Efforts to build customer loyalty garner more social media spending from marketers than campaigns aiming to build brand awareness or increase customer acquisition, according to the results of a new survey conducted by the Direct Marketing Association and Colloquy of DMA members and Colloquy subscribers. At least, that seems to be the case among companies which actually take the trouble to keep track of their social media budgets: remarkably, the DMA and Colloquy also found that a good number of companies engaged in social media marketing couldn't say how much they were spending.
MEASURING SOCIAL MEDIA ROI - THE FOUR BASIC METRICS
Measuring social media ROI requires an analysis of four metrics: Exposure, Engagement, Influence and Action
Spectrum of Online Relationships
The Three Categories of Social Media Conversations: Exposure, Engagement and Collaboration
Formula for Measuring Social Media Traction
On average, companies which primarily use social media to bolster customer loyalty spent $88,000 on these efforts in 2009, the DMA and Colloquy survey found, compared to an average $53,000 for companies which use social media primarily to build brand awareness, and an average $30,000 for companies which use social media primarily for customer acquisition.
Loyalty-building is also the strongest growth area, jumping almost 300% over the last 12 months, according to the DMA and Colloquy, "easily surpassing allocation increases for all other social media-related marketing objectives." Tellingly, smaller companies tended to spend more on social media, with a significant number saying they devoted more half their marketing budget to social media efforts (including all three categories).
So far, so good. Now for the bad news: a full 24% of survey respondents said they didn't know how much their companies spend on social media. Perhaps even more alarming, almost two-thirds of respondents said they didn't know how to measure social media success, and 65% said they don't monitor customer sentiment about their brand with social media tools.
A number of other surveys have produced similar findings in recent months. A KingFishMedia survey of 457 marketing executives in the second quarter of this year found only 30% of respondents said they had executed a social media ad campaign -- and only half of these had attempted to measure the ROI of their campaigns. And in June Digital Brand Expressions released the results of a survey of 100 marketing execs in which 78% said their companies were using social media, but just 41% said they had a strategic plan.
It's not hard to come up with a charitable interpretation of these data: they obviously reflect the new, still-experimental character of this emerging platform. But businesses aren't built on charitable interpretations, and these last data frankly paint a picture of an entire industry that appears to be flying blind. Pleading avant-garde status is unlikely to satisfy chief marketing officers who have to account for their budget allocations, let alone persuade them to spend more; to do this they need clear, convincing metrics before they will loosen the purse strings.
COMMENTARY: Social media is like mercury. It is difficult for many brand marketer's to get a handle on how to measure the effectiveness of their social media marketing efforts. The reasons, quite simply, is that there are no real social media measurement standards. There are different social media measurement metrics. It gets awful confusing at times. In my opinion, the problem is that there are just too many social media experts or guru's. Here are some suggestions:
- How to Measure Social Media ROI by Mark Thompson in Social Media
- ABC's of Social Media ROI and Measurement by Jordan Viator of CONVIO Move People
- 195 social media monitoring tools by Sales Rescue Team
- Social Media Monitoring and the Spectrum of Online Relationships by David J. Carr, Digital Fragments and Brand Reality Creative
- 6 Key Metrics for a Social Media Dashboard by Nathan Linnell of SearchEngineWatch.com
- White Paper: "How to Calculate ROI on Social Media Marketing" by ForeSeeResults
- Enhancing Net Promoter Score (NPS) With Total Customer Social Value (TCSV) by Jeremiah Owyang's Web Strategy
- The Social Media ROI Debate by Webbiquity
- The ROI of Social Media Marketing: More Than Dollars and Cents by Augie Ray, Senior Analyst, Forrester Research
- Ten Ways To Measure Social Media Success by Chris Lake, Director of Innovation, eConsultancy
- Sexy Numbers: Measuring ROI in Social Media Campaigns by Angel Djambazov, ReveNews
I hope that the above information about measuring the ROI of social media is of some help.
Courtesy of an article dated September 8, 2010 appearing in MediaPost Publications The Social Graf
Comments