The Death Of Social ROI — Companies Are Starting To Drop The The Idea That They Can Track Social Media’s Dollar Value

The Death Of Social ROI — Companies Are Starting To Drop The The Idea That They Can Track Social Media’s Dollar Value

JOHN HEGGESTUEN OCT. 2, 2013, 4:00 PM 2,066 2

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Many brands are moving away from metrics that purport to measure ROI on social media. They’ve realized that social media isn’t a transactional engine or sales machine, so they’re dropping half-baked indicators that gauge secondary effects, such as financial return. Instead, the new metrics evaluate social media strategies in terms of audience-building, brand awareness, and customer relations. In a new report from BI Intelligence, we look at the no-frills but powerful metrics that social media managers and analytics companies are focusing on, we explain how the end of the vogue for ROI has not meant a pullback on social media budgets (in fact, social media budgets are ballooning). And we dig into some of the misconceptions and misuses surrounding the more common reach and engagement metrics popularized by Facebook Insights, the built-in analytics dashboard for Facebook pages. Here’s how social media strategies are evolving: The decline of ROI metrics: Between 2010 and 2013, the percentage of marketers using a revenue-per-customer metric on social media went from 17% to 9%, according to the February 2013 CMO survey. The percentage tracking conversion rates also dropped, from 25% to 21%.

Even as the vogue for ROI indicators fades, social media budgets are ballooning. On average, top marketers expect to devote 9% of their budgets to social media spend in 2014, and 16% by 2018, according to the same survey.

Exceptions: Of course there are exceptions to the move away from ROI. Some social commerce applications and direct response campaigns will achieve measurable results on Facebook, or other social networks. And the end of the ROI-fever definitely doesn’t mean that all metrics can be thrown out the window.

The metrics to watch are audience reach, engagement, and sentiment. On Facebook, it’s always important to remember that due to algorithmic filtering, brand or business posts will only be seen by an average 16% of their fans.

Facebook shares are particularly valuable, because normal users’ posts are seen in a relatively high percentage of friends’ news feeds (compared to posts by brand pages); between 29 and 35% according to one study.

Improving the most common metrics: Insights, Facebook’s built-in analytics tool, offers great basic data for measuring reach and engagement. We show you how to transform those numbers into richer and more valuable metrics.

Post reach is the most fundamental indicator of reach on Facebook, but it’s important to track it relative to number of page fans and enrich it with complementary indicators. We show you how, and include screenshots.

In full, the report:

Includes interviews with Facebook and a top social media analytics platform

Includes screen shots from the new beta version of Facebook Insights, which will be many brands’ window into their analytics

Looks at why so few brands and businesses use metrics to perform a competitive analysis of how they stack up against other brands on social media platforms

Explains why most basic metrics like number of fans or likes are known as “vanity metrics,” because they don’t offer much beyond making social media managers feel good about themselves

Explains how to build an arsenal of straightforward but powerful metrics that examine activity, reach, engagement, and competitive dynamics for your social media strategy

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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