DB

Table of Contents. Getting a handle on social ROI 4

Two perspectives on social ROI 5

Understand your investment 6

A framework for calculating cost 6

Looking at the customer journey 7

The Social ROI to Your Goals. 8

Brand-level social goals 10

Which metrics for which goals? 11

Tracking brand campaigns down to the dollar 12

Correlation tracking 12

Conversion Lift 12

Advanced calculation 12

You can’t measure everything 14

“Hard” ROI 15

Campaign tracking 16

Attribution models 17

Optimising with analytics 18

ROI measurement approaches 19

ROI: strategically critical 20

Social Marketing is Now a Major Business Activity.

Teams and budgets have grown, and tools and channels have proliferated. This has increased both the challenge and the importance of measuring the ROI of social media marketing for the majority of brands. Knowing the impact of their social marketing activities is critical for any company that wishes to be strategically smart on social. It is also crucial as customer experience has emerged as the key competitive differentiator among brands. The aim of this handbook is to give the knowledge, tactics and tools to help brands better understand the value of their social marketing in terms of ROI.

Getting a Handle on Social ROI. An ongoing challenge for social media professionals is the widespread belief that its value can’t be accurately measured. But with the right tools and tactics, it’s entirely possible.

A s important as it is, measuring social ROI remains difficult for many brands. According to the most recent CMO (Chief Marketing Officer) Survey* of 289 US marketing executives, just 11.5% of marketers have been able to prove the impact of social media on their business quantitatively. 47.9% say they’ve been unable to show any impact at all.

However, these discouraging figures are somewhat tempered by the Survey’s finding that 40.6% have a “good qualitative sense” when it comes to social ROI, but lack a quantitative assessment to go by.

The potential for returns on social media, however, is at an all time high. The number of people who use social media worldwide, the amount of time they spend on social channels and the percentages of purchases influenced by social media mean that social marketing can have more of an impact than ever before.

Companies are also investing more in social - both in a financial sense, and also in terms of time and focus, on an institutional and departmental level. Respondents to the CMO survey also said that spending on social media marketing will grow to comprise nearly 20.9% of total marketing budgets in the next five years.

A company that can accurately measure the return on investment for its social media activities can allocate its resources better, improve performance across campaigns, and ultimately drive better results for their entire business via social.

*a semiannual survey of AMA members and marketing professionals at Forbes 1000 and Fortune 200 companies

Two perspectives on social ROI

1. There’s been much debate about measuring ROI for social media marketing. Some have argued that while it would be extremely useful to be able to grasp the ROI of social media marketing, social is most suited to accomplish goals that do not lend themselves to easy or accurate measurement, like building awareness and visibility. Gary Vaynerchuk, one of the most prominent names in the field of social media marketing, has said that “anyone who asks (what the ROI of social media is) is a losing player.”

2. Others cite the potential inherent in social media to track actions taken by users, and to tie those directly to on-site behavior, including sales. They say that social media provides greater opportunity to track and optimize ROI than other channels. Writing on ClickZ, a leading social marketing site, Overdrive CEO Harry Gold said “Social media is one of the easiest things to track the ROI from.”

Though seemingly contradictory, both of these perspectives are useful. It’s true that objectives such as building awareness, increasing customer loyalty, and engaging customers can be hard to quantify in financial terms. This, however, does not mean that measuring the ROI of activities aimed at meeting these goals is impossible.

Collecting KPIs like app downloads, completed registration forms, and products purchased all provide some evidence that your social media programs are generating tangible returns on investment.

This handbook will address measurement tactics and ROI for both sets of activities—those geared towards brand-level goals, like building visibility, as well as those that aim to push bottom-line numbers like leads and sales.

Understand Your Investment. Most of the conversation about social ROI focuses on getting a more complete or accurate picture of the returns from your social marketing.

But precisely quantifying how you invest in social media marketing is a critical part of the ROI equation, and worthy of more attention from many brands. Investments in social media marketing can come in a variety of forms. Looking at your overall marketing spending and determining exactly how much is devoted to social is not easy, but is necessary for a clear picture of the social ROI.

A framework for calculating cost Though extensive knowledge of different account systems may not be necessary to measure your social investment, having a model to track cost can certainly be useful.

Activity based costing (ABC), though developed for large manufacturers, can help determine expenditures on social media. Activity based costing can give a clearer view of overall costs by accounting not just for direct expenditures, but also for the costs of all the various inputs involved in the activity.

This is particularly useful because some costs for social marketing are more apparent than others. The specific amount you spend on paid campaigns on social media, on total and per-network basis, can be easily tracked. An agency or freelancers that handle part of your social presence invoice you for services. The cost of tools you use to manage social media needs to be taken into account.

But if your social media marketing is done in-house, accurate calculation of your investment requires taking into account, for starters, the time spent by each of your employees on social marketing tasks and the salaries of those employees. Technology for employees working on social, the cost of ensuring compliance with data privacy laws for social in different countries—all of this must be considered when calculating your investment in social media.

Without a clear picture of what goes into social, your returns will have no context, and understanding ROI is impossible.

Social-specific costs can include:

• Salary costs for dedicated social employees

• Paid social media

• Content creation costs

• Social management tools

• Agency, freelance costs

Secondary social costs can include:

• Time spent on social by non dedicated employees

• Equipment and time costs for non- dedicated social employees

• Cost of compliance on social across

Looking at the Customer Journey. Measuring returns in the often complex social landscape is a multifaceted process. Your overall business goals, your social strategy, and a host of other factors can play a role in how you track the impact of your social media marketing.

To get a clear view of ROI on social media, it’s necessary to take a high level view of your social presence.What do you do on social media, and why do you do it?It may be helpful to start with the customer journey. We know that this is no longer linear. There’s an increasingly fragmented sea of touch points now separating consumers and brands. Consumers will engage with said brand however and wherever they choose. The presence of so many channels means it’s an ongoing struggle for marketers to meet their audiences with the right message at the right moment in the customer journey. The challenge brands face is having the right tools and processes to discover, attract, engage, and connect with customers. And to provide the kind of customer experience across touchpoints that retains loyalty.

Look at the model above and determine which activities your company is participating in, or plans to address in the near future. Each activity within the steps of the customer’s journey to draw closer to your brand should have its own goals that will provide the KPIs you need to calculate ROI.

Tie Social ROI to Your Goals. A nd how does all this translate on to social media? At the earlier phases, as well as in the post-purchase stage, brand-level goals aim to increase awareness, visibility, and positive customer experiences, in order to be a part of the initial set of brands considered, or to replace one of those brands before the moment of purchase.

Further on in the customer journey, social goals are aimed at driving direct actions, whether in the form of a website signup or a sale. Think about how your customers’ social activities combine with non-social activities - for example, do you know which of your social media followers are current customers? Can you correlate a customer service interaction with a positive endorsement of your brand? Can you re-target future customers based on who is talking about your competitors? Remember that ROI can mean more than pure income - if you’re able to match social activities with increased customer retention rates, positive sentiment, decreased ad spend then you justify your social budget and its role in your company overall.

Initial Consideration

Set

Moment of Purchase

Evaluation

Loyalty

Postpurchase

Trigger

The more you know about your customers, the more informed your targeting decisions become - and a connected user profile ties that

information together and displays it in a single overview.

Measuring returns for all these activities is a challenging, evolving process, but it’s one that’s essential. It starts with clear definition of your social goals.

Brand-level Social Goals. I t may be useful to first look at the ROI of social marketing that’s oriented towards brand-level goals, like increasing brand awareness and visibility. Social media has had a tremendous impact on these functions. Brands large and small have used it to create conversations and awareness at scale. The size of the major social networks’ user bases mean that marketing messages have the potential to be seen by a staggering number of people. A single viral campaign can boost your brand awareness or name recognition exponentially - brand awareness more than immediate revenue, as awareness campaigns are much more suited to going viral than sales campaigns.

At the same time, organic reach on popular networks like Facebook is diminishing as they seek to monetize their services. Paid display ads are an increasingly important part of a comprehensive, effective campaign, and by far the best way to get your messages in front of the people to whom they will be most relevant.

Because there is an actual dollar value attached to every paid ad, calculating ROI is not only easier, but vital. You can get a handle on the ROI of these activities by clearly establishing goals, and intelligently laying out metrics and benchmarks to track progress towards them.

Branding goals can include:

• Increasing brand awareness and visibility

• Strengthening brand image

• Growing positive brand sentiment

• Increasing consumer involvement with the brand

• Building relationships with influencers.

Which metrics for which goals? Some metrics built into social networks can go a long way towards measuring progress in terms of these goals. The number of engagements on a given social network offers evidence for the level of awareness of your brand on that channel.

The number of engagements on a per fan/follower basis can help give you an idea of how much your customers have invested in your brand, in terms of how much time they spend, and how much they like the content you’ve created.

Listening tools can help you measure the total amount of conversations that discuss your brand across the entire web, helping you understand how visible it is more broadly. Measuring the sentiment of these conversations is also possible, and gives you a picture of how positively people feel about your brand.

Trying to analyze each of these statistics manually across multiple social networks is a major time

commitment. Using a tool like Audience, it is possible to collate all of these figures to get a better overview of your social interactions. You also have the option to drill down into the data to get deeper insights.

Relationships with influencers can be tracked on a case-by-case basis, as can the conversations, traffic and engagement they drive.

The metrics associated with these goals can be quantified on a network-by-network basis, as well as on an aggregate level. They can be benchmarked against competitors, measured for specific time periods, and tracked on an ongoing basis to see how your company is progressing in terms of brand goals on social.

Business Goals

To be the market leader by 2018

Social Media Objectives How can social media contribute to

the goals of our company?

Social / Digital KPIs Which metrics will tell us if we are on

track to reach our objectives?

Aligning social with your business goals

Tracking brand campaigns down to the dollar Looking at social returns in terms of progress towards goals like building brand awareness goes a long way towards helping you understand the impact of your social media marketing. Quantifying those returns in the form of exact dollar values, however, is another issue. Tracking financial returns on distinct investments in awareness advertising and marketing has been a challenge for as long as brands have been marketing. Complex frameworks for tracking the overall impact of various types of marketing across multiple channels, like the marketing mix model, have been developed with an aim of measuring the bottom line impact of all these messages.

On social, companies have generally moved away from assigning a dollar value to, say, each Facebook fan, and for good reason—these calculations largely ignored the quality of the fans, rendering the numbers they came up with for the value of each useless, and, perhaps worse, creating incentives to pursue new fans with no regard to how likely they were to become customers, or how relevant the tactics used to engage them were for the brands.

Brands are still evolving in terms of techniques for associating returns to investment in branding-level goals. The ability to track the exact dollar amount of all returns on social is still out of reach. But certain tactics, applied well, can give an excellent idea of the ROI of many of these social media activities.

Correlation tracking Detailed correlation tracking over time, with thorough controls for variables, offers a high-level view of the impact of social media activities. For example, Fame House, an agency that helps entertainers manage their digital presence, created a dashboard that draws data from Fame House’s social media channels, website and ticket sales. The data is then normalized and graphs are created. Fame House can therefore map social media activities against website visits, newsletter opt-ins, and ticket sales.

Conversion lift Facebook has increased the attention it pays to measuring how campaigns can impact bottom lines beyond click tracking. They have recently released capabilities for advertisers to measure what they call “conversion lift.” Essentially, this tracks progress towards a goal for two groups—a control that doesn’t see Facebook ads, and one that does. This model can help measure the impact of advertising beyond just a call to action and immediate conversions.

Advanced calculation Paid display ads are increasingly important to increasing awareness, which is why organic social is of significant financial value. The more mentions you can generate on social channels, the more free display advertising you generate. For example, Facebook has been reducing the organic reach of posts from brands for some time as a way of driving up ad spend - so to keep your budget under control, having people re-share your content is vital to achieving “free” awareness and recover some of that missing organic reach.

Again, similar calculations can be applied to photos, videos and any other asset that you would normally pay to have created and shared online.

N = Number of online articles/assets that focus on your brand or products

AV = Asset value ($)

C = Equivalent cost of creating the same content yourself ($)

N * C = AV

Increasingly marketers are interested in user generated content to fuel campaigns and increase engagement - but even these assets have a dollar value. Consider:

The same basic calculation applies to social web ads, or clicks from social posts indexed in search engines.

You can calculate the value of every mention quite simply where:

X = Number of brand/product mentions

DAV = Display ad impression value ($)

Y = Cost per impression equivalent display ad cost ($)

X * Y = DAV

N = Number of qualified leads coming through social channels

LTV = Lifetime customer value ($)

P = The lead-to-customer conversion rate (%)

N * P * LTV = SCV

Your data allows you to gain almost any insight you need when armed with the right calculation. You can even place a dollar value on the lifetime value of your social media customers like so:

SCV = Social customer lifetime value ($)

You can’t measure everything The returns on some investments will always be difficult to quantify with anything resembling precision. Offline, and in certain industries, there is a more established precedent for running these types of campaigns. It is done because the competition does it, because it’s what you’ve done before, and it has shown a positive ROI, if not a precisely measurable one.

On social, because there is a greater possibility of measuring returns, it can be tempting to shift spending to where it is more easily tracked. There are some

brand-level activities whose impact will not always be immediately felt in terms of ROI, but that are still critical to the success of your brand—a single positive interaction with a potential client, whether or not they purchase immediately, still has an overall effect on the strength of your brand.

In terms of KPIs, the value of such interactions can go far beyond vanity metrics such as likes or comments to positive reviews and sign-ups.

“Hard” ROI. Direct response, traffic, conversions, and campaign tracking.

Social’s usefulness as a branding channel doesn’t outstrip its ability to drive traffic, signups or conversions. Understanding progress towards these goals is potentially more straightforward than for branding-level goals, but still, a true view of ROI here involves multiple considerations. Social campaigns geared towards driving sales can be organized in any number of ways. They can be run simultaneously on multiple social networks, or confined to a single one, they can be comprised of a combination of paid and owned media, or primarily based on one or another. They can be based on a single product, or promote a brand-wide sale.

If, for example, you are running a Twitter ad campaign to drive sales of a single product, you know how much you spend, on an overall and on a cost-per-action basis, and, through campaign tracking tools, you can see how much in sales is driven by the campaign.

Different tactics can be used to help you calculate the “hard” ROI of your social marketing.

Campaign tracking Campaign tracking, though too big a topic to tackle in detail here, is an essential tool for measuring the ROI of your social campaigns. Though, of course, not limited to social, campaign tracking works the same there as it does elsewhere. You categorize your campaigns, for example, by name and source, and corresponding parameters are added to links. With an analytics tool—Google Analytics is by far the most popular, but Omniture and Webtrends are in wide use as well—behavior, from clicks to time-on-site to conversions, can be tracked based on those parameters. Salesforce also lets you add tracking codes to the links you share. This makes it possible to correlate a lead to a particular campaign.

The level of detail you tag with depends on your needs. You have the ability to see how many leads or conversions are driven by social posts on different networks, paid or organic, with different types of content or calls to action, among other things.

If you know the value of a conversion for your company, campaign tracking gives you a direct look at returns for the social campaigns you’ve tagged. If you’ve assigned value to other metrics, like sign-ups or downloads, analytics can also assign a direct monetary value to the returns of your social campaigns.

Example: Let’s say your website has a typical conversion rate of 0.5%, and customers spend an average of $100 per visit. If your post reaches 200,000 followers and 2% of them click the included link, you should make 20 sales - making that one update worth $2,000.

You can track those numbers over time—see the performance and the evolution of performance for various networks, post types, creative, products, timing and more. Data analysis can help you pull out insights into what elements lead to higher returns, enabling you to optimize your marketing results.

Attribution models The customer journey, however, does not always begin on social and end immediately after a sale. When a consumer who interacts on social multiple times as well as with other owned digital channels does ultimately purchase, where does credit belong from a marketing perspective?

Attempts have been made to meet this challenge. A simple iteration is the last touch attribution model, which considers the last point at which a prospect interacted with a brand online to be the channel of conversion. First touch attribution can also be used.

Multi-touch and weighted attribution models, though more complex, increase the precision of your

measurement. Multi-touch attribution credits all the trackable points at which a consumer interacted with a brand before purchase — for example, an email clicked, a social post engaged with, and a social ad that was clicked on and ultimately led to a purchase. Weighted attribution apportions the amount of a sale (the return) that “belongs” to each channel based on the amount the customer interacted with it. Using tools such as Falcon’s Audience, you can start to build a clear picture of who has touched a customer with which campaign, to see which activities drive results.

Optimizing with analytics Tagging social campaigns can also shed light on variables beyond just conversions—it can be used to look at elements that lead to them. You can tag your campaigns in a way that allows you to see how your audience from a specific channel behaves on your website, for example. Are they abandoning purchases in the basket? Are they converting at a particularly high rate? Considering the components that comprise your successes can help you succeed more.

Campaign tracking can also be used to measure the impact of branding-level campaigns on conversions, but since those campaigns are not aimed at directly and immediately impacting sales, that is not a good metric by which to judge their success. You can, however, use campaign tracking to see how many referrals a campaign drives and the amount of time spent on site, which can help you understand the involvement in your brand.

Tooling Falcon.io’s URL Builder allows you to track your campaigns via custom URLs,

integrating with most web analytics platforms. Learn More.

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ROI Measurement Approaches.

Goals Awareness

Positive sentiment Relationships

Loyalty

Metrics Engagement Discussion Sentiment

Sharing

Correlation Controlling for variables and carefully

tracking the relationship between marketing efforts and returns.

Calculation Plugging in known variables (value of

conversion, likelihood of a prospect to purchase) to calculate value of

awareness campaigns.

Conversion Lift Comparison testing audiences exposed to brand advertising and those not to

calculate value (Facebook’s term)

Measurement Tactics.

Goals Informing prospects

Inciting behavior (like sign ups) Picking up leads Increasing sales

Metrics Traffic driven

Desired behavior Number of leads

Conversion volume

Measurement Tactics.

Multitouch Attribution Distributing “credit” for returns from

users who interact on multiple channels.

Campaign Tracking Measuring traffic from a range of

sources, tracking on-site behavior and conversions.

Weighted Attribution Like multitouch, but “credit” gets

distributed proportionally based on behavior.

Branding goals Revenue-linked goals

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ROI: Strategically Critical.

Setting up processes that allow you to learn how much of your social media spend comes back to you in the form of returns is critical for several reasons. Most importantly, knowing the return on your investment helps you improve it. For a single brand, there could be hundreds of activities that fall under the umbrella of social media marketing. Knowing the value, in terms of dollars-in and dollars-out for those various activities opens up opportunities: The opportunity to adjust strategy to improve returns on each activity, the possibility of shifting resources to improve total social marketing returns, or the ability to compare social’s ability to meet goals compared to other channels, and boost the overall performance of your business.

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