Analyzing the ROI of Social Media Marketing

Cara Tarbaj
Cara Tarbaj Social Media Marketer, Wishpond

Posted on March 24th 2013

Analyzing the ROI of Social Media Marketing

People responsible for marketing budgets want to know if there is any ROI value in social media. Is the ROI of social media marketing capitals being thrown away?

Patricia Redsicker, an expert in the Edison Research exploration, takes a look at the statistics in the USA.

Here are the 9 most interesting discoveries in the study:


1. Almost 58 million Americans visit social media networks every day.


The “Social Habit” is defined as “the tendency to visit social media websites a few times per day.”

Shown in the diagram below, by the middle of 2012 the number of Americans who had “The Social Habit” increased from 18% in 2011 to 22% in 2012.


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Why are people visiting social media websites?

  • 89% of people do this to stay in touch with family and friends

  • 67% - to entertain themselves

  • 66% - to learn about new products and services

  • 48% of people visit social media networks for their career

The main conclusion is that consumers spend more and more time on social media - so you may need to consider finding new means to establish the contact with users and to interact with them throughout the day.

For example, you may post a short poll or a question on your Facebook Page in the morning, publish a useful article in the afternoon, and upload an interesting picture or a short video clip in the evening. Do not forget about the week!

It is important to understand the consumers needs and apply social media efforts accordingly.  

 

2. Twitter draws new active users

Twitter continues to draw more and more new users - it is evident by the figures on the diagram below. The author of the article mentions that the level of interaction between Twitter users increased by 69% in 2011 to 76% in 2012.

The main conclusion is that engagement on Twitter is on the rise. Give useful guidance and information (such as links to articles) in reply to users questions instead of just publishing promo content. In Redsicker’s opinion, this will help you to establish a confident online presence as an thought leader in your industry sector.


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3. Approximately 40% of American people hear about tweets through traditional mass media

The research data indicates that more than four in ten Americans hear about or read tweets almost every day in media. The author gives an example of TV shows such as Piers Morgan Tonight and Anderson Cooper 360 on CNN, which use their Twitter and Facebook accounts for advertising purpose and extended discussions.


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The main conclusion is that every day the TV audience deals with a wealth of information about Twitter and the communicative capabilities it provides users with. If your company advertises on TV (or is about to do this) you should advise your audience to follow you on Twitter and participate in online discussions.

See how American Express applied tweets and Twitter in their TV advertisement.

 

4. Brand following behavior in social sites doubled over the past two years

This has become a real revelation for Redsicker. Indeed, the diagram shows the brand following behavior on social networking sites for the last 3 years. Redsicker predicts it is most likely that the trends will hold.  image

The main conclusion: free offers and special deals for existing customers and interesting entertaining content may be pointed out as the major reason why users follow brand pages in social media networks. Therefore,  promote special offers from your website on your social media networks pages as well. These may be free research reports, webinars, or giveaways with products and/or services.

Get creative and vary special offers as often as possible to keep the users interested.

5. Facebook is the dominant platform for brand following behavior

79% of users prefer using Facebook to connect with brands and products, while only 9% of users prefer using Twitter. Why Facebook? The author replies:

● Facebook is a well known territory. Consumers spend a lot of time in social networking sites communicating with their relatives and friends; that is why it is not difficult at all to connect the brand.

● Secondly, Facebook users are strongly inclined to trust the opinion of their friends. If their friends like the brand they will most certainly “like” it as well - birds of a feather flock together!

● And finally, Facebook has more convenient and visually interesting interface that other platforms have. This allows brands offering daily deals, contests, prizes, etc. with maximum efficiency.

 

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The main conclusion: to increase the number of your subscribers on Facebook, consider giveaways and providing entertaining content. You may also reward dedicated subscribers and attract the new ones providing significant discounts on goods and services you offer (i.e. 50% and more discounts, but not just 5% or 10%).

6. Young Facebook users have lots of friends

Redsicker draws attention to the diagram that illustrates 18-24 aged Facebook users having most of the friends as opposed to adults. Taking into account that birds of a feather flock together, brands subscribers’ friends on Facebook, as a general rule, act the same as their subscribers.


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The main conclusion: increase your brand visibility on Facebook. Target not only your fans on Facebook but also their friends. Study the profile pages of your subscribers and determine their demography, interests, social behavior, etc.

This information will help you create the content that will be targeted at your subscribers. Then, create a message you can share, for example -  specials that require voting (if your subscriber votes, his or her friends may want to vote too). The goal is to frequently show up on the feeds of users, by that encouraging your subscribers’ friends to interact with your brand.

7. Nearly one-quarter of social networking users use “Daily deals” sites and services

In author’s opinion American people are not crazy about special deals like Groupon offers at all. Only 23% of social media users are registered users for “daily deals” services. There are a lot of customers who made a purchase on Groupon and shared their negative opinion in numerous resources about their experience.

Nowadays this segment of business is totally covered by Amazon and Google. Marketing specialists are supposed to watch the interesting reaction of their customers over the next 12 months.  

The main conclusion: in Redsicker’s opinion,  Groupon’s business model is pretty doubtful. But from the customers’ point of view, everybody likes special deals. That is why you just need to be careful and make sure there is social media marketing ROI, in case you use this type of service.

 

8. One third of social networking users are “Silent”

The majority of people on social networks are active and post status updates to social networking websites regularly. Nevertheless, 34% of social media users do not ever post status updates for various reasons. Some of them are observers (those who just watch and absorb information), and others are newcomers who are yet to improve their social and/or communication skills.


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The main conclusion: those who are “silent” or newcomers may not communicate via social media but still, they are able to hear you and can be useful to your business.

If you noticed silent observers among your subscribers, try to address them directly via message. They will most likely answer the question or the suggestive comment. To encourage newcomers to communicate with your brand, try to share some sort of behind-the-scenes information or photos that will appeal to them.



9. “Check-In” Behavior Stalls

Networking services such as FourSquare witnessed a decline in users’ “Check-In” activity in 2012. 57% of users almost never have used a “Check-In” service to post a status update that provided location.


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The main conclusion: if your marketing strategy is based on location, try to attract new customers with special deals and discounts. Taking into account people feel worried about their privacy and safety, your offers should be unique allowing them to check in.

Let’s summarize.

Nowadays marketing specialists have wonderful possibility to take into consideration Redsicker’s conclusions. Knowing what social media marketing ROI requires they are able to develop strategies adjusted for users’ behavior.

Redsicker advises to consider Facebook and Twitter’s popularity, as these platforms attract many new users. On the other hand, the author cautions against sell-out services, as users are not fond of them. Lastly, it is strongly advised to offer special deals and discounts.

What are your recommendations regarding measuring social media ROI?

 

Written by: Roman Viliavin, Vice CEO at Promodo Online Marketing Company.

Roman is an unconventional thinker and candidate master of chess. Roman has been working in the field of search engine optimization since 2005 and is the moving spirit of the company. Participant and speaker of all major events in SEO business. Roman has successfully completed dozens of projects and gladly shares his experience with SEO community via articles and various online and offline publications. Follow Roman on Twitter and Facebook.

Cara Tarbaj

Cara Tarbaj

Social Media Marketer, Wishpond

Cara Tarbaj is a social media marketer at Wishpond.

Wishpond builds social contest apps for businesses. Learn more on their website.

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Comments

This is a great visual to put things into perspective!

Thanks Becky!

We're also big fans of visuals (and stats).

Great insight.

However I'm unsure about the warning against sell-out services on one hand and the recommendation to offer special deals and discounts? 

Great article Cara.

Particularly interesting stat about the daily deals. Show's traditional and modern marketing can work together.

Thanks Stephen!

I agree. This article was a guest blog post by Roman Viliavin, the Vice CEO at Promodo Online Marketing Company. I'll be sure to pass on the feedback.

It think you meant it increased "to" 22% from 18%. Had it increased by 22% from 18% it would be at 40%.  It's not really proper to say something increased by 22% when starting from zero either. Otherwise, interesting stats. 

You give no source for the data other than it was writte by Roman Viliavin. Where is the data from?

Hi Nicole, thank you for pointing that out. You are correct.

I suppose the hyperlink was removed somewhere in between being published, here's the link to the data source: http://socialhabit.com/secure/wp-content/uploads/2012/07/The-Social-Habi...

 

Thank you for being so observant! 

Great article, especially for small, local businesses who do not have the time, wherewithal, or inclination to track their social media ROI more closely, but who may take some comfort from the survey numbers that their efforts are effective beyond what they may see in Likes and Shares. Very useful. Thanks!

Thanks for the feedback, Fred!

We agree, tracking the ROI of social media is important, yet positive statistics proving our efforts are worthwhile is definitely comforting. 

I think the insights on the PDF are interesting. I don't think this has anything to do with analyzing ROI though as the title says, but since most Americans are headline readers, as long as they click though right? 

ROI is a useful metric to compare the value of investments, but requires that you set out what you're using as the benefit (and how you're measuring it) along with what you're using as the cost. Nothing in the article or the PDF explains any of this. 

Not to say the information isn't useful, the title is just very misleading.

My recommendations for measuring social media ROI would be first to define what the numerator is. What are you using as the net gain for this proposed investment?  If you want to measure ROI for social media and don't want to use dollars and cents, then at least define what alternative metrics you're using so you can actually calculate the ratio in order to make an informed decision.

What on God's quasi-Green Earth does the headline have to do with the content of this piece? Stats on how often the population at large visit the two most well-known sites on earth? How does one determine ROI from any of this?