We have all been hearing a lot about social media lately, but many still wonder what it actually means and how it can work for them. The best way to define social media is to break it down. Media is a communication instrument, like a newspaper or a radio, so social media would be a social instrument of communication. In broad terms, it could be a website that provides information and also interactivity. Such interaction can be as simple as leaving you a space for comments or letting you vote on an article. Social media is a two-way street in the sense that it gives you the ability to communicate, to have a conversation, as opposed to the one-way communication of regular media, such as newspapers or television. Within social media, there are many websites that are becoming more and more high profile providing social bookmarking, social news, social photo and video sharing and the Wikis, as well as social networking.
In the marketing world, social networking is now crucial to many campaigns. It is now becoming essential for companies to have a presence on social networks in some way or another. Be it a fan page, a small competition or a full-blown campaign, you have to be part of it to be “out there”. With increasing importance, social media marketing is all about building relationships and, in a way, managing one of the most effective ways to advertise a product or service: through word of mouth. It goes without saying that one of the main goals of any social networking campaign is to increase brand awareness but, along with that, you can build authority, learn more about your target audience, educate and inform users of your product or service, increase sales and improve customer service. Far too many advantages not to feel temped to join in.
However social media can also go wrong. Competitions that do not work, blips to the system and information getting lost are just a few examples of what you can face when such large amounts of information are floating on the web. Having said that, when it does go right, it can be amazing and do wonders for your company. If you do decide to take part, you have to innovate somehow, just like Toyota announced a few days ago. The car-maker said that they will be creating a new social networking service called “Toyota Friend” for drivers. The service, to be launched in 2012, will enable owners to make “friends” with their car, which will have its own personal profile, as well as conduct “chats” and receive tweet-like messages. From a reminder to recharge a depleting electric battery to giving street directions, the car will be able to send a range of messages directly to devices such as smartphones, tablet PCs and other mobile devices. Initiatives such as Toyota’s mean one thing and one thing only: no matter where you advertise, creativity is still paramount and anything that is samey-samey can be easily forgotten, just like a printed ad with just a title, a poor headline and a random picture on it.
Right, so let’s say that you have bought into the idea of building a page for your company on one of the social networking available websites. Your page is up, you have fans, people follow you. Now how do you know it actually works and you are moving towards achieving something with it?
To put the ROI formula to work when it comes to social media, all we need is to take our return (the amount of value that we got from our social media campaign) and our social media investment (the amount of money that we invested in our social media campaign) and run it through a financial ROI formula. Simple, right?
Not so fast. The social media investment can be clearly defined, but how do you define the social media return and how do you attach a monetary value to the return? We need to answer both questions before we can calculate the social media ROI.
The peculiar feature of social media return is that you can define it to be essentially anything you want it to be! For instance, if the goal of your social media campaign is to drive sales, then your social media return is the number of sales that you can attribute to your social media campaign, and so on.
After we have defined our social media return, we need to quantify the social media return into pounds. This is difficult because you need to look at each type of social media return and develop a method for quantification. Therefore, if we are looking strictly at sales, we can quantify the social media return by looking at sales generated through it, or we can use sales forecasting techniques or use unique identifiers such as coupon codes or PURLs.
Quantifying consumer insights is a little harder though, and requires different techniques to estimate value. A commonly used technique is to compare the quantity and quality of consumer insights from offline focus groups to consumer insights from your social media campaign. The idea is that you know the value of consumer insights from offline focus groups based on their cost. By comparing the quantity and quality of consumer insights from both channels, you arrive at a reasonable estimate of the value of consumer insights from your social media campaign.
ROI is a very powerful weapon in your marketing arsenal and, once you have your social media ROI results, you can use it to compare it to other social media campaigns and also to your TV, print, radio and other campaigns. Social media is definitely here to stay and, although the way we use it will most certainly change with time, it will be all the more fun if it is shown to be profitable.
Marilia Spindler is an Account Executive at Happy Creative, a full service marketing agency based in Blackpool, Lancashire. To learn more or contact us please go to www.happy-creative.co.uk
