The ongoing debate about the value of social media engagement remains unresolved. However efforts have been made to assess the value of social media as “earned media” and to assess the ROI of social media marketing. After applying these recent calculations to our business and to our clients’ businesses, we find the assessments reasonable. At the very least, these calculations create a starting point for analysis of individual business results.
Social Media ROI — 3: 1
The first study, conducted by the Internet Advertising Bureau (IAB )examined FMCG brands in the UK. In particular, they examined the social media activity of Heinz, Kettle and Twinings over an eight-week period.
- First, they learned that 83 percent of “consumers exposed to a brand on social media” said they would try a brand’s product.
- Second, 80 percent of” consumers said they would be more inclined to buy a brand more often in the future after being exposed to its social media presence.”
- Third, three brands noted a lift in sentiment when a consumer was exposed to their social media presence: Heinz reported 22 percent lift, Kettle reported 17 percent lift, and Twinings reported 19 percent lift.
- “Kettle reported a 21 percentage-point increase in the likelihood of persons recommending the products to friends when exposed to social media.”
- Finally, the study calculated that for every £1 spent in social media, a potential value of £3.34 can be generated.
Earned Media Value of Social Endorsements
In the second study, Social Chorus attempted to create a benchmark document outlining the earned media value index for social media (the value of social endorsements). First, to define earned media, we will accept the definition provided in Wikipedia:
“Earned media (or free media) refers to favorable publicity gained through promotional efforts other than advertising, as opposed to paid media, which refers to publicity gained through advertising. Earned media often refers specifically to publicity gained through editorial influence, whereas social media refers to publicity gained through grassroots action, particularly on the Internet. The media may include any mass media outlets, such as newspaper, television, radio, and the Internet, and may include a variety of formats, such as news articles or shows, letters to the editor, editorials, and polls on television and the Internet. Critically, earned media cannot be bought or owned, it can only be gained organically, hence the term ‘earned’.”
Social Chorus prefaced their report with the reminder that “there is no one magic formula.” In other words, one must expect variations across industries, endorsement volume, etc. Here are their value assessments:
- Blog Posts about a brand or product: $853.00
- Facebook Like: $1.60
- Facebook Fan: $11.24
- Facebook Posts and Shares: $10.17
- Twitter Followers: $2.25
- Twitter Tweets and Retweets: $5.00
- YouTube Video Views: $0.38
- A Digg: $2.00
- StumbleUpon content: $1.43
- LinkedIn, Pinterest, Instagram, Google+: too little history and data to assess
Your experience may be different from the published findings and calculations of these two studies. Before using the calculations, it would be wise to download the reports from the appropriate websites to understand the logic, the process, and the calculations involved in reaching the stated conclusions.
What we have is a set of estimates of the value of various kinds of endorsements in the social sphere. They are a starting point for each company to consider in assessing or estimating the value of their social media activity. It is always important to keep in mind that a large number of endorsements in response to a promotion to win endorsements typically have less value than earned endorsements. Take these findings as a yardstick against which you can measure your success and your ROI.
Please let us know how close these calculations are to your own estimates.
Source: Research conducted by Marketing Sciences on behalf of the IAB’s Social Media Council and collected more than 4,500 responses. A summary is available at http://www.marketingmagazine.co.uk/article/1188981/social-media-provides-31-return-investment-claims-Iab-study Source: http://en.wikipedia.org/wiki/Earned_media Source: The Earned Media Value Index: A Benchmark Guide to the Value of Social Endorsements, socialchorus.com.