One of the biggest concerns marketers have about social media is lack of solid return on investment (ROI) data. Traditionally, merchants were able to run an ad campaign in the newspaper to promote a discounted product or service and then measure the increase in sales that came from spending money on advertising. This ROI approach was all about quantitative measurement. Some researchers say the strengths of social media can be best understood by using qualitative measurement strategies.
A study released by Crowdtap earlier this month says marketers need to measure the qualitative elements of marketing strategies such as free samples, online discussions (social media) and house parties. When done correctly, says Crowdtap, qualitative measurement of new media shows these formats outperform traditional media. The Crowdtap strategy involves analyzing lift for key performance indicators – brand equity, favorability, familiarity, brand advocacy and purchase intent.
Brandon Evans, CEO and founder of Crowdtap believes marketers must measure people’s reactions to various mediums. Evans notes, “Consumers may pay attention to a commercial, but if they don't trust it, that factors in. If a message is delivered in a much richer environment, it will score higher.”
An example of a richer environment is an online discussion often facilitated in a social media network. When viewed through the lens of consumer feelings of intensity and proximity with respect to brands, participation in an online discussion yields higher scores of consumer engagement than viewing a magazine or TV ad.
The Crowdtap report comes as comScore and Nielsen have announced that they’ll start applying gross ratings points to Facebook ads. Evans finds this troubling because these measurement systems are applying old metrics of quantity to a qualitative experience. Just as many consumers don’t pay attention to TV ads, similar numbers are likely to ignore Facebook ads. And these measurement tools don’t give the marketer a clear picture of how ads are influencing potential buyers.
Evans also acknowledges that marketers may have to spend more in order for social media to be an effective marketing tool. But the higher ROI would make it worthwhile.
Clearly, the jury is still out on the cost and benefit of social media with respect to marketing, but there is no shortage of strategies on how to measure ROI.
[Sources: Zax, David. Crowdtap’s Quest to Measure Brand Influence. 2 Aug. 2011. Fastcompany.com. Web. 17 Aug. 2011; Martinez, Juan. Social channels deliver better ROI, study say. Dmnews.com. 3 Aug. 2011. Web. 17 Aug. 2011]