Getting beyond the buzz: Is your social media working?
July 2012
Rishi Bhandari, Jonathan Gordon and Andris Umblijs
When General Motors pulled its ad dollars from Facebook, it set off a firestorm of debate about the value of social media. Executives in many ‘C’- suites today are asking: How do you compare the effectiveness of a Facebook comment with an ad that runs on TV? Or a tweet with a glossy magazine spread? Am I getting my money’s worth? Good questions, which until now have been impossible to answer. In a recent survey, we found that 91 per cent of companies believe social media doesn’t significantly impact sales. The reality is that it’s hard to say for sure because, in our experience, nobody has demonstrated that they can measure the return on investment (ROI) on social. This metrics blind spot means chief marketing officers (CMOs) can’t make informed spending choices between social and traditional channels. We believe that social media can have great value as part of a company’s marketing mix - not because of some gut feel but because we can measure it. At one large packaged goods client, for example, we proved that digital had an ROI that was, on average, six times greater than TV. After isolating the effects of digital display from other social content (such as user comments and viral activity), the analysis also found that social media had much higher impact than other digital media. As a result, the company is shifting more than 30 per cent of its TV budget to social media. Social media doesn’t live in a vacuum Measuring social media’s impact is complex, requiring a more sophisticated appreciation of how social media fits into the broader marketing landscape. A tweet may lead a customer to a website; a television ad may resonate after the customer reads a comment on a site; and a billboard may encourage a customer to “like” a Facebook page later in the day. Given the potential cross-over effect, any social media measurement needs to account for the impact of both digital and off-line interactions. Metrics should also factor in the impact of broader external influences, such as fluctuations in market activity and seasonality. And this all needs to be done simultaneously to capture the true impact of each channel.
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