It’s funny. I used to read a lot of social media marketing books. Hell, I even recently helped research one called microMARKETING (which is awesome and you should totally read, thus negating the point of this post…but I digress.)

But as I’ve mentioned in some other recent blog posts, my most recent fascination has been in investigating other areas of the marketing ecosystem. Books dealing with sociology, economics, brand marketing, psychology, anthropology, etc.

I know, it sounds a bit egotistical, “I don’t bother with social media marketing books…” but that’s not an accurate interpretation of what I mean.

What I mean is that I find so much more value in reading about topics that can be related to what social media marketers do. Sociology and psychology examine the mindset of people and their behaviors in community settings, particular when put under social pressures. Economics and brand marketing do good jobs of explaining the cyclical nature of business and how some brands have lasted while others have passed. And on and on.

I think it’s important that we all study those fields on the periphery of what we do through social media channels for the businesses we’re tasked with helping. It opens your thinking to so much more.

Such expansive thinking is infinitely valuable and I was reminded of it today in a NY Times article called “They Did Their Homework (800 Years of It)” about these economists who studied 8 centuries of economic crises in 66 countries.

In short, our economic doom was predictable if only we opened our minds to more:

“Everyone wants to think they’re smarter than the poor souls in developing countries, and smarter than their predecessors,” says Carmen M. Reinhart, an economist at the University of Maryland. “They’re wrong. And we can prove it.”

“The mainstream of academic research in macroeconomics puts theoretical coherence and elegance first, and investigating the data second,” says Mr. Rogoff. For that reason, he says, much of the profession’s celebrated work “was not terribly useful in either predicting the financial crisis, or in assessing how it would it play out once it happened.”

In the past, other economists often took the same empirical approach as the Reinhart-Rogoff team. But this approach fell into disfavor over the last few decades as economists glorified financial papers that were theory-rich and data-poor.

But in the wake of the recent crisis, a few economists — like Professors Reinhart and Rogoff, and other like-minded colleagues like Barry Eichengreen and Alan Taylor — have been encouraging others in their field to look beyond hermetically sealed theoretical models and into the historical record.

“There is so much inbredness in this profession,” says Ms. Reinhart. “They all read the same sources. They all use the same data sets. They all talk to the same people. There is endless extrapolation on extrapolation on extrapolation, and for years that is what has been rewarded.”

So last week I sat in on eMarketer’s “Seven Guidelines for Achieving ROI from Social Media” webinar and there were some interesting things to take away from it along with my own opinions.

Before we get into the nitty gritty, let’s get pumped. Let’s start with this great video called Socialnomics

According to one study by R2Integrated, the biggest barrier preventing marketers from incorporating social media into their marketing mixes is the lack of analytics and measurement. What’s interesting though is that 50.4% of respondents do feel that social media will generate quantifiable results in 2010, demonstrating a positive sentiment toward social media despite their wariness of current measurement tools.

And, there are studies showing results. Take a look at this slide.

So how do we get from confusion to clarity? How do we try and quantify results like this?

Let me start with a caveat. A lot of this is still conceptual and even the host had a hard time mapping it out. But there’s a lot of food for thought here.

#1. Establish clear marketing goals, and then identify social metrics that directly support those objectives

The biggest problem with establishing ROI metrics is that marketers don’t know what they’re trying to achieve with social media. Are they trying to retain customers? Are they trying to generate leads? Are they trying to make sales? In which case, what can we measure to determine if we’re accomplishing this? Most marketers look to see what impact their presence has on visits to their websites, and how many of those visits convert.

It is possible to track social media results at a very granular level. For instance, I’ve noticed that many brands who control their retail environment have tremendous success in social media by connecting with local customers and converting them into sales.

Domino’s is a big brand right? They’re nationwide, but they’re also franchised. So one franchise owner in Chicago named Ramon De Leon used Twitter to increase business for his local Domino’s restaurant. The results? He had the highest-performing store in the Chicago area and Domino’s had him consult franchise owners around the world on how to use Twitter for their businesses. There will be more detail about Ramon’s story in Greg Verdino’s upcoming book microMARKETING (Full Disclosure: I did research for the book)

There’s also the case of NAKED Pizza on Twitter, whose 1-to-1 connections with local customers generated so much response they actually made “Twitter” a checkout option on their cash registers. They even found that an exclusive-to-Twitter promotion on April 23, 2009, brought in 15% of the day’s business. And of course, there’s Dell and Best Buy’s Twelpforce.

But all those businesses have something in common. They control the retail environment and so their objectives were to connect 1-to-1 with customers online and lead them to their stores mostly by engagement and customer service. But what would you do for a brand like Fuze, whose products sit on shelves in dozens of retailers alongside 10 other competitors? The objectives have to be different because the barrier to measurement is greater.

For brands like Fuze, what you’re ultimately hoping to do is build loyalty, increase engagement and brand exposure, and hope it all translates into more purchases. But how do you measure that? What metrics could you use to determine if your social initiatives are having any effect.

Studies have shown that 34% of social media users search for a brand on Google after being exposed to it through social media. So, you can measure search volume using Google Trends. You can measure the number of brand mentions on Twitter, especially versus competitors.

And of course, there’s more.

#2. Organize your metrics into a logical framework

The image of the slide is missing for this one, but it had three buckets: Exposure, Engagement, and ROI/Outcomes. This was the least defined of the 7 points, but this is the general idea.

• Exposure: How many people are seeing my brand through this channel? This is more easily measured on Facebook with their Post Insights, but it represents a similar and familiar metric: impressions.
• Engagement: After being exposed to the brand, how many of them engage with the brand? Are they interacting? How are they interacting? What’s their sentiment? What is the % of engagement?
• ROI/Outcomes: This wasn’t explained as well, but it’s the idea of how many of those who engaged performed a desired action, such as visiting a website.

The idea is to create this link from exposure to engagement and finally to action. But he didn’t quite explain how to do that and I’m not sure how you would do that either.

#3. Take a long-term outlook with social media interactions and measurements. It’s a commitment, not a campaign.

This idea is simple, and one we all understand. The effect of social media relationship building can only be measured over time. You can do this by measuring the lift in comments and other interactions from month-to-month.

You could also check a competitor’s social presence and hand count their lift in engagement (at least on Facebook). This relates to tracking Google Trends and Twitter mentions, as noted earlier. You could’ve done something similar with Facebook Lexicon, which worked like Google Trends. Unfortunately, Facebook is killing it (and hopefully replacing it with another option).

#4. If hard ROI metrics are difficult to track directly, consider a range of softer metrics that can be linked back to desired outcomes.

We’ve already covered this concept in previous steps. It’s all about measuring “soft” engagement metrics versus business results. Check out this conceptual graph for an idea of what this means.

But within this are other thoughts from a variety of marketers. I’ll present the ideas as quotes

“Using a variety of hard and soft ROI metrics can absolutely be accomplished. I would offer that volumes of conversation over competitors, sentiment, the level of influence of those interacting with your brand, etc, are but some of the metrics that can be used to construct a dashboard of success.” - Blake Cahill, Visible Technologies

And…

“Many argue that a fixation on hard numbers could lead companies to ignore the harder-to-quantify dividends of social media, such as trust and commitment. A Twittering employee, for example, might develop trust or goodwill among customers but have trouble putting a number on it. “There is this default assumption that return on investment is the correct measure for everything,” says Susan Etinger, senior vice president at Horn Group, a San Francisco consultancy. “Everything needs to monetize within 12 weeks so we can understand that we’re successful. But frequently their measuring is misleading. Why? Because if someone on a blog or social network is trashing your brand, what is it worth to you if one of your passionate brand fans speaks out on your behalf?” - Bloomberg Businessweek, December 2009

Isn’t it more powerful when a brand advocate you’ve developed a relationship with through social media stands up for a brand or speaks highly of that brand? It’s much more powerful for a person to advocate for a brand rather than a brand extolling its own greatness. What is the value of that?

#5. Determine a dollar $ value for customers who choose to opt-in and engage with your brand via social networks.

It’s a great quote from Papa John’s, but hard to understand how they measured the percentage of Facebook fans who convert to customers. Perhaps you could create an arbitrary percentage, and maybe you can potentially tie their Facebook account to the Papa John’s site to measure their frequency of visits when they make an online order.

But semantics aside, ideally you could assign a dollar value to a fan through sentiment or self reporting. For instance, your Facebook fans might say “I buy Product X everyday!” and you could calculate that out. Or you could calculate a number based on sentiment. “I love Product X!” = $5/month.

And you can always invoke other correlated work of social psychologists like Leon Festinger and the dozens of others who came after him, who all studied the theory of cognitive dissonance and how much more likely we are to reassure ourselves of our loyalties. If you buy a Toyota, you’re more likely to gravitate toward news stories about how great Toyota’s are and tell your friends about how great your Toyota is. This manifests itself constantly in the form of customers that some people call fanboys, those people who stick to their purchases through thick and thin.

The general idea has already been somewhat proven within social media.

So is it likely that people who’ve never purchased your brand’s products will sign up for your brand Fan page? No, it’s unlikely unless there’s a strong incentive to do so, typically through a promotion. But it doesn’t mean it’s all a waste. What you’re doing here is constantly communicating, solidifying, and nurturing brand advocates who are key to sustained business and business growth. If those brand advocates can then get their friends to try your product and like it, then, voila… new fans and more advocates.

#6. Listening can save your market research $s

This is another way to look at social media ROI: It can save you money elsewhere. While typical research is more fine-tuned by questioning a wider swath of consumers, social media can help you measure how people are talking about your service.

• What aspects of your business are talked about most?
• Which are talked about least?
• What words are used to describe your products, and how can you mirror that for your own advantage in communications?
• What parts of the sales funnel are they missing? For example, I was working with a retailer who had fans on their Facebook page post that they were having a hard time with the online checkout. Some couldn’t even find the checkout! Those fans alerted the brand about an issue that ultimately helped them save lost sales.

And the second image of the HP CMO is particularly interesting. You can view conversations on social media to determine the impact of your traditional ad campaign. Are people responding to it and talking about it on social media? If so, why not? How can that inform future campaigns? If they are talking about it, is your brand getting its desired result?

#7. Build the technological capabilities to measure your customers’ complete digital footprint – in real time.

The host admits that this is the most conceptual and aspirational step. Essentially, it’s about connecting the dots between your multiple digital channels.

• How is social media effecting search volume?
• Can you alter your search keywords and ad copy based on listening?
• How do you measure the social connections? For instance, this person on the Facebook page who posted this great comment has 302 friends. This person wrote a wall post that was commented on by another person who has 212 friends. This brand tweet was retweeted by this guy with 1,200 followers. How far is your reach and sphere of influence?

One Last Thought

He also had some comments about branded vs personal accounts, which is a constant debate among marketers who want to leverage Twitter. But first, we must revisit an earlier slide.

If TRUST (or liking) is the primary “weapon of influence” used in order to succeed in social media, then how can customers trust a talking logo with no accountability?

“We can’t have carefully tailored messages from a brand entity. That’s why brands are putting their own people on social media to respond to consumers and engage. In trying to leverage TRUST, branded accounts have a hard time doing that. Frequently, brands start with a brand account and move to personalities, especially on Twitter.” - the webinar host, Geoff Ramsey (eMarketer CEO)

Your Feedback

This is obviously a big topic among marketers looking to use social media. What are your thoughts on the subject? Are these steps helpful?