Show Me The Metrics


By Niall Cook
Worldwide Director of Marketing Technology, Hill & Knowlton

Many agencies are fudging the issue of how to measure the impact of social media and word of mouth marketing. Yet, as long as the objectives are clear, there is a plethora of metrics that can be used to demonstrate return on investment.

As far back as 2004, observers tolled the death knell of cavalier spending:

“For years, corporate marketers have walked into budget meetings like neighborhood junkies. They couldn’t always justify how well they spent past handouts or what difference it all made. They just wanted more money – for flashy TV ads, for big-ticket events, for, you know, getting out the message and building up the brand. But those heady days of blind budget increases are fast being replaced with a new mantra: measurement and accountability.”[1]

Fast forward to late 2009 and a survey undertaken by Visible Technologies and SiriusDecisions finds that twenty-one per cent of US business-to-business companies admit to not tracking the success of their social media marketing activities. So what went wrong?

Social media may well be experiencing a honeymoon period that currently excludes it from the same levels of measurement and accountability demanded from other marketing activities, but surely that can’t last long. For it to find its way into the marketer’s toolbox, even if it is eventually dismissed as a passing fad, it will still need measuring. Smart marketers should therefore incorporate metrics into their social media strategies today, and not wait to be told to do so tomorrow.

So let’s dispel the mystery that seems to surround social media metrics. Firstly, a metric is nothing more than a measuring system that quantifies a trend, dynamic or characteristic. Metrics are used because they are objective, can be compared across different geographies and disciplines, and provide a common language by which anyone in the business can assess performance. Perhaps it is that last point that makes so many reluctant to set metrics for social media marketing objectives.

Secondly, smart metrics start with SMART objectives: if the objectives are not specific, it is impossible to know what to measure; if they are not achievable or realistic, there is little point in measuring them; and if they are not timed, there are no parameters. It’s also worth remembering that not all objectives are financial; they may be reputational or even educational and, in the case of social media, are probably more likely to be.

Thirdly, when we talk about social media marketing metrics we are concerned primarily with campaign/channel effectiveness, but these sit within the context of broader marketing and business metrics that every marketer should already be tracking. So when people ask about the return on investment of social media marketing it is really the wrong question. They should be asking how social media marketing is contributing towards the return on investment of marketing as whole.

So what metrics are appropriate? In their Measurement and Metrics Guidebook, the Word of Mouth Marketing Association (WOMMA) offers an overview of the kinds of social media marketing metrics available, as well as some of the methods that can be used, summarized below.

Metric Applies to Measured by
Advocacy Intent and/or behavior of making recommendations Net Promoter® Score
Brand Advocacy Quotient
Online Promoter Score
Conversation Value Value of positive or negative brand-related conversations Net Promoter®
Economics
Media Mix Models
Conversation Volume/Share Quantities of word of mouth within a period of time Syndicated research
Bespoke research
Informal tools
Cost Deflection Removing hard and soft costs from existing process Cost deflection calculation
Cost Per Conversion The cost of getting one person to take a desired action CPC calculation
Marketing Mix Modeling Relative impact of different contributors to success Bespoke research
Reach How far a marketing message has spread Network reach calculation

Ultimately, some argue, the only metric worthy of any merit is return on investment (ROI).

ROI = (Gain from Investment – Cost of Investment) / Cost of Investment)

However, caution should be exercised when dealing with ROI as the only metric to measure social media marketing. When senior executives ask, ‘what’s the ROI of this social media stuff we’re doing?’ what they’re often asking is how its performance can be measured. In this sense, ROI is used as a collective term for metrics like those above, and the most appropriate one must be chosen on the basis of the original objective of the campaign. If, for example, the objective of a campaign were to achieve an increase in sales by 60% within twelve months then ROI as the metric would make perfect sense. However if the objective were to increase awareness of a brand amongst a particular customer segment, even if the purpose of this increased awareness was to effect sales, an ROI metric would not be able to tell you whether or not you had succeeded.

The days of fudging social media metrics are over. There is a wide variety of well established and, in most cases, easy to apply metrics already available, but they must be selected based on objectives. Which begs the bigger question: do you know what you’re actually trying to achieve?

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[1] Brady, Diane, with David Kiley and Bureau Reports, “Making Marketing Measure Up,” Business Week

Article taken from Ampersand – http://blogs.hillandknowlton.com/ampersand
URL to article: http://blogs.hillandknowlton.com/ampersand/show-me-the-metrics/

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