You Can Always Measure ROI for Social Marketing

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Ryck
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Re: WHAT ABOUT OTHER INFLUENCES?
Ryck   4/24/2012 5:11:29 PM
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Mitch, that is the conundrum.  Unless you can separate out other influencing variables, it is nearly impossible to determine each marketing component's true value.  That is why the software company I mentioned didn't try to attribute value, but more importantly to them, they looked at the combination of activities that yielded the most revenue--their ultimate goal.  As Scott identified in his response to me, this doesn't always work because you may be trying to measure some interim activity (ex. increasing web site visitors), not revenue.

Dwhite706
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Re: ROI of social Media
Dwhite706   4/24/2012 4:56:41 PM
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Mitch I agree. I have gotten great traffic from online campaigns that on the surface seemed great. But you know how many sales i got out of that traffic...... 0

smkinoshita
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Re: SMM ROI
smkinoshita   4/24/2012 4:50:28 PM
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@Mitch -- Strategically a failure, but if a company foolishly places value on Likes out of context the marketing activities themselves would be successful.  Essentially, the company would know what generates Likes even if they never do anything that clever with them.

I assumed that everyone here already knows that Likes on their own have little value...

Mitch Wagner
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Ryck - Capturing every customer touch point is the best case. But how do you then measure which ones were effective and which not?

Mitch Wagner
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Re: SMM ROI
Mitch Wagner   4/24/2012 4:46:28 PM
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@smkinoshita - If a campaign's goal was simply to generate Likes, then it was a failure no matter how many Likes it generates. Companes need to have a plan to DO something with those Likes. 

Mitch Wagner
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Re: ROI of social Media
Mitch Wagner   4/24/2012 4:44:59 PM
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@kicheko - The goal for social and other marketing should be driving sales. Traffic isn't a valid business result. 

OTOH, if sales aren't coming, then it might not be the fault of social marketing. Traffic is a good measurement of whether social marketing should be working, but great traffic numbers doesn't mean it is working. 

cvargas
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Re: SMM ROI
cvargas   4/24/2012 4:41:30 PM
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@DWhite

Most definitely.  And it also provides a proving ground as to what to expect in future SMM campaigns as well.

Dwhite706
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Re: SMM ROI
Dwhite706   4/24/2012 3:24:52 PM
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I absolutely agree with defining short and long term goals. It allows you to build on early success ( or not) and leverage those learnings for future iterations

smkinoshita
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"The only issue I have with your calculation of ROI, however, is that you seem to be assuming the social media campaign operates in a vacuum."

No, that's not what I'm assuming at all -- I meant to imply the opposite.

What I'm suggesting is that each aspect to be measured for ROI must have its expectations defined explicitly.  The idea being that one looks at the campaign as a whole, with each aspect -- social, advertising, web site, sales people, foot traffic -- being measured for its expected part.

If your example, we would have certain expectations from traditional media as well.  In a basic example, I'd be looking for increases in search traffic for the website based on our expected search terms based on the traditional media that went out, based on the timing of the media's release.

So if we predicted a 10% conversion rate defined as site traffic from traditional media and we expected the media to reach 1,000,000 people then we would expect the traditional media to deliver 100,000 visitors to the site, with each visitor having an approximate value based on the chances of making a sale.  If all our social networks can link directly, we can assume that traffic from social primarily comes from linking. 

Really drilling down to determine what has impact and what doesn't falls into the realm of controlled experiments in analytics, but that's not the point of this post.


Social meanwhile would have its own expected results, and its measured against its own expectations.  If we expected 15% traffic from social then its primarily measured against this expectation.

As to the credit for the sale, we'd be using analytics to determine the factors that went into the sale -- but since the expecatations were primarily traffic we're going to be looking for our primary ROI from visits.


Ryck
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WHAT ABOUT OTHER INFLUENCES?
Ryck   4/24/2012 1:18:13 PM
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Scott, I agree with your approach.  The only issue I have with your calculation of ROI, however, is that you seem to be assuming the social media campaign operates in a vacuum.  There are many marketing campaigns--digital and traditional--that touch prospects and have influence.  For example, someone may be looking for a product/service like yours and may have already been to your web site, read about you in a traditional media article and finally clicked on a link in your Tweet or on your Facebook page.  Do we give full credit to Twitter or Facebook for this lead?

This particular issue of determining the cause of a prospect to finally act has plagued marketing departments, even before social media came onto the scene.  Some companies focus on the first marketing activity to touch the prospect, as it started the ball rolling, yet others focus on the last, as it finally had the prospect pull the trigger.  One company I am aware of captures all the marketing-prospect touch points as part of the customer on-boarding process.  Understanding that prospects will be engaged by multiple marketing campaigns, this company's focus is not to isolate the one key activity and attribute credit, but to determine the optimal combination of marketing activities that yields the best results.

Considering all of this, I think social media marketing ROI, like any type of marketing campaign ROI, is still a difficult task.

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