Altimeter Group have released a great study on the social media ROI measurement practices, “The Social Media ROI Cookbook: Six Ingredients Top Brands Use to Measure the Revenue Impact of Social Media”. The study, which is based on the interviews with 38 social media technology vendors (including Campalyst), 15 brands and 3 agencies, as well as quantitative survey of over 70 brand and agency-side professionals, without doubt is the most comprehensive attempt to identify the practices brands apply and the challenges they face in attempting to measure ROI of social media.
As one of the key challenges in measuring social media ROI, Altimeter Group highlights the fact that “Social Data is New and Different”:
- “Exists in online, offline, and across multiple screens, fragmenting data capture”. And though one can argue that measuring offline effect of digital marketing has not been solved yet even in more mature channels, such as display and search, the extensive usage of social media on mobile devices cannot be omitted, or that will lead to incomplete picture. After all, over 100 million people access Facebook solely on mobile devices in June, 2012 according to SEC filling.
- “Is volatile, making measurements a moving target”. The metrics and data provided by social media networks to brands and technology vendors are in constant change. An example, provided by Altimeter Group includes the considerable changes Facebook rolled out to their APIs earlier this year. As the technology vendor, we can confirm that solely keeping up with the APIs is a skill on it’s own.
- “Different apps and platforms give rise to different metrics, making a holistic view challenging”. While the “bottom of the funnel” metrics are still the same (visits, conversion rates, revenue, etc.), the “top of the funnel” metrics are now completely different from what they used to be. In the world of display the funnel looked simple, “banner ad impression -> click -> visit to website -> conversion”. Now try to imagine the conversion funnel for Facebook pages, “saw a ticker notification that a friend liked Page X -> “liked” the Page X -> saw a status update from Page X -> clicked the link -> visited website -> converted”. Finally, try to imagine the funnel for a Sponsored Story or Promoted Twitter Account!
If you are interested in reading the full study, the report is available for download at Altimeter Group’s website. That’s a great read and highly recommended to everyone in search of the social media ROI!