When General Motors pulled its ad dollars from Facebook, it set off a firestorm of debate about the value of social media. Executives in many C-suites today are asking: How do you compare the effectiveness of a Facebook comment with an ad that runs on TV? Or a tweet with a glossy magazine spread? Am I getting my money’s worth? Good questions, which until now have been impossible to answer.
In a recent survey, we found that 91% of companies believe social media doesn’t significantly impact sales. The reality is that it’s hard to say for sure because, in our experience, nobody has demonstrated that they can measure the return on investment on social. This metrics blind spot means CMOs can’t make informed spending choices between social and traditional channels.
We believe that social media can have great value as part of a company’s marketing mix – not because of some gut feel but because we can measure it. At one large packaged goods client, for example, we proved that digital had an ROI that was, on average, six times greater than TV. After isolating the effects of digital display from other social content (such as user comments and viral activity), the analysis also found that social media had much higher impact than other digital media. As a result, the company is shifting more than 30% of its TV budget to social media.
Social media doesn’t live in a vacuum
Measuring social media’s impact is complex, requiring a more sophisticated appreciation of how social media fits into the broader marketing landscape. A tweet may lead a customer to a website; a television ad may resonate after the customer reads a comment on a site; and a billboard may encourage a customer to “like” a Facebook page later in the day.
Given the potential crossover effect, any social media measurement needs to account for the impact of both digital and off-line interactions. Metrics should also factor in the impact of broader external influences, such as fluctuations in market activity and seasonality. And this all needs to be done simultaneously to capture the true impact of each channel.
Figuring out what your earned media is worth: a social GRP
Digital media comes in three flavors: owned (e.g. your website); paid (banner ads you buy on other sites); and earned (what people blog or tweet about you). Earned media is of particular importance because of the amplification power of social media so we set out to isolate its value.
As a model, we took TV advertising’s GRPs (gross ratings points) – a function of the percentage of target audience reached by an ad and the number of times viewed on average. Marketers can plug this GRP into marketing mix models (MMM) that analyze the effectiveness of each marketing channel. Social needs its own GRP so that marketers can calculate the relative value of earned media.
The Social GRP metric must account for three elements:
Currently the most used social media activity measurement is “buzz.” Buzz, however, measures the number of people talking or writing about a brand or product (“mouths”), but not the number of people exposed to these messages (“eyeballs”). It’s great to have 1 million Twitter followers but if they don’t read your tweets, that’s empty buzz and it doesn’t have much sales impact. Reach matters only if your audience listens to or reads what you’re saying.
Not all buzz is created equal. Your message is only as effective as the people it reaches. Imagine, for example, an ad for a high-end car that sets off a storm of social media buzz, but that buzz turns out to be young males who generally can’t afford to buy the car talking about the music track in the ad. That kind of buzz is virtually useless to the car company.
Sentiment. Measurement efforts need to take the complexity of the social media conversation into account. Unlike TV advertising, where ads deliver positive brand messages, social media ranges across positive, negative, and neutral sentiments. For this reason, you need to calculate three separate social GRPs for each sentiment because they have different impacts on sales.
Show me the social money
This Social GRP has already helped companies better manage their social media investments within their overall marketing mix to drive sales In one example an internet broadband provider watched new customer acquisitions slow to an unacceptably low pace despite significant investments in traditional media. An assessment of the Social GRP showed a tremendous amount of negative sentiment as complaints about long waiting times on the phone help line went viral through social media.
After calculating the effects of the negative social media, the company was stunned to learn that the loss in potential customers was close to $45 million – which more than offset all incremental customer acquisitions generated by a multimillion dollar TV advertising campaign. With this understanding of the impact of social, the company quickly invested about $1 million to improve customer service and turn the sentiment to a much more positive mix. More importantly, customer acquisition improved.
For companies to make informed decisions in the social age, they need hard facts and sophisticated analytics. Social media can no longer thrive on buzz alone.