Sunday 11 December 2016

The Business Return from Social Media

This post was originally published on www.warc.com.

Social media has grown and evolved to become an integral, necessary part of business, extending beyond function to a cross-discipline practice. However, its value will continue to be debated as long as engagement rates and potentially thin metrics, such as ‘People are talking about this’ (PTAT), are used to justify ROI. The myriad metrics available are often not very useful when measuring social media value and can be difficult for stakeholders to relate back to the overall goals and function of the business.

Social media value needs to be measured in the context of what it is doing for the business. Start by identifying the right business objectives and then map metrics to them. Traditional metrics can often be applied to measure your social media efforts.

This sounds very simple, but studies find that many marketers are relying on soft metrics, such as engagement rate and ‘likes’, when reporting on social media effectiveness. Recent studies have found that up to 57% of companies said the deepest level of reporting was on soft metrics such as engagement, followers and time spent (source: Econsultancy and Adobe, Quarterly Digital Intelligence Briefing: Managing and Measuring Social, 2012).

Tracking soft metrics is very important and, in some cases, appropriate, depending on the brand owner’s business objectives. But many firms are doing this without understanding the impact of these measures on the business. This is not a new challenge; marketers have traditionally struggled with demonstrating ROI over the years across communications disciplines – advertising, PR and so on.

The good news is that measuring and understanding the ‘value of social’ to the business is possible and becoming more commonplace. In the same study, Econsultancy and Adobe found that 12% of companies and 16% of agencies are tracking bottom-line effects on revenues. So how did these companies get to this point?

Develop a social media strategy

Establishing a clear vision of what social media is going to do for your business is the first step to maximising ROI.

Companies often set up a Facebook page or Twitter handle for a campaign without establishing any long-term social strategy. In these cases, the lack of purposeful social media may have a negative effect on the brand. When a fifth of UK consumers are turning to social for complaints and expect a response within 48 hours, a branded Facebook page or Twitter profile implies that the business is ready to respond in a social timeframe. Lack of timely action could be taken as no action at all, ignoring the consumer, and become a greater problem.

While building an audience on Facebook is important to reach consumers – perhaps through a campaign – you will need to support that community afterwards or people will become increasingly frustrated by the lack of response and perceived lack of care. This is becoming very costly for brands. Last year, businesses lost £12 billion through poor customer service, with complaints through social media increasingly impacting this (NewVoiceMedia, 2013).

Create a measurement framework

After the social strategy has been agreed, a key performance framework can be created. This is a document that defines what success looks like and outlines how it will be measured. All stakeholders should agree on the objectives and metrics. It should be designed so stakeholders can easily understand what is being measured, why they are being measured (and why others are not), and how each of the metrics affects and relates to the business objectives. Defining and getting stakeholder buy-in on what success looks like is the most critical juncture to proving social media value. This step is often mistakenly neglected. In this framework, the following fields should be included:

  • Business objective, e.g. Increase sales of product A.
  • Communication objective, e.g. drive awareness of product A.
  • KPIs/primary metrics: the primary metric that will allow you to achieve the desired objective, e.g. reach.
  • Supporting metrics: supporting or tactical metrics, not KPIs, e.g. engagement rates.
  • Target/benchmark: baseline for measuring change and performance success.
  • Calculation: a detailed explanation of the calculation used, including the formula and datapoint (e.g. Facebook page level insights – sum of daily reach versus 28-day reach).
  • Source: an explanation of sources is important because data varies (e.g. Facebook insights versus Buddy media analytics.
  • Additional metric detail: any other considerations, such as media spend. Use the business objectives as your starting point and then map social metrics back to those objectives as opposed to letting the available metrics dictate the framework (Figure 1).


Figure 1: Business objectives framework

Start from these core business objectives – grow revenue, reduce costs and improve satisfaction. Social media can be mapped to any or all of these. Often, the tendency is to map social media to grow revenue. In fact, over 50% of firms consider revenue generation its primary objective (Awareness, State of Social Media, 2012).

Social media can also be used to reduce costs and improve satisfaction. Only 14% of companies in the same survey are using social media to increase operational efficiencies. Industry trends indicate that, as the market matures, this will become more prevalent.

For example, social media measurement service social Bakers has introduced customer response rates as a main social KPI in its analytics suite to track and improve customer satisfaction and/or operational efficiencies (www.socialbakers.com). Airline KlM has centred social media efforts on customer care – a more strategic and effective use of social media for the business than driving sales (www.socialbakers.com/storage/www/klm­sociallydevoted.pdf).

Figure 2 shows what this could look like. Note that the metrics chosen here are just examples.


Figure 2: Business objectives and corresponding metrics
*see mashable.com/2012/04/24/call-center-death-exaggerated

Tool selection

Deciding on the right tool is an important step and can often be very time-consuming. In this space, the majority of tools offer similar functions and vary insignificantly. There are a variety of sources you can use to measure your social media efforts. Because there is not currently one tool available that can offer everything, it is best practice and commonplace to use a variety of tools to measure your social media performance due to their strengths and limitations of the options. We expect that, as the industry consolidates, this will change – for example, with the salesforce acquisition of Radian6 and Buddy Media (which recently bought Brighter Option, a paid media measurement tool). But the most advanced options are extremely expensive, to the point that the cost benefit ratio may not be worth it, depending on your business.

Measurement Tools

Listening and monitoring

  • Function: overview of all public related conversation online.
  • Pros: can filter by locations, language, etc.
  • Cons: expensive, training often required, margin of error can be high, does not include ‘private’ conversation, e.g. Facebook, Pinterest.
  • Examples: Radian6, Crimson Hexagon, Sysomos, Netbase or Synthesio.

Third-party-owned channel performance and competitor tracking

  • Function: tracking of owned and competitor channel performance.
  • Pros: cost-efficient, one dashboard to view aggregate results across multiple platforms, most agile when new platforms become popular.
  • Cons: volume limits, defined KPIs.
  • Examples: Simply Measured, Social Bakers.

Social CMS analytics

  • Function: data available through the social content management solution.
  • Pros: one view of all performance.
  • Cons: non-exportable data, limited custom options, expensive.
  • Examples: Buddy Media, Hootsuite.

Platform analytics

  • Function: data available through the platform.
  • Pros: free.
  • Cons: data exports in raw form.
  • Examples: Facebook Insights, YouTube Analytics.

Proving the value of the medium comes down to measuring performance through understanding change or impact. If it changes, it can be measured. To do this, you must have a starting point for comparison. After agreeing on how success will be measured, collect historical data to understand past/current performance. Use either a fixed time period or a comparable campaign to do this. A one- to three-month period will usually provide enough statistically significant historical data. After you have established the benchmarks, you can use them to create targets for the campaign or programme.

As professionals, we are inundated with challenges that appear again and again in social media marketing measurement. It is important to be aware of the challenges and focus on uncovering the value. Here are some of the most prevalent:

  • Automated tools are often positioned as the solution for managing large amounts of digital data. The industry relies heavily on automated tools and dashboards. But automated measurement is of limited use, or even misleading, because of the lack of human context – particularly when brand metrics, such as awareness, association and sentiment, are measured. Human context is an imperative variable when measuring attitude and perception. Only with context can you understand nuances in tone. When analysing ‘sentiment’ (a metric often used to understand attitude and perception), the difference between ‘I freaking love my Product A!’ versus ‘Freaking Product A!’ is significant. An automated system cannot read the difference.
  • In digital, there is a tendency to try to measure everything just because it can be tracked. There is no need to do this. In fact, it can become extremely inefficient to do so. It can lead to ‘number soup’, where you are dealing with unmanageable amounts of data. Work out which metrics matter most and focus on those. Ensure the whole team knows what success looks like, so all efforts are concentrated on the same goal.
  • Social media is 24/7. It is always-on and living and breathing. Someone has to be there to manage the community. If you aren’t paying attention, you miss opportunities. This is a challenge because businesses are not typically set up to address this. Have a dedicated resource, either in-house or with an agency, managing your social communities. Because social media isn’t just active from 9am to 5pm, decisions must be made very quickly to use the channel effectively. A measurement framework helps to determine what is important and to track the impact of real-time efforts. Robust measurement can also indicate problems as they emerge – such as Facebook’s suppression of brand page reach to brands’ fans.
  • Social can touch every element of the business, from operations to marketing, and if social is siloed it can be very hard to uncover insights. When analysing the value of social, ensure you get the whole picture. Review the results in relation to your web performance by using free tools, such as Google Analytics, or review call centre volumes in relation to queries resolved on Facebook.
  • Some third-party services offer proprietary scores or metrics to measure social media performance. ‘Secret sauces’ are often presented as a solution to dealing with the complexities of social media measurement. These are presented as a package but you are not allowed to see what’s in it. This makes it difficult to understand the results because there is no transparency.
  • New metrics in social are constantly being introduced and are often positioned to be a solution for measurement challenges. New hype metrics can be extremely distracting and usually aren’t that useful. For example, when Facebook introduced ‘People are talking about this’ (PTAT), many companies replaced traditional metrics with it without understanding the drivers behind KPIs. After analysing drivers, it was found that the only significant driver of PTAT was paid media. If the media budget didn’t include ads on Facebook, the results weren’t favourable.

Conclusion

Social media has evolved beyond an extension of traditional communications and analysis has developed as businesses have demanded to see how effort can affect results. More data has recently become available about the value of social to brands, but how to measure this remains debatable.

Measuring social media value comes down to understanding what it is doing for the business by developing a social media strategy. This should be disseminated throughout the business. Start by identifying the right business objectives and map metrics to them. Traditional metrics can often be applied to measure social media efforts and these should be considered upfront.

Defining the value of social media should come before you have built a million fans, rather than after, when you may be struggling to justify the value to the business. By aligning your social metrics to your business objectives, it doesn’t matter whether you measured reach to understand market communications programmes or customer response rates. If you have done the groundwork to ensure that social media and its measurement are integrated into the business objectives, value will be inherent.

Image credit: BigStock

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