Six Social Media ROI Models

We’ll begin show shortly…

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Who’s presenting?

Jim TobinFounder, PresidentIgnite Social Media@jtobin

Tom WebsterVP, Marketing

Edison Research@webby2001

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Details

• Jim & Tom will lead Q&A at the end of the call.• Tag your tweets with #igniteroi• We’re recording the show.• We’ll send an email follow up to everyone.

Download the White Paper

http://bit.ly/ignite-roi

We’ve come a long way.

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The Models

1. Amplification2. Value of Social Traffic vs Display3. Quality of Visitors From Social4. Revenue From Facebook Fans5. Revenue From Social Media Marketing6. Social Promotions Sales ROI

None of the models are

perfect.

All of the models are better than

nothing.

Model 1: Amplification

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Amplification Step By Step

Calculate social impressions,

actions

Facebook impressions and clicks, Twitter impressions and clicks,

YouTube views, Online mentions, etc.

Sum value of impressions,

actions

Assign value to impressions and actions, weighting actions more

heavily that impressions.

Compare to total social

media spend

Map social impressions and actions to paid marketing value equivalency.

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Amplification Model Example

Social Impressions, Actions

Paid Advertising Equivalent Value

2,000 Facebook impressions $10 CPM $20

100 Facebook clicks $0.50 per click $50

100 YouTube Views $0.20 per view $20

Total Value: $90

Social Budget: $30

Social ROI: 300%

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Likely Questions & Considerations

• Most of the social data inputs are available for free.• The model is complex. It requires proxy values for

social actions based on non-social comps.• The model aggregates cross-channel social data and

maps it to familiar marketing metrics.• The output is a relative comparison, not an actual

sales return on investment.

Model 2: Value of Social Traffic versus

Display

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Example Traffic Comparison

Description Display Social Delta

Net New VisitorsAbove baseline

30,000 170,000 Social drove 5.67X more visitors

Cost $150,000 $130,000 Social cost only 86.7% of display

Cost per visitor $5.00 $0.76 Social generated a 6.5X better return

This data reflects actual performance from an Ignite Social Media client.

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Likely Questions & Considerations

• This approach is less complicated than others, it requires fairly simple inputs.

• The model works well if you have an active display advertising campaign as a basis for comparison.

• The model doesn’t incorporate impression value, only traffic value.

• The channels are the variable, so try to keep other variables constant.

Model 3: Quality of Visitors From Social

Media

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Example Traffic Quality Comparison

Description Display Social Delta

Pages per Visit 1.57 2.84 Social drove 1.8X more pages per visit.

Time on Site 0:40 2:18 Social visitors spend 3.45X time on site.

Bounce Rate 81.40% 45.46% Social visitors had a 44% lower bounce rate.

Goal Conversions 3,098 12,603 Social drove 4X conversions.

This data reflects actual performance from an Ignite Social Media client.

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Likely Questions & Considerations

• You can compare social traffic against other channels or “average” site traffic.

• Choose the most meaningful metrics, don’t worry about comparing all of them.

• Factor in all costs related to social and other channels for a final calcuation.

Model 4: Revenue From Facebook Fans

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The Facebook Factor

Brand Purchase in Last 12 Months

Likely Consider

Likely Recommend

Fan Non-Fan Fan Non-Fan

Fan Non-Fan

Bust Buy 79% 41% 78% 47% 74% 38%

Coca-Cola 95% 71% 85% 58% 83% 47%

Blackberry

55% 10% 69% 17% 62% 16%

Walmart 94% 74% 85% 56% 77% 39%

Source: Forrester Research, The Facebook Factor, April 2012

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Example Calculation

Net New Facebook Fans 283,786 For a year.

% Likely to Consider, Fan

69% Blackberry is closest comp brand in this example case.

% More Likely to Purchase Since Becoming a Fan

16% Conservative estimate from 2011 Chadwick Martin Bailey data.

Price of Product $250 Fictitious.

Purchases per Year 0.33 Fictitious.

# of New Fans Who Are New Customers

31,330 New Fans X % Likely to Purchase X % More Likely Since Becoming Fan

Total Estimated Revenue $2,584,723 New Fans Who Are New Customers X Product Price X Yearly Purchases

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Likely Questions & Considerations

• This is an admittedly rough estimate.• Additional data from comScore further

indicates that Facebook influences purchase behavior.

Model 5: Revenue From Social Media

Marketing

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Example Calculation

Visitors to Goal Pages 4,830,827 For a given time period

Products Sold 345,324 For the same time period

Goal Pages per Sale 13.989 For the same time period

Social Traffic to Goal Pages

27,716 Visitors from social who landed on a goal page during time period

Social “Sales” 1,981 Social traffic to goal pages / (goal pages / sale)

Avg Transaction Value $135 Revenue from period / transactions during period

Social Revenue $267,435 Social transactions X Avg transaction value

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Calculation Continued

Social Revenue $267,435 From previous slide

Social Marketing Cost $97,500 For the same time period

ROI $1.74 (Revenue – Cost) / (Cost)

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Likely Questions & Considerations

• This is (also) an admittedly rough estimate.• For considered, offline purchases, digital

marketers have limited visibility to impact.• This model becomes more valuable the more

you know about your buyers’ aggregate web behavior.

Model 6: Social Promotions Sales

ROI

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Example Calculation

Total Cost of Promotion $195,404 Including ads

# Goal Page Completions

34,812 Use actual if possible

Goal Pages per Sale 13.989 From model

Social “Sales” 2,489 Goal page completions / goal pages per sale

Social “Sales” Revenue $336,015 Social sales X average transaction value

ROI $0.72 (Revenue – Cost) / (Cost)

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Likely Questions & Considerations

• This model works well when you want to map a specific promotion to purchase intent.

• Remember that you’re comparing the effectiveness of marginal marketing spend – a “low” ROI might not be a bad thing.

BONUS MODEL 7: Show Me Yours

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