For years, marketers have known they needed to participate in social media, but have struggled to quantify the financial impact of their social efforts. Management reports show 1000 new fans, 500 likes, 300 retweets. But what are those new fans really worth? The expensive video you posted: what revenue did that really generate, in this new age of declining organic reach?
Let’s step back in time just a few years.
Social media often was sold as “the Revolution” and the holy grail for marketers. But in reality, many organization learned the hard way that social media was not a one-way street – the power of the consumer voice can bite back. So before marketers have discovered Facebook or Twitter as a marketing channel they had to do their homework first. In many cases, Corporate Communication teams were the first stakeholders that had to create a communication strategy for Facebook and Twitter, and had to learn that communication is not just broadcasting any more. They also had to provide resources to feed the content beast, to listen and answer to whatever fans and followers had to say.
Naturally, beloved brands had an easier go than unknown brands in regulated industries, and many brands felt loved by the sheer amount of fans and followers who would subscribe “organically” (meaning without the brand having to invest into paid advertising on social networks) to brand’s messages just because they loved the brands anyway. The more fans the better. It just feels so good to have more fans than your competitors, right? Brand managers felt the love and so huge investments were made to feed the content beast to please the fans and to spread the love. And soon marketers learned that on social media, a brand’s communication goals can hardly be reached the traditional way – content needed to berelevant to be seen by most fans and to drive engagement.
Until 2011, that seemed to work fine and Facebook marketing was considered free marketing (often forgetting that all the content, the editors and community managers, listening software et al already meant a serious investment). But then brands learned about the Edge Rank, Facebook’s secret filter mechanism that decides which content actually gets served to a Facebook user – and the outrage was not yet too loud when studies revealed that brand content only had a visibility up to 16% (meaning that 74% of fans never saw the brand content after they had liked a brand’s page once).
In 2012 and 2013, it was all about relevant content and fan acquisition. KPIs like #Fans, Engagement Rate and People Talking About This seemed to work fine for social media managers but not for CMOs of CFOs. But since a large fan base seemed to define success, budgets were shifted towards paid social to drive the engagement rate of the content – and to acquire more fans. Suddenly the CpF (Cost per Fan) became a popular KPI, and agencies were paid to optimize paid media campaigns to the max to acquire as many fans as possible. Because fans feel like love. Somehow social media land slowly experienced: if you boost your content with (paid) media you actually can buy reach, followed by engagement. So far so good.
In December 2013, the hammer dropped on social media’s wonderland: studies showed that the organic reach on Facebook had dropped to 8%, and in many cases even down to 5% – meaning that up to 95% of the acquired fans never saw the brand’s fabulous content created by hipster social media agencies. Let’s summarize for a moment: for years, social media managers have invested most of their efforts and millions in cash into content production and distribution in order to grow a fan base that, in 2014, is basically worth almost nothing. Today any content that is NOT boosted by paid media has all the visibility of a blind goat. Suddenly, content marketing on Facebook is under huge pressure, budgets are being shifted from content to paid, and the early adopters have begun to realize: Facebook is a mass medium. Just like TV. If you want reach you have to pay. Just like in the good old days of the soap operas: content was created to fill the gaps between the commercial breaks. On Facebook content is created to become advertising. Content is advertising and advertising is content. Welcome to madison avenue reality. Social media marketing is about to outgrow the walled gardens of esoteric thinking that marketing is now all different. It is actually not.
But what does this mean for the future of social media marketing – especially on Facebook? Facebook is just beginning to become the next big thing in advertising and one cannot afford NOT be on Facebook as a brand. The perception of Facebook as a platform that gives brands free “organic” reach is rapidly changing to being a mass marketing platform. In 2014, the media budget that brands dedicate to Facebook is – especially compared to TV – still fairly small. This will gradually change, but only when a brand manager can prove that Facebook is – cost-wise – at least as efficient as other mass media. Just as a TV spot AND a soap opera cost money and deliver reach and generate engagement, a brand channel on Facebook needs to be properly funded. And to prove the efficacy of social media marketing, it is necessary to calculate the value added by interactions on social media. The reach and engagement that fans and followers generate for a brand is called earned media. And it is the only way to actually prove the value of social media in the marketing mix.
Good news – the ultimate KPI for measuring the value added by Social Media is here: it’s cold hard cash.
Being able to measure the success of content marketing this is good news. Since it is almost impossible to measure the direct correlation between a brand post, a like or a shared video to the marketing goals of an organization or even the financial results of an enterprise it is time to look at TCO (total cost of ownership) of Social Media and the earned media value it creates. Undoubtely the reach that a relevant brand post gains through sharing and liking of it’s fans is worth real money. Just as in classic public relations where success can be measured by calculating the Advertising Value Equivalent (AVE) of e.g. a full page PR piece (press release, interview, thought leadership article) by comparing it to the advertising costs of a full page in that medium. In Social Media we call this effect earned media value. The EMV can be measured in 3 steps:
Measuring the EMV of a Facebook page or a Twitter feed of a brand though is not trivial. To do so would mean to measure EVERY interaction of a fan or a follower that amplifies the reach of your brands post. Every like, every retweet, every video view, every comment etc. It seems obvious that this can not be done manually but needs a technical solution that pulls the KPIs automatically and stores them in a scalable database.
Which benchmarks should these KPIs be measured against? Every click, every new fan, every engagement has a price. What is required here is the knowledge of your industry’s paid media cost (CpC, CpE, CpE etc.). This seems easy – but it becomes a challenge when you want to compare the performance of your social media team in LATAM against let’s say North America or EMEA. To compare apples to apples it requires deep global knowledge of realtime advertising and programmatic buying and media buying in general.
How much is that fan interaction worth for your brand? The weighing factors and the methodology is where the secret sauce is. Different from financial reportings, balance sheets and the art of book keeping there is no national or global organization that provides a framework on how to measure the value add of (social media) marketing. Even though methodologies like the Balanced Scorecard and trends like strategic controlling have found acceptance in economics it is hard to justify budgets for “soft” successes. Let’s be honest: there only 2 things a manager is interested in in the end: make more money and save more money. And this is exactly where the the EMV has it’s strength. It makes Social Media comparable in the marketing mix – comparing cost and the efficiency of content marketing allows social media performance management at it’s best.
Measuring the value added by social media using the EMV has many benefits because it gives marketers a stronger voice within budgetary discussions.
- Establishes a financial basis for social media performance goal-setting
- Simplifies KPI development for an enterprise’s social media teams
- Creates performance reports to compare and optimise the efficiency of your content (and your social teams) by product, country and region
- Delivers a reward system for content marketing based on earned media value
- Identifies cost-cutting potential in your global content marketing efforts
Any marketer that hopes to get away reporting KPIs like #fans, #retweets or engagement rate will face problems in the near future. If you want a bigger share of the marketing budget you will have to report in hard currency.