The document summarizes a conference presentation on developing a framework for measuring the effectiveness of social media marketing communications. It reviews literature on social media marketing, metrics, and marketing performance measurement. Key points discussed include: 1) Social media enables more engagement and interaction between companies and customers 2) There is a need for new marketing performance metrics for social media given its interactive and collaborative nature 3) Effective social media metrics can be qualitative, quantitative, or financial in nature and should be tailored to a company's specific objectives and strategies.

1. Conference
of the EuroMed Academy of Business
21.10.2011
Aarne Töllinen, Heikki Karjaluoto / Jyväskylä University School of Business and Economics

2. • Social media has gained significant interest both in science and
business
• Marketing Science Institute
– Customer engagement as a top research priority for marketing
academics (MSI, 2010)
– New frameworks and methods that link existing marketing metrics and
marketing performance measures with new media (MSI, 2010)
– Marketing measurement and metrics (MSI, 2000; 2002; 2004; 2008)
• Business

3. We ask…
... Is there a need for new marketing communications
performance metrics for social media?
So, we try to develop a framework for measuring the effectiveness of
social media marketing communications.
TO DO THAT
We review and collate the literature on social media marketing, social
media metrics, and marketing performance measurement. The
Literature is collected from
The most recent social media books and article
The studies related to marketing performance measurement

4. Social media
• Social media is collaboratively produced and shared content
published through the internet. The term refers to networked
digital platforms, which are used in communication between
human beings.
• Social media is new, but a permanent environment for marketing
– Business invests $6 billion in social media in 2011
• The shift toward engagement and interactive communications
– From many to many
– Customer participation & customer interaction
– UGC / UGC
(van Zyl, 2009; Riegner, 2007; Hearn et al., 2009; Aho Williamson, 2011; Weinberg and Pehlivan, 2011; Dennis et al., 2009; Liu et al., 2011)

5. • With social media one could equally be a content creator and
a content consumer.
• In social media, neither the customer nor the company is a
king. The king is the content.
Web 1.0 INTERNET Web 2.0
Platform for information Platform for influence
(Hanna et al. 2011; Parent et al. 2011; Kietzmann et al. 2011)

6. Perspective to Social Media Author(s)
viral marketing Kaplan and Haenlain, 2010; Ho and Dempsey, 2009;
word of mouth Steffes and Burgee, 2009; Cheung and Rabjohn, 2008; Brown et al.,
2007
ecosystem Hanna et al., 2011
customer engagement and Parent et al., 2011; Muñiz and Schau, 2011; Kaplan and Haenlain,
participation 2011
marketing budgeting Weinberg and Pehlivan, 2011
corporate internal communications Hearn et al., 2009
organizational knowledge management van Zyl, 2008
history and development Boyd and Ellison, 2008; Kambil, 2008; Schibrowsky et al., 2007
conceptual studies Karakas, 2009; Constantidines and Fountain, 2008
relationship marketing and customer Quinton and Harridge-March, 2010; Ozuem et al., 2008
interaction
direct marketing Palmer and Koenig-Lewis, 2009

7. • Why social media? (according to marketing literature )
– FIRST, marketing communication created by customers has been
proved to be more credible in customers’ eyes than the messages
promoted by an organization, and so to have a more powerful impact
on decision making (Riegner, 2007).
– SECOND, UGC may increase customers’ value experience, because of
interactive and fluent customer service and better opportunities to
participate in product and service creation process (Muñiz and Schau,
2011).
– THIRD, active interaction and customer based content creation helps
companies to build long-term competitive advantages (Parent et al.,
2011).

8. • Marketing performance • The research have advanced
measurement = gaining only sporadically
calculable and provable results
from marketing activities – Marketing productivity (the
efficiency approach)
Financial (e.g. sales, savings)
– The marketing audit concept
Non-financial (e.g. brand awareness, (the effectiveness approach)
customer satisfaction)
• The ability to measure
marketing performance
Quantitative (e.g. visitors, leads) positively affects firm
performance and reporting
Qualitative (e.g. sentiments, frequency mediates the
reviews) relationship
(Morgan et al., 2002; O’Sullivan et al. 2007 and O’Sullivan et al. 2009

9. • The digitalization has radically altered the ways in which
firms can monitor their customers and collect data from
their marketing communications
Companies do not understand what KPI`s they should measure?
How to measure the new kind of interactive marketing
communications?
(Phillips and Halliday, 2008)

10. • The simplest measurement model includes actions (inputs) and profits
(outputs)
• Ambler et al. (2001) propose that “metrics” should be limited to
performance measures which are high level, necessary, sufficient,
unambiguous, and ideally, predictive.
– Marketing metrics should be calculable, in quantitative form, and auditable –
in other words, reliable and professionally sourced (Ambler, 2002).
Marketing
Business Marketing Marketing Marketing measurement METRICS
strategy strategy objectives tactics
strategy
Phillips and Halliday, 2008; Ambler and Roberts 2008; Seth and Sisodia, 2002

11. • Challenges:
– Short-term and Long-term effects
• the answer: brand equity?
– The continuous change in business environments
• the answer: multiple metrics?
– The lack of shared marketing-accounting language:
different objectives, different tools, different metrics
• the answer: deeper co-operation between marketing &
accounting?
Ambler et al. 2004; Seth and Sisodia 2002; Sidhu and Roberts 2008

12. KPI discussion ROI discussion
• ROC (return on a customer) • According to AMA ROI measures
are:
• NPC (net promoter score) – incremental sales revenue
– ratio of cost to revenue
– cost per sale generated
• NPV (net present value) – changes of financial value of sales
generated,
• CLV (customer lifetime value) – cost of new customer, cost of old
customer retention.
• CE (customer equity) • According to Ambler and Roberts
(2008) none of those is really an
• Shareholder value ROI metric.
Peppers and Rogers 2005; Reichheld 2003; Ambler and Roberts, 2008)

13. “CP can be considered, with some adjustments,
equivalent to the CLV over a period of one accounting
year, it is possible to see the inter-relation of these two
terms. Since CE is defined as the sum of all current and
future customers’ lifetime values, we can clearly link CE
with CLV by adding the NPV of future customers to the
sum of the individual CLVs of all existing customers.”
Sidhu and Robers 2008

14. • Social media analytics is a fresh concept, but it is
based on the old principles of business analytics
• ROI discussion
– Financial measurement and non-financial measurement
Barlow and Thomas 2011; Blanchard 2011; Turner and Shah 2001; Arikan 2008; Delahaye Paine 2011; Hanna et al. 2011

15. Qualitative Metrics Quantitative Metrics Financial Metrics
Negative mentions Number of shares Average buy
Positive mentions Number of retweets generated Average yield per transaction
Recommendations Number of outbound replies ROI
Product reviews Number of click-throughs EPL = earnings per lead
Geographic distribution of Number of customer service Customer lifetime value
mentions requests
Consumers thoughts Number of comments Cost per acquisition
Consumers feelings Frequency of transaction Value of online transactions
Number of bookmarks Value of sales
Number of inbound visits Value of conversions
Number of subscribers CPM
Number of event attendees Value of leads generated
Bounce rate Value of prospects converted
Conversions Value of customer retained
Costs

16. Findings
• The digitalization has enlivened the discussion around marketing performance
measurement during the last ten years
• New technologies enable more precise qualitative and quantitative marketing
communications measurement
• When companies engage with their customers, the focus of their marketing
measurement should be on the customer reaction to the tactics employed by their
marketers.
– Marketing measurement metrics should also be customer oriented
– The digitized environment facilitates reaction tracking and marketing communications
measurement.
– Marketing measurement models developed in the past 40 years are still usable, and even
more important than ever (customer satisfaction, CP, CLV etc.)
– The shift towards a digitized interactive marketing environment does not necessarily mean
that a whole array of new measurement metrics is needed.

17. • The marketing communications measurement must be company
specific
• That the marketing communications measurement must base on
company strategy
• Especially in the social media context, but also in a broader sense,
marketing performance should be measured with several metrics
• There is no broadly accepted opinion of a single KPI
• Social media marketing metrics can be categorized in three groups:
qualitative, quantitative and financial

18. COMPANY STRATEGY
MARKETING STRATEGY
SOCIAL MEDIA MARKETING OBJECTIVES (short- & long-term)
SOCIAL MEDIA MARKETING TACTICS
SOCIAL MEDIA MARKETING MEASUREMENT
ROO
EVALUATION
Return On Objectives
Goal A Goal B Goal C Goal D Goal E Goal F
Qualitative Quantitative Financial
measurement measurement measurement
Sentiments, Number of… ROI, Profits, Sales,
Thoughts, Followers, Clicks, Savings, Costs, CLV,
Emotions, Feelings, Mentions, Shares, EPL, CPA, Value of
Tones, Mentions Replies, Requests, leads generated
Reviews Comments,
Bookmarks,
Bounce rate

19. • A large share of the literature concerning
social media marketing measurement is
managerial
• We combine traditional marketing
performance literature and social media
marketing literature
– Not conclusive, but indicative results

20. • How companies have combined the increased interest
both in social media and in marketing performance
measurement in practice.
• How has the movement towards social media changed
measurement practices?
• An interesting question is whether the popularity of
marketing accounting will continue to increase or
perhaps we are moving towards more qualitative type
of measures, or a mix of the two forms?