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Calculating the ROI of Content and Engagement Strategy
I often get asked, particularly by clients, what the ROI of content and engagement is. What is it going to cost, and what are they going to get out of it? This is always a tricky question to answer, but I’ll attempt to do so at the end of this post. First, some context.
Nothing in life is guaranteed…unless you’ve been working in advertising.
Content in old advertising was pretty simple: shoot a nice, glossy ad, pushing your product/service and then pay CPMs to distribute that content. Advertisers knew exactly how much that ad was going to cost to produce, how much it would cost to distribute and how many people the ad would (potentially) reach (“potentially” because impressions are not synonymous with engagements).
The Wild Web
Today’s content is a different beast. A good content strategy incorporates paid media, owned media, relationship media and SEO to generate earned media. None are mutually exclusive. And, the emphasis is on the engagement, not the impression.
Social Media
Notice I didn’t even mention social media in there? That’s because social media is ubiquitous across the aforementioned forms of media. Social media is a channel for paid media (e.g. Facebook Ads and Stories, Twitter’s Promoted Trends and Tweets, to name a few of the biggies). It’s a channel for owned media (e.g. Facebook Pages, Google+ Brand Pages, YouTube Channels, Tumblr accounts, Twitter accounts – these are all places to build an owned community). Social media is a channel for relationship media – my term for modern day PR (you can now identify who the top influencers for your brand are; many, if not all, will have a social media presence). Leverage these three media well, coordinated with a strong content strategy, and social media helps facilitate scaled earned media. But, please do not mistake social media as a siloed form of media.
The Brand’s Predicament
Now coordinating these media and solidifying one unified content and engagement strategy is difficult – particularly for Fortune 500 brands with large marketing budgets. That’s because each medium is often handled by a different agency or group. Paid media is handled by media agencies. The content for paid media is produced by the creative agencies. Relationship media is handled by PR agencies. You have a new breed of social media agencies doing some pieces of each (paid, owned and relationship media), while the PR, creative and media agencies are all fighting each other and the social media agencies for a piece of the social media pie. No wonder brands are confused.
Building A Newsroom
To help solve this issue, I’d like to see brands build something akin to a newsroom. This would be a cross-divisional/agency team focused on content and engagement strategy. They would work together to
- Identify the key existing and target audiences (i.e. consumers) for the brand;
- Identify what content is valuable to each of those audiences at different stages of the purchase funnel;
- Identify where (Facebook, YouTube, Twitter, blogs, TV, news outlets, etc.) and how (video, pictures, text, slides, etc.) audiences like to consume that content;
- Identify who the brands’ top influencers are; and,
- Then, assign team members and agencies to produce the appropriate content and distribute it through the appropriate channels (i.e. execute on the plan)
For more detail on the above bullets, see my posts “Content As A Platform” and “Building A Content Platform”.
Calculating the ROI of Content and Engagement Strategy
Now, I believe that social media and mobile technologies have empowered brands (large and small) to
- Access more specific data about their audiences;
- Produce and distribute a higher volume of content that is more valuable to their audiences, and do so more efficiently; and,
- Build deeper, longer lasting relationships with their audiences
With this in mind, I’d like to see brands and agencies use the following as a benchmark for calculating ROI
- calculate the average Customer Lifetime Value (= revenue x time [per month/per year])
- calculate Allowable Cost Per Sale (i.e. the amount your willing to spend to acquire a sale – e.g. 10% x CLV)
(Note: Jamie Turner does a great job describing Customer Lifetime Value and Allowable Cost Per Sale in this post)
With a successful content and engagement strategy, average Customer Lifetime Value should increase over time, while average Cost Per Sale should decrease over time.
I’d like to place emphasis on the words “over time”. While you can certainly run one-off social media campaigns, content and engagement are long-term initiatives that involve constantly listening, learning and iterating. You won’t see ROI tomorrow, or maybe even six months from now. Anyone that has ever started a blog and tried to build an audience/community around it will confirm that. But, I think a year in, you should probably start to see these effects starting to take place.
Are any of you building a newsroom in your organization? How are you calculating ROI for your content and engagement efforts? Would love to know.
Related articles
- Google+ Pages: Real-Time Platforms for Connected Brands (greatfinds.icrossing.com)
- The Content Strategy Burger [Infographic] (socialmediaexplorer.com)
- Infographic: The Content Strategy Burger (aht.seriouseats.com)
- How to Design a Content Marketing Strategy in 3 Simple Steps (e1evation.com)
- 7 Tips for Stellar Social Media Community Management (hubspot.com)
- How does an effective website content strategy benefit a business? (marketing.yell.com)
- A Deep Dive Into GetSatisfaction’s Content Strategy (contently.com)
- 5 Trends That Will Shape Small Business in 2012 (ducttapemarketing.com)
- Measuring Social Media ROI: 3 Things to Consider (socialmaximizer.com)
- Building a Content Platform (reciprocitytheory.com)
- Why Every Agency Needs an Earned Media Director (adage.com)
- How Can Startups Leverage Social Media? (currentindiaaffairs.wordpress.com)
Defining ROI of Social Media by Identifying Opportunities with Social Media
The social media industry as a whole is following a strikingly similar approach.
In the startup world there are rumblings of a bubble. It’s sexy to invest in social media startups in hopes of getting in on the next Facebook or Twitter or LinkedIn or even Groupon. The problem is that many investors trying to get into the industry don’t know what to look for, and so many entrepreneurs are, as Charlie O’Donnell so adequately stated in his newsletter a few weeks ago, “solving to get funded” instead of building products that are creating value by improving the lives of the greater population. It’s about the sprint, and the finish line is getting funded by a VC. While any VC or entrepreneur worth their salt knows it’s really about the execution, and that is akin to running a marathon several times over.
In the marketing world, we are reporting on the most-viewed, viral branded videos. We’re creating badges for every action and trying to figure out which new check-in or check-out startup we should use on the next campaign. We’re confusing brands about what’s important and valuable – probably because this is all still so new that we are, in part, figuring it out as we go.
So, I have a challenge for everyone: keep it simple and focus on the longview.
Here’s what I mean by that:
Social Media Is Not New
Instead of trying to give you a lesson in the history of social media, I’ll just refer you to a series of posts by Marc Suster. Honestly, he explains it better than I could. Here are Part 1 – Social Networking: The Past, Part 2 – Social Networking: The Present and Part 3 – Social Networking: The Future.
What it comes down to is that there is a common thread between the technologies from thirty years ago, and the ones today. What has changed is that the internet is now ubiquitous and the platforms more sophisticated in enabling people to connect with each other, and find, filter and share content that they find relevant and valuable.
When analyzing new technologies, focus on those that solve a real problem for a large audience (broad or niche) and create a community (i.e. a network or fan base) around that product/service.
So, What’s the Value of Social Media for a Brand?
The most valuable thing that a brand can do in social media is leverage its platforms to listen to, and communicate with, their customers to create an owned advocacy network where a brand’s most avid advocates can
- inform the brand directly on valuable improvements that the brand can make to its product/service
- help other customers solve issues that they’re having with the product/service
- gain exclusive access to content that the advocates crave and can use for their own social activities (participating in forums, blogging, etc.)
This is valuable because
- customers transform into advocates with an emotional connection to the brand
- brands can implement the insights from their advocates into product/service updates, improving their brands in a meaningful way
- advocates earn a real voice in the brand’s development and identity, which only deepens their connection with the brand and makes them want to participate more, leading to more insights and more positive word-of-mouth and content (and high search results) for your brand
- less money and time spent on a customer service team because your advocates are already answering many of the questions that a customer may have. And, they may be answering those questions in a clearer and more timely fashion than your customer service team would
What Does This Really Mean for a Brand?
A tectonic shift in the way a brand manages its business. It must start behaving like a transparent startup, and that directive has to come from the C-Suite down. The value can be tremendous. Social media gives brands a channel to encourage innovation informed by its greatest advocates. It eliminates the guess work when thinking of improvements to your product/service – just listen to your advocates and you know that there will be a consumer base that appreciates the updates.
I’ll leave you with two Warren Buffett quotes:
- “The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective”,
- “There seems to be some perverse human characteristic that likes to make easy things difficult”.
Well, essentially, the same goes for social media. The press and ad agencies and VCs and startups generate a lot of noise and make social media sound a lot more complicated than it really is.
Focus on the simple behaviors – the basic actions that people take online. Understand why people take those actions and empower them to do more of it, while providing them value with your brand. And, remember that it all starts with listening.
Social Media and the Reciprocity Theory
This post originally appeared here on Big Fuel’s blog Content to Commerce.
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rec.i.proc.i.ty / [res-uh-pros-i-tee] / n.
mutual dependence, action or influence
http://www.merriam-webster.com
Newton’s Third Law of Physics
I constantly contextualize and visualize information; it makes digesting that information easier. Thus, I often think of social media in the context of Newton’s Third Law of Physics (for every action there is an equal and opposite reaction). And, I refer back to this image of two ice skaters pushing against each other.
So long as the force that each skater is acting upon the other is equal, they maintain a balanced relationship. But, as soon as the force of one exceeds the other, the relationship is thrown off balance. In other words, the skaters’ relationship is mutually dependent, or, reciprocal.
Lately, I’ve been thinking a lot about the core motivators that drive participation and action in social media. What is influence, really, and why the desire to become an influencer? What drives a piece of information or content (the two being synonymous on the social web) to go viral? And, how can a brand leverage social media to reach its audience and see a real ROI?
This notion of social reciprocity has struck a cord with me, leading to the development of what I call the Reciprocity Theory.
The Reciprocity Theory
At its core, the Reciprocity Theory believes that social motivation is based on each person’s desire to
- be recognized as an individual, and
- belong to a community
It’s the yin and yang of the social being. Why do we join a social network like Facebook or Foursquare? To be part of a community – even if that community is just connecting online with your offline friends. Why do we share content on Twitter and YouTube? To share in common interests and knowledge. Of course, as I was thinking about this, I had to visualize it, so I drew a venn diagram:
Taking a step back, I immediately thought: here’s the root of influence – at the intersection between the individual and the community. Influence is earned by being a valued member of the community. And, how does one become a valued member of the community? I backed into this answer…
The Valued Community Member
In their study “Content- What Drives Consumption?”, AOL concluded that audiences want valued original content. And, the equation for valued original content is:
Unique Content + Quality (trusted, fresh, relevant, authentic) Content = Valued Original Content
Thus, in order to be recognized as a valued community member, an individual must produce or curate valued original content. Provide value to the community, and your influence will grow. It’s reciprocal.
And, here lies the essence of the Reciprocity Theory. Whatever you give to a community, you earn in return. It’s reciprocal and, potentially, infinite – as long as you continue to provide value to the community. So, the reciprocity venn diagram became an infinity loop of sorts.
Simple enough, right?
But, what about brands?
Looking back at the reciprocity venn diagram, another thought occurred to me: where does a brand fit into this? How does a brand reach their target audience? If a brand interjects itself with traditional, antiquated messaging and advertising, then it will throw off the balance and the individual and community will retract. The individual and the community will continue their relationship, but the brand won’t be a part of it.
So, how can a brand earn a seat in the conversation in a world where the individual wields more power than the brand? The brand must do exactly that: earn it – by respecting the relationship and becoming a valued community member.
In my next post, I’ll be discussing how a brand can become a valued community member and start to see a real ROI for its participation. If you’re interested, please follow me on Twitter for updates.
Related articles
- Practice Social RECIPROCITY, not Social MEDIA (reciprocitytheory.com)
- Podcast – An Introduction To Social Media Marketing (simplybusiness.co.uk)
- The Myth Of Reciprocity And The Social Life Of Brands (twistimage.com)
- Exposure to Social Media Linked with Changes in Sales and Brand Perception (ogilvypr.com)
- 3 Layers of Social Media Connections (brasstackthinking.com)
