you measure something that starts on the internet, moves offline, then comes back onto the internet, then moves back offline again, in an unpredictable manner? How do you measure human behaviour without making a few assumptions about pr ...

1. MISSION IMPOSSIBLE: MEASURING SOCIAL MEDIA
RETURN ON INVESTMENT
INTRODUCTION
Harry Dresden, a digital strategist at Online Advertisers, looked
up at the wall in front of him. The wall was full of temporary
marker notes, arrows, bullet points and dates. Matthew Bilbilly,
one of the co- founders of Online Advertisers, and Dresden, had
created the wall to visually map out Online Advertisers’ new
social media division, Online Advertisers Social. After three
weeks of research, Dresden and Bilbilly had devised a potential
value proposition and completed the competitive industry and
internal analyses to identify a potential path forward. As a new
social media company, management wanted Online Advertisers
Social to carve out its own niche, rather than competing directly
with other social media companies with more money and
experience. Offering a value proposition that leveraged Online
Advertisers’ strengths while creating a unique point of
differentiation was crucial. In devising this, Dresden needed a
solution to the existing dilemma, social media metrics.
Dresden’s research on the social media marketing industry
revealed that proprietary analytics and success metrics were two
major client concerns. Marketers were clearly starting to
appreciate the value in marketing through social media;
however, few understood how to define or quantify that value.
The nascent and complex nature of social media marketing had
made corporations wary of social media marketing firms with
value propositions that pushed creativity on the implementation
side without solid metrics and reporting. The general client
sentiment was that creativity alone could not justify marketing
spend, especially when comparing social media marketing with
other marketing initiatives competing for the same dollars.
There had to be a legitimate and reliable way to measure social

2. media effectiveness. More and more corporations wanted an
easy-to-read return on investment figure in exchange for their
business.
A large number of products online claimed to have the ability to
calculate social media return on investment. After a closer
inspection, Dresden had discovered the claims were not
convincing and all lacking in one way or another; none of the
products encompassed the entire, complex picture of social
media.
Dresden summed up his views on social media measurement in a
conversation with Mitchell Wong, head of affiliate marketing at
Online Advertisers:
Social media measurement is a huge bubble in this industry. So
many companies are saying, “Here is how you figure out your
social media ROI in a few easy steps, now buy my tool today...”
They know corporations want an easy answer and they’re
preying on that weakness. However, the answer isn’t that
simple. How do you measure something that starts on the
internet, moves offline, then comes back onto the internet, then
moves back offline again, in an unpredictable manner? How do
you measure human behaviour without making a few
assumptions about probability? Anybody who tells me all I have
to do is enter 10 easy to find income statement and balance
sheet figures to receive a magical social media ROI figure is
praying that ignorance pays.... That’s just not how human
behaviour works, and social media is human.
It looked like there might not be a magical figure to represent
the complexity that was social media, but Dresden had to find a
way to represent a social media marketing initiative’s success
— or failure — somehow. This required starting with an
analysis of what had made successful social media campaigns
successful and identifying differentiating factors that could be
named and, hopefully, measured.
ONLINE ADVERTISERS – A COMPANY HISTORY
In 2009, Online Advertisers was born because the two owners

3. realized that they had the intellectual ability to succeed on the
web. Online Advertisers was originally an online web
development and design company. During the first year of
operations Online Advertisers acquired a niche of start-ups and
young businesses to build a portfolio. After two years, the
company grew at an exponential rate and became larger; as a
result, it had acquired its corporate clients. Online Advertisers
continued to work with start-ups, taking equity in a number of
digital companies from a variety of industries, as they came
online. With positive cash flow and an office filled with 12
employees and only two years of operations — the owners had
been constantly seeking new ways to grow revenue streams.
Online Advertisers had a strong in-house creative team, and the
team had been able to leverage its creativity and intuitive
talents to acquire clients. In the past, the creative team had been
the driving force for much of Online Advertisers’ strategy and
success.
Online Advertisers had recently started an affiliate marketing
company and introduced a highly customizable ecommerce
platform. The social media division was an integral new area of
growth for the company. Both owners had high hopes for the
division, as social media marketing margins were some of the
best business-to-business (B2B) margins on the web.
The company had named its social media division, Online
Advertisers Social, and already had two clients through
previous web development relationships. Both clients were very
happy with Online Advertisers’ personable service and ability
to produce results, but there were issues with expressing those
results in a standard, metric-based form. To expand the division
into a larger revenue generator, some direction was needed.
Online Advertisers Social needed a high-level strategy, paired
with streamlined internal processes, of which should be driven
by a sustainable value proposition. This was why Online
Advertisers hired Harry Dresden to analyze the social media
marketing landscape and learn what Online Advertisers Social
should offer.

4. After three weeks of research, Dresden and Roth had devised
what they felt was a solid strategy for the new division. The
value proposition for Online Advertisers Social was simple and
best summarized in three words: Agile (able to react quickly to
client needs), Analytical (data-based management), and Social
(keeping in mind that consumers are people to be well treated).
The only problem Dresden had with the current value
proposition was that it did not leverage the creative team and
had Adpioneers directly competing with larger competitors on
analytics. Equipped with a strong in-house creative team,
Online Advertisers Social was capable of campaign management
and graphics design on the fly. In the past, the creative team
had proven to be effective in both web development and social
media campaign creation. Thus, should the team be better
represented in the proposition?
If a client received a negative comment or customer complaint
on their Twitter page, the project team could diffuse the
situation within minutes, before things had the opportunity to
get out of control. Online Advertisers Social had shown that it
could monitor and manage corporate social media while leaving
marketing departments to their core competencies.
However, when it came to analytics and metrics, existing
capabilities were absent. Online Advertisers used a number of
listening tools to manage campaigns with effectiveness, but
there were still no tried-and-tested metrics or formulas to show
its clients the value for money.
Many of Online Advertisers clients were smaller companies
with little insights into their consumer base. On the one hand
this made effective social media marketing a difficult task; on
the other hand, it opened up the opportunity to provide
businesses with data on their target market as a value-added
service.
MARKETING ON THE WEB
Internet marketing, also known as digital marketing and e-
marketing, is generally divided into three major groups: search

5. engine optimization (SEO), pay-per-click (or per impression or
per action), and social media marketing.
Search Engine Optimization
Search engine optimization (SEO) is the process of improving a
website or webpage’s search ranking on Internet search engines.
Search engine optimization is a form of organic traffic
generation because website owners do not pay the search engine
(such as Google or Bing) to be optimized, but rather they will
optimize their placement on a search engine in order to direct
search engine users to a website/webpage through the search
engine’s search algorithm.
Pay-per-click
Pay-per-click is a method of marketing that places
advertisements on websites as texts or graphics. When a
consumer clicks on an advertisement, a predetermined “cost-
per-click” is paid to the website owner from the advertiser.
Alternative methods of this model are pay-per-impression
(every time someone sees the advertisement, the website owner
is paid, regardless of whether the user clicks or not) and pay-
per-action (every time someone buys because of the
advertisement, the website owner is paid).
Social Media & Marketing
Social media use has grown immensely over the past five years,
across all demographics. Today, Facebook has more than 750
million users,1 while Twitter has more than 175 million2 and
YouTube nearly 500 million3. Due to the exponential growth of
social media users, user time spent on social media sites, and
the high level of consumer engagement possible while on social
media, corporations have started to take social media seriously.
A recent McKinsey research study stated that enterprises
utilizing social media have significantly improved performance
and are more likely to be market leaders, or to be gaining
market share, in their respective industry.4 The study also

6. indicated that companies that fail to implement a social media
strategy could be making a critical mistake.
For many companies social media represents a low-cost, yet
often poorly executed method of communicating and
relationship building with consumers. Through the creation of
online communities, dialogues, and group discussions, social
life has moved onto the Internet, and so has business. With this
shift, online image has become an important part of a
company’s profile.
Spending on social media networking has increased by over 800
per cent in the past five years.5 To remain competitive the
question is no longer, “Should our corporation have a social
media strategy?,” but, “What is the best social media strategy
for our corporation?” The complexity of social media strategy
— that is not always evident at the onset — has led many
companies to outsource their social media initiatives.
The social media space is a fast-paced environment, which
allows for large-scale interactions within a digital landscape.
However, social media initiatives require rigorous attention to
detail and constant attention to consumer interaction after
inception, because timeliness and agility are necessities in
social media — such as a social situation.
Social Media Listening Tools
Social media listening tools are an integral component to any
social media strategy. Listening tools are social media tools that
are used to listen to public conversation on the web, rather than
communication tools, such as Facebook or Twitter. A number of
listening tools on the web distill vast amount of public
information floating around social media sites into intelligible
data that can help social media managers to
better understand their community and social media users and
thereby provide a rich source of information from which
valuable consumer insights may be gleaned.
Listening tools allow managers to measure and track important
variables such as volume, sentiment, demographics influence,

7. trending topics, “share of conversation,” “share of voice,”
volume trends, brand volume by media type, sentiment
breakdown (positive and negative), liked/disliked entities,
liked/disliked themes, regional activity and much more.
Listening tools streamline social media management and help
managers determine who is helping the company’s image online
and who is not. Listening tools are one of the main ways that
corporations can be “more social” with their social media. When
used properly, listening tools allow companies to distill a large
amount of information while relating to people at an individual
level — being strategic while being human as well. Thus,
management is not only made better with the use of listening
tools, but also with metrics.
SOCIAL MEDIA MARKETING – THE DETAILS
There are two major components to a social media strategy:
community management and campaign management. Community
Management represents the day-to-day operations of a
company’s social media strategy. Unlike social media
campaigns, community management is an ongoing process by
which social media voice, brand, and growth, are optimized,
through interaction with current and potential consumers online.
Community management includes determining the appropriate
social media platforms for a company and adeptly managing the
use of platforms.
When engaging your community you have to understand why
your friends, fans or followers are members of your community
so as to motivate them to be active, however, this is defined
with respect to the company objectives.
A large part of community management deals with feedback,
both positive and negative. Quality community management
produces the right amount of content to keep the community
engaged. Further, quality community management requires
constant building and management of a community composed of
an ideal target market, not just the largest friend/follower base
that money can buy.

8. Interestingly, many social media marketers seem to believe that
the goal of community management is to attain as many friends
and followers as possible, so as to develop the largest
community. Community- based strategies seem to be designed
to entice anyone and everyone to enter a company’s online
community through a method called friend seeding. Although
this may develop a large audience in the short term, there is a
high probability that the audience will be filled with people who
may not want to listen or engage. Friend seeding can lead to
irate consumers, negative feedback, and a negative image
online, as the growing user base is neither interested nor
involved. Negative social responses can quickly spin out of a
company’s control in this sort of environment. Once a negative
sentiment spreads across the web, firefighting becomes nearly
impossible.
The goal of community management should be to optimize the
number of interested community members who comprise the
core target market for a company and enhance internal
community member engagement. This can be achieved by
creating conversation and buzz through substantive business-
consumer relationships, rather than symbolic ones. Community
members need to become engaged through group conversation
instead of dialogues or monologues. The whole concept of
social network marketing —online and offline — is to allow the
network to do the work itself. Dialogue conversations can only
exist within the time available to social media managers during
the day, while group conversation can grow exponentially with
more and more users taking part.
Online Advertisers Social planned to build community
relationships through engaging positive and active community
members, called Ambassadors. Ambassadors are active
individuals within a company’s community. They have either
brought others into the community or regularly created
conversation and content.
Social media fails when it is not social. A social media strategy
needs to incorporate the gritty details of implementation and

9. social life and include constant listening, analytical tools, and
human reactions to shift in conversation sentiment and content.
Social media managers need to know how to deal with both
positive and negative comments and feedback as well as how to
build positive relationships that go beyond short- term mindsets,
which solely focus on obtaining a sale.
THE COMPETITION
Wolf21
Wolf21 offered a number of services, including SEO, Price-per-
click marketing, e-mail marketing, display advertising, online
media buying, and social media services. Their value
proposition pushed their ‘cost- effective method’ of intensifying
traffic to corporate websites through the use of LinkedIn, video
content, a blog feed, events promotion, and fan engagement.
Wolf21’s social media value proposition was based on efforts to
build a strong blog feed and “social media SEO” with an end
goal of driving traffic to the corporate website. Wolf21 did not
specialize in the creation and monitoring of content. Wolf21
was a very analytical company, and did not rely heavily on
creative designs and marketing.
Social Media Group
Social Media Group offered strategic consulting, enterprise
services, measurement services, reputation monitoring and
general social media management. A major component of Social
Media Group’s value proposition was that the group had
comprised of seasoned project managers.
Social Media Group offered proprietary analytics and reporting
and marketed itself as social media savvy experts, with
whitepapers and jargon for support. Their approach to social
media was very analytical and organized with the defining of
business objectives, followed by research and development
(R&D), then strategic planning — completed by a team of

10. analysts, developers and designers. Social Media Group had
worked with clients such as Yamaha and Ford in the past.
Syncapse
Syncapse was Online Advertisers largest competitor. Started by
an ex-Facebook employee, Syncapse was the largest social
media management company in Online Advertisers’ region, with
millions of dollars in backing and a unique platform and
measurement tools. However, Syncapse only offered social
media services, including strategy, build, management and
measurement. It also offered its clients return oninvestment
(ROI) figures, and real-time analytics, which had been all
organized on an easy-to-use dashboard. Syncapse labeled their
social media platform as “the first social media management
platform to operate across a range of social networking sites.”
Syncpase also moderated social activities across 30 languages
and had worked with brands such as Budweiser, Blackberry,
GE, and Labatt.
As a small player in the industry, Dresden hoped to emulate the
Syncapse model with Online Advertisers Social. However,
Online Advertisers Social would differentiate itself as a
boutique, microcosmic business model of the Syncapse model,
with friendly service and agile project management.
SOCIAL MEDIA MARKETING METRICS
There are many ways to measure the success of social media
initiatives. To follow all public nodes and connections within an
online social community is possible; but to follow a social
conversation, which goes from the Internet and offline and then
returns to the Internet, is not as easy to measure.
Harry Dresden found that campaign management was much
easier to measure or to provide an ROI figure than community
management. Campaigns existed within a defined temporal
period and could be tied to specific online content, conversation
and target market(s). There were still a number of qualitative
measures that were challenging to quantify when measuring

11. campaign success. However, a realistic and fairly accurate ROI
figure seemed realizable.
Dresden made a top 20 list of factors that could affect social
media success and ROI. Depending on the industry, competition
and social media strategy each of these measures may vary in
importance to a company’s client. It was important to be
cognizant that some of the measures were more relevant in
campaign management and others in community management.
Quality of Fans, Followers, and Friends
How often do your community members interact with you and
your community? Are they influential among their peer groups
and among those that you wish to bring into your community?
Growth Rate of Fans, Followers, and Friends
If you are running a campaign, how many new community
members have you attained? Does your community continue to
grow at a steady rate?
Level of Community Engagement
How does your community interact with you? Are they engaged
when you offer a deal or a contest? When you ask your
community a question, do they respond? Are your community
members interested in your content and copy?
Number of Active Ambassadors
How many of your community members engage and influence a
large number of target market members in your social media
space?
Likes or Favourites
How many Likes or Favourites does your campaign have? How
many Likes do your posts have?
Click-through Conversion (Pay-per-click Optimization)
What is the cost-per-click for your social media affiliate
marketing campaign?
Influence of Consumers Reached
How connected is your network?
Online Buzz

12. How is your company, product(s), service(s) or campaign(s)
discussed on the web?
Online Sentiment
What is the tone of the online conversation about your
company, product(s), service(s), or campaign(s)? You want to
ensure that people are not only talking a lot, but also saying
good things!
Profile of Engaged Audience Compared to Desired Target
Audience
Are your campaigns and efforts attracting your target market?
Visitor and Follower Time Spent Interacting with Company
Social Media
The longer followers interact with your social media, the more
likely they are to be engaged and buy. The longer visitors
interact with your social media, the greater the chance of
conversion. What matters most is the followers and visitors that
stay and join the conversation.
Consumer Method of Content Discovery
When running a campaign, it is important to identify the path
that people took to access your social media content. Did the
campaign bring them in, or was it something external?
Online Polls and Votes
What are the results of your online polls and votes? How many
people were engaged?
Contest/Deal Engagement
What is the percentage of your community members who take
part in contests? What is the percentage of their return for the
next contest?
Volume and Content of Customer Feedback
What type and quality of feedback are you receiving?
Customer Acquisition and Visitor Conversion
After people visit your social media sites, do they return? Do
they like you? Do they befriend you? How many members of
your target group are engaged as members of your online social
community?

13. Comparable Competitor Analysis
How do you measure competition? Are your campaigns
effective? Are your community members engaged?
Response Rates
When you initiate conversation, does your community respond?
When you offer a deal, does your community act?
Impact on Offline Behaviour
Do customers redeem discounts at physical locations? Are
physical sales instigated by online communications?
Money Saved from Using Social Media rather than Traditional
Channels
A social media strategy does not cost nearly as much as
traditional media! You can have a team of in- house
programmers, designers and analysts at your disposal for a
fraction of the cost and reach many more people. (Facebook
does have 800 million members after all).
CONCLUSION
Dresden stared at a public Syncapse report on his desk. The
report clearly stated that a Facebook “friend” was worth
Cdn$136.38. After all the analyses, Dresden found it annoying
that a company as complex and metric-focused as Syncapse
would be willing to reduce its Facebook friends to one value.
After reading the report in full, Dresden was even more
perturbed. The design of the study was unscientific; all of
Syncapse’s measures were situation-specific without much of a
case for external validity. Even within those situations, the
measures were lacking.
Dresden knew that many companies struggled to accurately
calculate social media ROI, but presented externally to existing
and prospective clients that there was a “magic formula.” Given
this competitive reality, what would Dresden do to craft and
finalize the value proposition and product offering for Online
Advertisers Social? He refused to mislead clients about metrics,
but everyone seemed to want something impossible. Could a
proprietary metric be built to measure campaign and community

14. management value? How should metrics be reported to clients,
as perfectly objective measures or as a probabilistic model?
Dresden began to think of social media management as very
similar to brand management. Spending a dollar today could
help create and sustain loyalty over the long term, but how
would the message be delivered to a client who wanted to know
exactly how much their money would make?
Dresden also had to seriously consider the value proposition of
Online Advertisers Social. With such a strong creative team
driving Online Advertisers’ success, it seemed nearly
impossible to solely focus the value proposition on data-driven
analytics.
Five Steps to Case Analysis Method
1. Define and state the business problem specifically. (Problem
Statement)
1. State your purpose (short term and long term goals) and
measurable objective. (Purpose/Objective)
1. Write two or three alternative solutions to the problem, and
evaluate the advantages and disadvantages of each. (Alternative
Solution

15. s)
1. Recommend the best one solution that will best meet your
measurable objective. (Recommended