Sexy Numbers: Measuring ROI in Social Media Campaigns
Unless they are prefaced by dollar signs, numbers are not sexy, which is why social media experts have spent years avoiding them. Like the cool kids, they often seem more interested in being invited to the party than delving into what the party is for. The argument is often that numbers and metrics only serve as distractions to engagement and dialogue.
As a model matures in order for it to maintain a business role, make no mistake social media is about business, its impact needs to be quantifiable. Forrester Research estimates that social media will make up 3 percent of overall interactive marketing spend in the US in 2010 with the highest delta of growth in any channel over the next four years. As social media’s channel grows so will the pressure to quantify.
Brian Solis, author and principal of the FurtureWorks agency, recently posted a well written piece about the Maturation of Social Media ROI on Mashable. In it he tackles the main crux behind the issue that many CMOs are spending against social media without being able to quantify a return on those efforts. Brian believes this is:
â€œA direct result of not tying activity to an end game, the ability to know what it is we want to measure before we engage. Doing so, allows us to define a strategy and a tactical plan to support activity that helps us reach our goals and objectives.â€
Warm and Fuzzy Metrics
It used to be that simply being invited to or crashing the social media party was enough. Companies hired interns to catalog content and rushed to create Facebook Fan Pages and Twitter accounts, often because everyone else was doing it.
Then came what I like to call â€œwarm and fuzzy metricsâ€. Words like engagement, participation, and involvement became key terms for defining online interactions with consumers. Similar to views in CPM, these terms are measured in volume of followers or retweets. Influencers sprouted from this tactic as a way to amplify that volume; after all you wanted to have the best DJ at your party.
Then came terms like trust and affinity; these were less fuzzy in nature and involved a brandâ€™s core group of followers.
Of the warm and fuzzy metrics of social media ROI, only customer service is tangible. Both in terms of the increased ability for people to rate and review products, as well as the opportunity for customer service teams to engage and provide proactive response.
If your company is just participating in social media than maybe the fuzzy metrics are enough. If your company is running social media campaigns and considers social media a marketing channel than fuzzy metrics are a great way to get your budget slashed. It is no coincidence that, according to MarketingSherpa, inability to measure ROI, lack of budget funding, and management resistance are barriers to companies implementing social media campaigns:
For those who insist that â€œmarketing is not salesâ€, I invite you to use that exact statement with your CMO and see how quickly your budget is diverted elsewhere. As David Vellante, co-founder of ITCentrix, Barometrix, and The Wikibon Project, cautions:
â€œIâ€™ve seen multimillion-dollar print and television advertising initiatives get the green light because CMOs understood the media — and Iâ€™ve seen $10,000 social-media efforts scratched because execs didnâ€™t get it.â€
The Key is Return on Ad Spend
ROAS (Return on Ad Spend) is what many CMOs will look at when considering budget allocation against a marketing channel. By definition it has a tighter set of parameters than ROI because it doesnâ€™t consider less fuzzy elements like branding or engagement. This metric for success is specifically looking for a direct dollar value generated as compared to the actual budget being spent.
If, as a study by Bazaarvoice indicates, 80 percent of CMOs expect upwards of 5 percent of their revenue to come through the social media channel then the spend against generating revenue better be tracked.
According to Fast Company, Dell made over $3 million in revenue through the Dell Outlet account on Twitter. Â But, considering much of what happens in Dellâ€™s Twitter account is coupon or offer driven, what was the true ROAS of hitting that $3 million? Never mind the additional cost of coordinating social media tactics and messaging within a company as big as Dell which, as Lionel Menchaca, Chief Blogger for Dell Inc says is challenging, â€œExecuting against all those [social media] strategies will take a lot more effort and collaboration between many departments within the company.â€
More telling is a recent report by Omniture on the impact of a social media campaign for National Geographic. While the campaign was seen as a success, in the report the Omniture analyst states that traffic from social media is 20x less likely to purchase than average visitor.
Laying the Foundation
What rings true for Dell is true for both large and small business interested in participating in social media.Â Collaboration between all stakeholders is necessary in order for a campaign to reach its potential.Â Here are the steps you need to take to lay a proper foundation for launch.
- Know Your End Game: As Brian Solis said defining your end game is necessary in order to be able to quantify results. Â Know what are you trying to accomplish and how you want to try keep track of it all.
- Define Your Metrics: What metrics do you need to track to quantify results: Leads, Registration, Sales?
- Check Your Tracking: I canâ€™t tell you how often a new client doesnâ€™t have the right pixel/cookie set on the right confirmation page. If your success metric is sales make sure youâ€™re not just tracking leads. This requires testing.
- Set Expectations: Benchmarking is great way for you and your CMO to have realistic expectations from a campaign. Fireclick and Coremetrics are two tools that can provide benchmarks based on industry averages related to conversion rates, cart abandonment, and other valuable data. They also allow you to pull data from a specific vertical.
This is where you gather the numbers that will let you know how your campaign is doing and where the dollars are. There are a lot of tools out there that will provide pretty dashboards but few that provide useful data. Here are some of the tools I recommend:
- Google Analytics: Google Analytics is the defacto analytics system in most companies. You can track visits, page views, bounce rates, etc. Be sure, if sales are a key metric, that the ecommerce portion is activated.
- Hitwise: Owned by Experian, Hitwise relies on ISP data of approximately 10 million users in the United States alone. Although an expensive solution, their Clickstream data provides some of the best intelligence on upstream and downstream traffic to your website.
- Coremetrics: Along with their benchmarking services Coremetrics offers an analytics suite whose main differentiator rests in what they call their LIVE (Lifetime Individual Visitor Experience) Profiles. This is essentially an analytics expansion on the concept of customer types.
- Fireclick: Owned by Digital River, is a streamlined version of many of the tools available for free through Google Analytics but in an easier to customize interface. The main advantage here is their Advanced Marketing Suite which ties you into other vendors and components in the Digital River portfolio.
- Radian6: Radian6 is a buzz monitoring software that allows you to monitor certain keyword sets and capture data round them. The data includes such things sentiment, engagement, reach, and inbound links. It also allows you to port that data to your CRM.
- HubSpot: In some ways HubSpot is more of a site optimization tool than an analytics tool. It does compile interesting sets of data around competitors and around reach as well as lead identification tools.
- Omniture: I have a love/hate relationship with Omniture. Used correctly, with sufficient internal technical resources as well as buy-off from the marketing team on consistent use of campaign hierarchy, SiteCatalyst along with the other Omniture, is an amazing if overly complicated resource. It is however a very expensive one and there is a reason that Omniture holds yearly conferences on how to use their product.Â They have a great Facebook app measuring toolset.
Making Sense of it All
Having the tools to capture the data you need is great but numbers are of little value if they are not actionable.Â Here are some guidelines to avoid drowning in the data:
- What to Do When the Numbers Donâ€™t Match: First of all get the notion of the numbers matching out of your head. The numbers between two analytics systems will rarely, if ever, produce an exact match. The objective is to look for trends in the data and ignore anomalies that are not statistically relevant. If the data matches within 10 percent or less variable then consider the data to be inline. If the variant is 11 percent-49 percent then it might be worth doing some due diligence. For instance are all the pages that should be tagged, tagged correctly? If the variant is greater than 50 percent then something is wrong with the setup itself or with one of the systems you are using.
- Spotting Trends is Vital:One of the most common mistakes I see is when business get excited about high sales numbers while completely ignoring the fact they overspent to get those numbers. Sales matter little if ROAS is in the negative. Trends are a great way to spot deltas which often provide indicators of the health of campaign. Sample key trends are:
- number of new to file customers
- number of transactions
- changes in repeat customers
- number of customer referrals
- uplift in other marketing channels
- Looks for Wildcards and Outliers: Sometimes you are so focused on the campaign data that you become blind to important clues. My favorite personal example of this was during the measurement of a campaign that Jones Soda ran with I Can Has Cheezburger in 2008. If you looked just at the number of sales that directly came from the I Can Has Cheezburger website the campaign numbers barely broke even.Â However, when we looked closer at the analytics data we saw 12,000 additional posts created because of the campaign. When attributable sales from those posts were factored in sales showed 172 percent month-over-month growth and 42 percent year-over-year growth! With the amount of distribution sources available in social media always take time to see if elements of your campaign have been distributed beyond the initial sites you targeted. It will allow you to spot new opportunities to expand your campaigns.
If you are managing a social media campaign or are a business eager to launch into social media, remember to embrace the numbers. Numbers are sexy. They help spot costs and inefficiencies you could avoid; help identify opportunities you could be missing; and often determine which budgets will be renewed.Â Â The dollar signs are there, you just have to know where to look.
About Angel Djambazov
Born in Bulgaria, Angel Djambazov has spent his professional career in the fields of journalism and online marketing. In his journalistic career he worked as an editor on several newspapers and was the founding Editor-in-Chief of Wyoming Homes and Living Magazine. Later his career path led to online marketing where while working at OnlineShoes he earned the Affiliate Manager of the Year (2006) award at the Affiliate Summit, and In-house Manager of the Year (2006) award by ABestWeb.
For four years Angel served as OPM for Jones Soda for which he won his second Affiliate Manger of the Year (2009) award at Affiliate Summit.
Currently Angel serves as OPM for KEEN Footwear and MedicalRecords.com. His former clients include: Dell, Real Networks, Jones Soda, Intelius, Graphicly, Chrome Bags, Onlineshoes.com, Vitamin Angels, The Safecig, and Bag Borrow or Steal.
Angel is the Editor-in-Chief and Co-Publisher for ReveNews.com and ReveNews.org.
Angel lives north of Seattle, spending his free time reading up on obscure scientific references made by his wife MGX, while keeping up with a horde of cats and a library of books.
You can find Angel on Twitter @djambazov.