social media roi: measuring success from a marketing perspective

Verflixter ROIMicrosofts Weg vom Optimieren der Fanseite zur Erfolgsmessung

Marco Rinne ([email protected]) 04/16/2012

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)

The “new” digital marketing: paid, owned and earned media

PAIDMEDIA3rd Party/

Commercial

OWNEDMEDIAMicrosoftChannels

EARNED MEDIA

Community/ Social Media

MS.COM

Microsoft Foren, Newsgroups, Blogs,

Communities

Neutrale Communities,

Foren etc.

Social Networks

Display Advertising

Search EngineMarketing

Microsoft Partner Ecosystem

msn.de

E-Mail Newsletter

Events, Messen

Blogs,Microblogs

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)

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)

Economic concepts behind social media ROI

Measuring social media objectives

Exposure/Awareness

Engagement

Action/Conversio

n

(Advocacy)

soft metrics• reach• # fans• friends of fans• impressions• referrals from

brand/productwebsite

soft metrics• storyteller• # likes• # comments• # shares• video views• picture views• …

soft metrics• engaged users• downloads• shop referrals• video views• …

soft metrics• external

referrers• shares• brand/product

recommend.• …


Counting Facebook fans

0

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10000

15000

20000

25000

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35000

40000

0

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2000

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5000

6000

Example: Development of German Windows fan page

Täglich Neue „Gefällt mir“-Angaben Täglich Gefällt mir nicht mehr Laufzeit „Gefällt mir“ insgesamt

Xbox DE Coop:advent

calendaraction


0

5000

10000

15000

20000

25000

30000

0

20000

40000

60000

80000

100000

120000

140000

31656149

11825

20195

31257

45012

61461

80602

102437

126964

New Fans Lost Fans Fans (total)German FB Brands (avg.) Trend polynominal (R² = 0,96)

Monthly growth rates and polynomial trend of Facebook fan page and German brands on Facebook (Top 11-20)


Tracking #likes, #comments and #wallposts

0

100

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800

0.00

0.20

0.40

0.60

0.80

1.00

1.20Activity / Engagement on German Windows Facebook fan page

Daily Likes Daily Comments Daily Wall Posts

Measuring social media objectivesHow users utilize the different forms of engagement on Facebook…

engagement index =0.1 * #likes + 0.3 * #comments + 0.6 * #sharespage posts impressions (unique)

1/1/

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10.00

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1.20

[Example] Engagement-Index (Windows Deutsch) - January - March 2011

Engagement-Index Linear (Engagement-Index)

comments and shares normally are the more valuable form of engagement


Though the data is still available this index doesn’t scale well anymore…

storytellers – fan adds (unique)

page posts impressions (unique) · 100

… we’re evaluating a new index.

Windows (deutsch) graph API excerpt

Exposure/Awareness

Engagement

Action/Conversio

n

(Advocacy)

soft metrics• reach• # fans• friends of fans• impressions• referrals from

brand/productwebsite

soft metrics• storyteller• # likes• # comments• # shares• video views• picture views• …

soft metrics• engaged users• downloads• shop referrals• video views• …

soft metrics• external

referrers• shares• brand/product

recommend.• …

The transition to financial metrics

financial metrics• cost per fan

financial metrics• cp

engagement

financial metrics• cost per action

financial metrics• cp referral


total invest in SoMe platform# new fans in campaign timeframe

Engagement

Exposure

Action

(Advocacy)

cost per fan =

total invest in SoMe platform# comments + # likes in c. timeframe

cost per engagement =

total invest in SoMe platformi.e. # downloads in campaign timeframe

cost per action =

total invest in SoMe platform# referrals in campaign timeframe

cost per referral =


Windows Campaigns Q1-3 FY 11/H2 FY 11/H2 FY 11/H2 FY 11/H1

Campaign (Digital) Bridge Holiday Holiday BTS

Media Status

Budget totalBudget spentTraffic Drivers Off-Net (paid)Display (Banner-Placement)Budget spent

Ad impressions

Clicks (Initial responses)Initial responses rate (CTR%)

CPC €Primary Conversions (global&local)Primary CR%CPA €SEM (Holiday ab KW 47)Budget spentClicksCPC €Primary Conversions (global&local)Primary CR%CPA €Total (Display+SEM)CPC €CPA €

cost per ad impression

cost per click

cost per click (SEA)

cost per action (SEA)

financial metrics (avg.)Windows campaigns (digital) Q1-3

cost per action


(paid) media

cost per ad impression

cost per click

cost per action

social media

cost per (message) impression

cost per (message) impression

cost per action

ownedmedia

cost per page

impression

cost per visit

cost per click / action

compare fair

long term vs.

short term

Fans participate

intentionally esp. in earned

channels

An integrated campaign view (no either-or decision)

„integrated“ digital campaign timeframe

earned

owned

paid

invest

ment

Digital marketing-mix in „real life“ campaign (one possible approach)

The transition to financial gains

advertising

ad networks

pay per click

text links

affiliate marketing

pay per click

pay per signup

pay per view

direct sales(social comm.)

services

products

digital distribution

indirectmethods

content syndication

partnering

Website vs. Social Media


Facebook XBOX DE affiliate marketing example

Amazonmedia coop


Amazon.de „Cyber Monday“ Coop

Call for VoteDashboardFacebook

Communities

Facebook EngagementChoose 1 of 3 products

Timeline post for winning productTimeline affiliate link

Limited offerOrder Units = Votes

The transition to financial gains (social commerce)

source: JWT Social Commerce Trend Report Jul11 US/UK online survey n=971 (adults 20+)

Social commerce opportunities on Facebook …


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


Windows PC Corner: Social Commerce approach

(some) pros and cons of this approach

PROS CONS

Social media can be evaluated and compared within the „paid, owned, earned“-model

Model doesn‘t scale too well• no ready-to-use tools• data has to be collected semi-

automatic• manual comparison of paid

owned earned

Use of existing (and proven) ROI definitions

„hard“ ROI definition relies on alienable goods/services

Evaluation in financial metrics on cost and revenue side possible

Opportunity costs approach needs automated order/invoice system

No need to search for patterns in social „soft“ metrics and transactional data

Baseline measurement necessary

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)

social media roi: measuring success from a marketing perspective

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