Rob Saker's Blog

An interesting conversation has been occurring on Twitter debating the measurability of social media.  Social media advocates are arguing that social media offers measurement greater than most traditional marketing channels, while detractors claim everything including that social media is outright unmeasurable.  Omniture recently announced the ability to measure Twitter, and I expect a syndicated provider such as IRI or Nielsen to announce a BuzzMetrics type of capability for Twitter any day.

While people are debating the measurability (and viability) of social media, they’re glossing over the most important aspect of the conversation.

What are we measuring?

In the early days of the web, people spoke about the number of hits, then page views, then visitors a web site received.  This conversation eventually evolved to a question of what value those facts delivered.  Measuring the act and measuring the result of an act are two different processes, and yet many people seem to use these interchangeably.

I’m focusing on the benefit of social media (and why companies would support social media initiatives), so we must focus on the result of social media efforts. Not measurement of just an action, but measurement of the desired result in relation to the action.

This is a multipart part post to look at the ability to measure the effectiveness of Twitter in promoting a brand or product.  I choose Twitter for a few reasons.

1. It provides an immense ability to measure facts,
2. It has captured the mindshare of a large audience and is growing, and,
3. It’s measurability has great room for improvement when contrasted with other marketing channels.

There are direct and indirect models of business on the Internet, and that these firms have different objectives with their use of social media. Part I of this post will discuss the direct business model.

Twitter on Direct Models

Omaha Steaks is a leader in the direct online business model.  While Omaha Steaks does make an effort to build its brands, it is recognized for by many from its promotional tactics, spending thousands on e-mail, impression ads, terms, and other awareness generating vehicles.

The basic ROI model works requires a promotion, action, and conversion:

Promotional method > Click > Action

With “traditional” digital media promotions this is applied with CPM, CPC, E-mail and other methods.  The result is:

Ad > Click > Purchase

E-mail > Click > Purchase

The following was a recent ad for Omaha Steaks:

Omaha Steaks Special
www.OmahaSteaks.com
Save Up to 67% on Omaha Steaks plus Get 12 Burgers Free. Order Now!

The basic components of this ad were

• A cost for the ad,
• The company/brand,
• The offer,
• A URL
• Corresponding time and date (maintained in the ad management system).

The first apparent benefit with this approach is we’re able to measure the effectiveness of any promotional method to the desired action.  That’s the obvious advantage of the direct model.  We can determine the ROI of any specific promotion and tune our messaging or optimize our spending.

The next benefit is that we can determine effectiveness across promotional methods.  With appropriate tagging, we can identify which promotional methods drive the most quantity of desired actions, which provide the highest ROI per action, etc.

I had the opportunity to listen to Omaha Steaks team a few years back and view their model.  They’ve taken this basic concept and applied additional segmentations to create a model that enables them to not only calculate the return on any promotional effort by channel, message or other dimension, but also predict how much revenue a promotion will generate and the likely lifetime value of a customer by source.

So how do traditional digital promotion methods compare to Twitter?

Woot.com is another leader in direct, e-commerce space.  Woot features one product a day, and while they have grown largely through word-of-mouth they also have begun posting their daily specials to Twitter.

This was a recent post from Woot:

woot $4.99 : HP Advanced Photo Paper 4×6 Glossy – 200 Pack http://www.woot.com

12:00 AM Feb 28th from web

This component of this Tweet are:

• A cost of the Tweet,
• A company/brand,
• A specific offer,
• URL
• Corresponding time and date.

It’s not dissimilar to what you might see in traditional digital promotions.  With existing online analytics tools, we can determine the click-through and purchase activity.

Tweet > Click > Purchase

We can approximate the time spent creating the message to determine a cost, and this provides us a basic ROI model that is identical to traditional digital promotions.  Omaha Steaks doesn’t use Twitter, but I believe they could easily incorporate Twitter messages into their promotional mix.  I doubt they’d need to modify any of their measurement tools or processes to incorporate this new medium.

Social media advocates are correct when they state that the benefits of social media activity are measurable when we’re talking specifically about direct models.

Score: Social Media Advocates 1, Detractors 0

Next up: Indirect Models.  The direct model is the easiest model to quantify.  It is a low-context model, and favors companies that develop systems and processes to constantly optimize their promotions.  Our ability to measure the benefit of Twitter with indirect models increases considerably.

Bookmark & Share