I have been lucky to work in marketing analytics almost since the start of legitimately using social media for business purposes, so whenever I see posts like Dan Zarrella’s & HubSpot’s Value of a Like pop up, I pay attention. Whether I agree or not, there is always a lot of controversy and criticism that both adds to and detracts from the overall conversation about measuring social media.

On the one hand, stakeholders need to know what they are getting out of social media, but on the other, we can’t allow either the analysts or the critics to mislead our clients, because at the very least, it makes everyone’s job harder and doesn’t move marketing forward. This is something I call bromarketing – a variation of the broscience that is popular in the weight lifting space.

Bring in the experts!

BlitzLocal CEO Dennis Yu, genius marketer Ian Lurie, EdgeRank expert Chad Wittman, Social Nerdia founder & Sprinklr director and strategist Esteban Contreras, and awesome marketing podcast host and consultant Bob Knorpp were kind enough to help me look at measuring and valuing social media based on their experience and knowledge.

Can you reliably measure social media in a way that makes it comparable to traditional business metrics? If so, can you give an example?

Dennis Yu – Yes, we can reliably measure social ROI with real business metrics– ones that a CFO will appreciate.

To do that, we must be able to trace interactions from social all the way through to revenue events — leads, in-store sales, online, and so forth. Some we can do on a direct basis (coupons, links, and referrers), then we do attribution and correlation analysis on cross-channel impact. For example, Rosetta Stone saw a 6 to 1 lift from social into in-store sales. The correlation analysis is critical to capture the impact of an impression that doesn’t have a click, but still results in a sale later, often as an assist into Google or the POS.

Ian Lurie – You can’t reliably measure social media across multiple clients or organizations, because every organization interacts with their audience in slightly different ways. If organization "A" puts a lot of effort and energy into social media, and not much into the traditional marketing side, then social media will carry a high value. If organization "B" is more balanced, their approach may work just as well, but their average social media relationship is worth far less.

The smart organizations value social media within their own context, and don’t try to look outside. For example: You can do a limited value calculation by simply dividing sales with some attribution to social by total number of followers. If you’re using any passable attribution tracking, like Google multi-channel tracking, you can figure out which sales were ‘touched’ by social in some way. That lets you figure out a very, very loose social media valuation.

But this requires that everyone involved, from the marketing team to the CFO, understands that the value measured is a fraction of the real value. And I haven’t seen any organization understand that since I was a copywriter doing direct mail pieces in the mid-1990s.

Chad Wittman – I think we’re at an interesting time in the social media ROI timeline. I look at social media a lot like eating healthy. What’s the ROI on a glass of orange juice versus a glass of Coke Zero. Should I count calories? Maybe I should look at grams of sugar? Coke Zero is going to win that argument every time, but I know orange juice is the better choice. I understand that brands need to have an understanding of their ROI on social, but I think sometimes the brands that are obsessed with it lose sight of its actual value.

When a brand has a fully integrated social approach and then attempts to apply a rigid traditional ROI calculation to the campaign, are they really getting a sense of a real ROI? Of course, there are plenty of areas that allow me to track sales straight through and measure that against ROI, but’s that not the entire picture. For example, I’m not as worried about getting sales via 100 Tweets, but I’d like to have 100 inbound links via Tweets. I’m willing to invest in 100 inbound links via Tweets because I believe that will improve (either now or in the future) the PageRank of my site. Some executives would look at 100 Tweets and ask how many sales were generated, but I’d ask how that impacts our social search results. With that being considered, how many sales did search drive?

Esteban Contreras – Companies that do ecommerce are able to track direct attribution from social. For those who don’t they must still have a hypothesis on which they must take a leap of faith, just as companies have always done with TV commercials and print ads. You must measure social metrics and then determine how you attribute to non-social metrics (ie. preference, awareness).

Bob Knorpp – Depends on your definition of reliable and also what your objectives are for your social media campaign.

If you are running a direct marketing promotion via social, of course you can reliably measure results from the CTR, conversions and to a certain extent through backend analysis. But nearly everything else you may want to achieve objectively offers no reliable metric to measure impact.

All we have are branding measurement tools and those don’t really measure social impact as much as reach. In other words, we can run ads or make posts and know exactly how many potential eyeballs we reached, but we have no real measure of impact other than the overall sales number or traffic increase. This is not necessarily a bad thing, but it does make it difficult to justify more relational efforts.

My personal believe is that we need to focus more on the customer measurement and less on the channel measurement. True multi-channel marketing measures the customer’s journey across media and determines what the right mix and story is for creating maximum value from that individual. Finding ways to do this is a much better way to determine the value of the social component in the larger messaging mix.

What is one common misconception that people have about valuing social media?

Dennis Yu – A common misconception is that we need to “convert” users to fans. Existing customers in the real world are most likely to become Facebook fans, so this is less about traditional marketing funnel conversion and more about amplifying the word-of-mouth power from happy customers to their friends.

Ian Lurie – The biggest misconception, not only of social media, but of all marketing is that you can somehow measure every last dime spent and generated. You can’t, because we’re not marketing to computers. We’re marketing to human beings, who can be swayed by their environment. Your Facebook page, or Twitter account, or whatever is just one part of that environment.

The most successful companies get it – they market themselves in-context and with a long view, never sacrificing message for short-term gain. The ones that fail miserably, or do ridiculously stupid things like tweet Superstorm Sandy-themed advertisements, just don’t.

Chad Wittman – There are false assumptions being made with the thought process I detailed in my answer to the first question. What did those 100 Tweets do to our thought leadership, how about our brand’s image? How many sales did we pick up last week at a convention because someone mentioned how we’re a thought leader? I’m going about this explanation in a roundabout way, because I’m trying to illustrate the confusion that is often inflicted upon executives and where they’re missing the big picture.

I think it’s far more important to look at some of these micro KPIs and benchmark against either yourself or competitors. We need to make sure we’re driving Tweets, creating quality backlinks, establishing interesting content, capturing email addresses, etc. That’s where I assign value for our company.

Esteban Contreras – The belief that last click attribution is the whole story. IBM’s study on Black Friday is myopic at best.

 

Bob Knorpp – The biggest misconception folks have about social valuation is that you can’t measure ROI. This is based on another fallacy, which is that social is entirely about creating dialog and relationships.

In the end, no one really wants a relationship with a tube of toothpaste. They want deals and they want to be entertained and they remember positive experiences, but most will never want to have a conversation with you or your brand. They just want clean teeth. So what good is it for a toothpaste brand to gauge success through conversational interactions?

Not every brand is the same. Some brands really can gauge success from how many interactions they have with customers. Non-profits, for instance, live and die by the conversation with supporters. But most product brands can do perfectly well treating likes and followers as an audience rather than a community. It’s like a TV show. You entertain the followers enough, they will pay attention to you and then you can market to them with ads.

Are there any must-use tools, ways of thinking, or resources you recommend for someone looking to put a value on social media?

Dennis Yu – You must use your web analytics and social together to measure cross-impact. Nobody does it well, despite what the marketing materials say, so you must piece this together yourself. And the most important tool is the one between your ears — no software can do strategy for you. Reports are not the same as analysis.

Chad Wittman – Must-use tools? Of course, we put our heart and soul into EdgeRank Checker and PostAcumen to make these tools a must-use for marketers on Facebook. We’re looking at these important micro KPIs that allow your brand to continue to grow and understand how you’re growing. These are the KPIs we look at for our own business, and that’s why we built these tools to help brands improve them.

I think, with most things in life, education is the key. Too many executives aren’t being educated in how complex this ecosystem works. I used the analogy before about comparing a glass of orange juice to a glass of Coke Zero. If you simply look at the nutrition facts, you might pick Coke Zero every time. You might even find scientists that tell you that the net effect is the exact same. The reality is, the body is an incredibly complex and adaptable system. Social media marketing is the same way. It’s hard to say exactly what that blog post that drove 0 sales actually did for the brand. I know that’s not the answer that many executives are looking for, but if they spent time educating themselves in the ecosystem, I think they’d start to understand.

What I do know is that companies such as ourselves, built our entire customer base via organic social media. I know it can be done, and I know the value can be tremendous. I also know many brands that have failed miserably at the same tactic. It’s about educating yourself to the best of your ability and trying it. Track as much as you can, but understand it’s not the whole picture.

Esteban Contreras – I am biased but recommend big companies to leverage enterprise-grade tools like Sprinklr to track and understand owned and earned engagement + operational efforts.
 

Bob Knorpp – I sometimes believe that we work way too hard at measuring impossible things in social. Everybody is hawking sentiment analysis, but I have it on good authority from many experts behind the scenes that not a single one of the social sentiment analysis tools out there reliably measures actual sentiment. They are just snapshots of positivity and negativity, but not real indications of desire to buy. For that, you need many more data overlays that have nothing to do with your Facebook or Twitter effort. You need demographic profiles and POS data and a host of other factors that require offline data.

So as for tools, simple tools like HootSuite’s built-in analytics or bit.ly tools are great to measure raw click throughs. Google Alerts are great for knowing when and where keywords are mentioned. And Radian6 is amazing (and amazingly expensive) for determining deeper impact and reach of your brand conversations. But in the end, social valuation is more a process of changing our thinking of what we are looking to achieve, rather than which tools we use. We need to know what our objective is, determine what kinds of communications our customers are giving us permission to make and then create programs that clearly map a path back to profitability.

Final Thoughts

As I was finishing up this post, Mitch Joel released a podcast he had recorded with Tom Webster. I recommend listening to that because part of what they discuss is what can and can’t be measured online and the circumstances in which various types of data collection might or might not be valid.

Regardless of whether you’re using the Value of a Like calculation or some other method of social media valuation, you should always look at overall business KPIs first before getting into anything like last touch attribution, click tracking, sentiment analysis, engagement reporting, or mention tracking. There’s a lot of data in the social media realm, and as cool as it is to be able to be able to point to a chart of mentions and see it go up and to the right, it doesn’t necessarily mean anything unless you’ve put that in the context of your overall business goals.

I think about marketing analytics all the time. How do you think about measuring and valuing social media for your business?