Marketing has always been an inexact science. From handbills and sandwich boards to magazines and TV spots, you never really knew where your money was going.
As John Wanamaker said, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” Digital advertising has made that much better — Google AdWords are not perfect, but they’re a lot more accountable than what came before.
But marketing ROI will never be simple. How do you know which interaction — or combination of interactions — actually triggered the buying decision? If you knew which ones made a difference, you could just eliminate all the ones that didn’t make a difference. Unfortunately, the reasons why we buy are murky. We’re starting to better understand them through the help of MRI’s and other whiz-bang brain research, but marketing will remain more than just science for a long time.
So how do you evaluate whether your social media buy is worth it?
1. Targeting. Knowing that you are reaching only (a) people who are interested in you and (b) the people they share with. They now know that every time a message from you gets delivered via social media, it’s coming from a trusted source. As the cognitive load of screening out advertising gets higher and higher, ordinary advertising becomes less effective. What is effective? Trusted sources.
People trust “Recommendations from People I Know” and “Consumer Opinions Posted Online” more than any other medium. Advertising — in any format — is not trusted the same as people vouching for a product or service. To be direct about it, recommendations are judged about 2x as trustworthy as TV Ads. Wouldn’t it make sense that each recommendation is worth twice as much as a TV impression?
2. Volume. Simply put, more impressions (in the right audience) is more powerful than fewer impressions. Based on our client work, social media and blogging delivers 2 to 3 times as many impressions as banner ads or even AdWords for the same spend. We have many clients, but they all follow the same trend — the first few months of building an audience means total impressions are down, but by month 3 or 4, Social Media delivers 2 to 3 times as many impressions. (And didn’t we just say these impressions are better trusted?)
3. Technical Analysis. Mashable has a good list of ways to measure here. They are more technical, but valid. Principally, if you can identify the sources of traffic to your shopping cart, you can measure which ones work.
As a former magazine publisher, I’m delighted to see media spend get more accountable. Back in my magazine days, our team put a great magazine together. Unfortunately no magazine can do anything other than send the magazine to the right people and hope they read the ad. The accountability the web offers is great, but trust and human relations will always play a role. (That’s why we’re platform agnostic, too — people change over time and what they want changes over time.)
Someday, we will understand exactly what makes people buy. Our knowledge will continue to asymptotically approach perfect understanding.
But what we know today is that people trust their friends more than they trust ads, that people start the buying process with web searches, and that social media leverages both of these habits better than any other medium.
Image credit: CC by Miguel Virkkunen Carvalho