Tuesday, July 24, 2012
Few can argue that social media has started to revolutionize the way people communicate with each other and brands. There is little that separates the consumer from the brands of the world. While social media usage among the online population remains high (ComScore reported that 80% of the worlds online population uses social media) we are still in the infancy of truly understanding the benefit of social media to the organization and the brand.The fad is starting to wane but with massive social networks like Facebook remaining, the ROI question is always front and center.
Our friends at the Altimeter Group released a new report today called, "The Social Media ROI Cookbook : Six Ingredients Top Brands Use to Measure the Revenue Impact of Social Media." The report is excellent and one of the better reports I have read on the overall impact and measurement of social media.
Let's first take a look at the issues presented at the beginning of the report taken from the large organizations interviewed and studied for this report.
- Quantifying Revenue Impact - Fifty-six percent of brands and agencies that Altimeter Group surveyed reported "the inability to tie social media to business outcomes" as the primary challenge to quantifying the revenue impact of social media.
- Changing Format and Data - Exists online and offline on multiple screens and changes daily. It is hard to measure and track a high volatile channel like social media.
- Ownership - Organizations don't "own" social media like they own their website, signage, building, and other marketing tools.
- Out with the Old - Social media changes so rapidly that it is hard to apply old measurement rules to the equation. They simply do not apply.
According to the Altimeter Group, several best practices emerged during their study. 30% of organizations claim to be highly effective at connecting social media to revenue generation. They define six ways to measure the impact of social media within the report. However, keep in mind that "while the six ingredients of measurement are consistent, the emphasis each company places on them depends on the nature of their business." Download the report and use the six ingredients as a guideline to help improve your insight into social media.
Six Ways of Measuring the Impact of Social Media
- Anecdote - specific examples where social media was known to influence a sale
- Correlation - number of Likes vs revenue
- Multivariate Testing - comparing groups exposed to different types of content
- Links and Tagging
- Integration - SaaS offerings with integrated analytics
- Direct Commerce - social eCommerce platform
Out of the six ingredients Anecdote, Correlation, and Links remain the primary positive impacts of social media within the brands identified in the report. "Qualitative approaches are more widely used than quantitative approaches; anecdote and correlation tied at 44% as the most popular ways to measure the revenue impact of social media, while links were a close second with 42%.
51% of respondents stated that social media measurement "enabled us to make better informed decisions based on social data."
Overall, the main business value of social media is the deepening of relationships with customers and the community. It is designed to pull insight from the customer community to enhance the decision making ability of leadership and brands.
The importance of building a solid business case around social media cannot be understated. The audience within the community requires constant care and feeding if you want them to return the favor no matter your measurement tools and/or strategy. The care comes in understanding the data behind the community in order to treat them as an individual rather than a mass audience.