The document discusses the complexities of measuring return on investment (ROI) in social media for Microsoft, highlighting the importance of both financial and non-financial outcomes. Key points include the application of economic concepts such as opportunity costs and various methods like affiliate marketing and social commerce to enhance social media ROI. It emphasizes that a comprehensive approach integrating paid, owned, and earned media is crucial for evaluating digital marketing effectiveness.

1. Verflixter ROI
Microsofts Weg vom Optimieren der Fanseite zur Erfolgsmessung
Marco
Rinne
(marinn@microso/.com)
04/16/2012

2. Key takeaways
1. There already are economic concepts to deal with social media ROI
2. Non-financial outcomes only help optimizing social media activities
3. Opportunity costs as ROI “workaround” help to select among
alternative investments
4. ROI is defined by (financial) gains
5. Affiliate marketing, advertising and/or social commerce can be valid
approaches to financial gains and to social media ROI (where applicable)

3. The “new” digital marketing: paid, owned and earned media
MS.COM
E-­‐Mail
NewsleQer
msn.de
Events,
Messen
OWNED
MEDIA
Microso/
Microso/
Partner
Channels
Microso/
Foren,
Ecosystem
Newsgroups,
Blogs,
CommuniJes
PAID
EARNED
Search
Engine
MEDIA
MEDIA
MarkeJng
3rd
Party/
Community/
Neutrale
Commercial
Social
Media
CommuniJes,
Foren
etc.
Blogs,
Display
AdverJsing
Microblogs
Social
Networks

4. Economic concepts behind social media ROI
Opportunity Costs
Friedrich von Wieser (November 1914)
“Theorie der gesellschaftlichen Wirtschaft”
(Theory of Social Economics)
“Opportunity cost is the cost of any activity measured in terms of the
value of the next best alternative foregone (that is not chosen).”
(Wikipedia 01/12)

5. Economic concepts behind social media ROI
The problem(s) we face:
• What’s the precise value of a social activity as a “next best
alternative” (opportunity costs)
• How do you calculate the gain from a social media investment?
(to use it in the ROI formula)

6. Measuring social media objectives
Exposure/ Action/
Engagement (Advocacy)
Awareness Conversion

7. Measuring social media objectives
Counting Facebook fans
Example: Development of German Windows fan page
40000 6000
Xbox DE Coop:
35000
advent calendar 5000
30000 action
4000
25000
20000 3000
15000
2000
10000
1000
5000
0 0
12/1/2010
12/3/2010
12/5/2010
12/7/2010
12/9/2010
12/11/2010
12/13/2010
12/15/2010
12/17/2010
12/19/2010
12/21/2010
12/23/2010
12/25/2010
12/27/2010
12/29/2010
12/31/2010
1/2/2011
1/4/2011
1/6/2011
1/8/2011
1/10/2011
1/12/2011
1/14/2011
1/16/2011
1/18/2011
1/20/2011
1/22/2011
1/24/2011
1/26/2011
1/28/2011
1/30/2011
Täglich Neue „Gefällt mir“-Angaben Täglich Gefällt mir nicht mehr Laufzeit „Gefällt mir“ insgesamt

8. Measuring social media objectives
Monthly growth rates and polynomial trend of Facebook fan page and German
brands on Facebook (Top 11-20)
30000 140000
120000
25000
100000
20000
80000
15000
60000
10000
40000
5000
20000
0 0
9 10 10 10 11 10 12 10 1 11 2 11 3 11 4 11 5 11 6 11
New Fans Lost Fans Fans (total) German FB Brands (avg.) Trend polynominal (R² = 0,96)

9. Measuring social media objectives
Tracking #likes, #comments and #wallposts
Activity / Engagement on German Windows Facebook fan page
800 1.20
700
1.00
600
0.80
500
400 0.60
300
0.40
200
0.20
100
0 0.00
9/1/2010 10/1/2010 11/1/2010 12/1/2010 1/1/2011 2/1/2011 3/1/2011
Daily Likes Daily Comments Daily Wall Posts

10. Measuring social media objectives
How users utilize the different forms of engagement on Facebook…
[Example] Engagement-Index (Windows Deutsch) - January - March 2011
1.20
1.00
0.80
0.60
0.40
0.20
0.00
1/1/2011
1/3/2011
1/5/2011
1/7/2011
1/9/2011
1/11/2011
1/13/2011
1/15/2011
1/17/2011
1/19/2011
1/21/2011
1/23/2011
1/25/2011
1/27/2011
1/29/2011
1/31/2011
2/2/2011
2/4/2011
2/6/2011
2/8/2011
2/10/2011
2/12/2011
2/14/2011
2/16/2011
2/18/2011
2/20/2011
2/22/2011
2/24/2011
2/26/2011
2/28/2011
3/2/2011
3/4/2011
3/6/2011
3/8/2011
3/10/2011
3/12/2011
3/14/2011
3/16/2011
3/18/2011
3/20/2011
3/22/2011
3/24/2011
3/26/2011
3/28/2011
3/30/2011
Engagement-Index Linear(Engagement-Index)
0.1 * #likes + 0.3 * #comments + 0.6 * #shares
engagement index =
page posts impressions (unique)
comments and shares normally are the more valuable form of engagement

11. Measuring social media objectives
Though the data is still available this index doesn’t scale well anymore…
… we’re evaluating a new index.
storytellers – fan adds (unique)
· 100
page posts impressions (unique)
Windows (deutsch) graph API excerpt

12. The transition to financial metrics
Exposure/ Action/
Engagement (Advocacy)
Awareness Conversion

13. The transition to financial metrics
total invest in SoMe platform
Exposure cost per fan =
# new fans in campaign timeframe
total invest in SoMe platform
Engagement cost per engagement =
# comments + # likes in c. timeframe
total invest in SoMe platform
Action cost per action =
i.e. # downloads in campaign timeframe
total invest in SoMe platform
(Advocacy) cost per referral =
# referrals in campaign timeframe

14. The transition to financial metrics
Windows Campaigns Q1-3 FY 11/H2
FY 11/H2
FY 11/H2
FY 11/H1
financial metrics (avg.)
Campaign (Digital)
Bridge
Holiday
Holiday
BTS
Windows campaigns (digital) Q1-3
Media Status
Budget total
Budget spent
Traffic Drivers Off-Net (paid)
Display (Banner-Placement)
Budget spent
cost per ad impression
Ad impressions
Clicks (Initial responses)
Initial responses rate (CTR
%)
cost per click
CPC €
Primary Conversions
(global&local)
Primary CR%
cost per action
CPA €
SEM (Holiday ab KW 47)
Budget spent
Clicks
cost per click (SEA)
CPC €
Primary Conversions
cost per action (SEA)
(global&local)
Primary CR%
CPA €
Total (Display+SEM)
CPC €
CPA €

15. The transition to financial metrics

16. An integrated campaign view (no either-or decision)
Digital marketing-mix in „real life“ campaign (one possible approach)
earned
investment
owned
paid
„integrated“ digital campaign timeframe

17. The transition to financial gains
Website
vs.
Social
Media

18. The transition to financial gains
Facebook XBOX DE affiliate marketing example
Amazon
media coop

19. The transition to financial gains
Amazon.de „Cyber Monday“ Coop
Call for Vote Facebook Engagement Limited offer
Dashboard Choose 1 of 3 products Order Units = Votes
Facebook Timeline post for winning product
Communities Timeline affiliate link

20. The transition to financial gains (social commerce)
Social commerce opportunities on Facebook …
source: JWT Social Commerce Trend Report Jul11
US/UK online survey n=971 (adults 20+)

21. The transition to financial gains (social commerce)
Facebook is theoretically well positioned to address something that the
Internet has been notoriously bad at supporting: product discovery.
But the key challenge is that Facebook is about socializing rather than
shopping. […] Facebook stores are unable to replicate the full brand
experience of a company’s official website […]
Sucharita Mulupuru, Forrester Analyst

22. The transition to financial gains (social commerce)
Windows PC Corner: Social Commerce approach

23. (some) pros and cons of this approach
PROS CONS
Model doesn‘t scale too well
• no ready-to-use tools
Social media can be evaluated and
• data has to be collected semi-
compared within the „paid, owned,
automatic
earned“-model
• manual comparison of paid owned
earned
Use of existing (and proven) ROI „hard“ ROI definition relies on alienable
definitions goods/services
Evaluation in financial metrics on cost Opportunity costs approach needs
and revenue side possible automated order/invoice system
No need to search for patterns in social
Baseline measurement necessary
„soft“ metrics and transactional data

24. Key takeaways
1. There already are economic concepts to deal with social media ROI
2. Non-financial outcomes only help optimizing social media activities
3. Opportunity costs as ROI “workaround” help to select the best
investment alternative
4. ROI is defined by (financial) gains
5. Affiliate marketing, advertising and/or social commerce can be valid
approaches to financial gains and to social media ROI (where applicable)