Getting Started With Social Media Valuation

Even with all the buzz about social media, many people have questions about how to value social media marketing efforts. It’s not uncommon to hear (very legitimate) questions such as:

“How much is it worth for a user to become a fan of ours on Facebook, or to follow us on Twitter?”

“How much revenue is social media really bringing in?”

“How should I think about hiring or putting resources against our social media marketing efforts?”

These are the questions marketers and managers alike are asking, in companies small and large. In large companies in particular—such as Yahoo, where I work—where every incremental resource has to be justified by a business case, the lack of knowledge about the true value of social media can make it very challenging to get a program off the ground (I’ve written in the past about how big brands should organize around social media). Before throwing in the proverbial towel on resourcing social media marketing (SMM) efforts, let’s take a step back and remember where we were less than a decade ago with search marketing.

The wayback machine

When we started optimizing websites for search in the nineties, there was hardly anything in existence that resembled web analytics. For the most part we couldn’t quantify how we were benefitting from SEO, but intuitively we knew that traffic from search engines was good, so more of it must be better. Now, of course, the tracking of paid and organic search traffic, and the attribution of that traffic to conversion events, is not only well understood, but in fact it’s fueling a multibillion-dollar industry. So to lay the foundation for a solid SMM campaign, let’s rip a page out of the book on search marketing and find something measurable to serve as a starting point.

Valuation, valuation, valuation

First of all, and you’re probably tired of hearing me go on and on about it, valuation will serve as the cornerstone to your SMM foundation in the same way that it helps search marketers secure and maintain their budgets and their jobs. But valuation in social media is fundamentally more challenging than in search, because the bulk of the value is generated outside the friendly confines of your website. I was talking to Brent Csutoras about this yesterday. Brent happens to know more about SMM than just about anyone.

In our conversation, Brent acknowledged that tracking SMM is tricky business. To cite a couple of obvious examples, only about a third of all tweets come from twitter.com, which makes the vast majority of tweets much more challenging to track. As well, while the bulk of Facebook activity comes through the news feed, you can’t put traditional tracking code on your news feed page, so it’s a real chore to try to understand exactly what’s happening on Facebook. The result of this conundrum is that, if your goal is to quantify the value of your SMM campaigns, you should start with something small that you can track and quantify, and that drives some sort of measurable value. Look for something bigger than a click, but smaller than a conversion, to make your goals attainable yet significant. From there, your best bet will be to extrapolate the effect onto a larger scale.

Content remains king

Here’s an example. Think about promoting content on your site. Video, text, whatever you either have or can develop with some ease. Pick one item. Only one. Make sure that you have the content on a page where you can invite others to “like” or share with all the popular social network badges right there around the content module. Heck, you might even try to make sure that the page where your content is hosted is search engine friendly (social helps SEO—I’m just sayin’). Then, either with an agency or on your own (if you know me you also know that I’m going to recommend you use an agency), promote the hell out of the content via SMM, and use tracking URLs wherever you can. On your Facebook page, link to the content. Tweet about it. Promote it to bloggers. Here’s where an agency can really help, as they’ll know the best places to promote your content based on your goals. Use bit.ly URLs that re-direct to your analytics server to cookie the users if you can.

Wait for it

Then, you should be able to see the effects of SMM over time. If you’re promoting video, measure the number of times people play the video or the average time spent engaging with the video unit. If it’s a white paper, measure the number of downloads. If it’s normal web content, measure time spent or subsequent activity on your network. Anything that leads to quantifiable value is fair game here.

Now, you’re able to go back to your executives and show them the value of SMM in some measurable fashion. The good news is that SMM is a little like SEO or SEM, in that once your executives get a taste of social, they’ll want more. And more, and more…