Phase one of social medi analytics was mostly about number of followers, fans, posts and tweets. The idea was that if you have a large number of fans, then you were doing well. That makes sense and often a site with more fans is doing better than a site with less fans. At the end of phase one, we begun to understand that the sheer number of fans is less important than what how these fans are engaging. To use an extreme example – a site with a thousand fans who do not engage is not as useful as a site with 100 fans who talk a lot.

As we move into phase two of social media analytics, we are starting to understand that what people are saying is more important than how much people are saying – quality vs quantity. If we continue to use the example above, we see that a site with 10 fans having a discussion with a particular goal in mind is worth more than a site with 100 fans where the discussion is not focused.

Before we continue, a word of caution – social media is large and the value of your social media effort (ROI) is directly linked to your social media goals. Sometimes you want a large group of people who talks about anything and everything, and sometimes you want smaller, more focused discussions. It is all about your goals.

In phase two of social media analytics, we are measuring and analyzing discussions. We try to understand which users seem to be leading discussions and which users seem to be following. Keyword analysis is used to increase the understanding of language. Through user and keyword analysis, together with sentiment and emotional analysis, we get a reasonable good understanding of users’ behavior, whether they are our customers, potential customers, our competitor’s customer or simply users interested in some subject where we have a stake.
Klurig Analytics have developed a phase two social media analytics service. Our technique is used in a number of different places including live sporting events. This graph shows the sentiment of fans from Boston talking about Boston Celtics versus fans from Dallas talking about their Dallas Mavericks. The data is based on Twitter postings and the graph was shown live.

In this game (Dec 12, 2012), Celtics was leading most of the game until towards the end, where Mavericks went ahead a few points. At that time – about 10:10pm on the graph – the sentiment between the Boston fans and Dallas fans changed. At regulation, the game had tied. The game then continued with two five-minute overtimes where Celtics finally stood as the winnner. Again, this is reflected in the Boston fans’ sentiment a few minutes after 11pm. Also, take a peek at the top graph at around the 11pm to see the increased number of tweets during the overtime.

As a marketer, you can not afford to miss an increase or decrease of this magnitude in a discussion about your products, services, competition and industry.

We use the social media analysis technique in sporting events mostly for fun. In reality, you would use Klurig Analytics’ technology to measure your and your competitors’ fans’ discussions for at least the following primary reasons:

1. Gain a better understanding of your user’s behavior and sentiment. Better understanding leads to better ways to market to them.
2. A solid a understanding and a real-time feed back leads to better risk management. As the saying goes: in the past, an unhappy customer told 10 of his friends. Today, that unhappy customer will tell a million of his friends. Solid risk management is critical today, and it starts by being aware of the risks in real-time.
3. Measure campaign effectiveness. Use our technology before, during and after a campaign to understand campaign effectiveness.
4. Marketing campaign trials; play what-if, test A/B testing across cities and products.

Click here to go directly to the article.  The following is the first two paragraphs.

Social media return on investment (ROI) is simply a measurement of efficiency. It’s a lot of things to a lot of people: “return on inactivity,” “return on innovation” and “return on engagement.”

However, in a stricter sense, social media ROI is defined as a measure of the efficiency of a social media marketing campaign. This definition might sound complicated, but in reality, it’s quite simple.

Read more at Social Media Examiner…

Are your executives demanding quantifiable ROI of social media campaigns? Are soft metrics such as “engagement” and “awareness” no longer sufficient to prove its value?

Join us for a free webinar, where we will show you how calculate the ROI of social media and prove its financial impact on your business. Webinar registration.

• Learn how to measure the financial value returned from each dollar invested in social media campaigns
• Compare the effectiveness of social media campaigns with traditional media such as TV, print, radio and outdoor
• Monitor KPI (key performance indicator) trends and optimize your social media campaigns to maximize returns.

Led by Dag Holmboe, CEO of Klurig Analytics, moderated by Mala Sarat Chandra, Lecturer in Social Media at the University of Washington, this free 30 minute webinar will run on Wednesday, May 25th, 2p, EDT, 11am PDT.

The application takes as input your campaign’s Facebook Insights metrics (instructions on our Facebook campaign site).

The extremely important output metrics include total number of fans (increasing or decreasing), your reach, and the return value of your brand awareness and engagement.  The values are measured in dollars.  Brand awareness, engagement and total values are also calculated per fan, which means that the application gives you the average value per Facebook fan.

So far so good.  Now, here is where the application is awesome – it not only provides you with your brand’s values, it also provides you with how your brand’s values compares to other brand’s values as measured in dollars. Thus, with our application, you can see how your Facebook campaign measures up to other Facebook campaigns.  Very cool.

The online application’s input and output are a subset of our full Social Media ROI application. The full application also includes Social Media ROI optimization, trend analysis and multi-channel comparisons.

Access the online Facebook campaign application here.

The Facebook Insights metrics are readily downloadable from your Facebook fan page (just make sure you are the administrator – instructions on our Facebook campaign page).

This article is to some extent based on a white paper written by Lithium Technologies called “Community Health Index for Online Communities”. Lithium has development a technique to measure the health and assign a score of an online community based on membership, content, traffic, responsiveness, interaction and liveliness. Jeremiah Owyang of Forrester Research reviewed the Community Health Index for Social Network communities.

What do you need in a healthy online social network community? In general

1. Members and word of mouth – happy members forward your brand by invitation and other means.
2. Content – content is king.  You need to ensure that there is fresh useful content on the site at all times.  The content can be created by others and shared on your site (digg.com), or created and published by your members (flickr, youTube), or it can be simple social setting on your site (mySpace, facebook).  The main point is that the content has to be fresh and useful.  Take a look at your bookmarks on your browser and ask yourself, why do I like these sites?  Most likely, most of the sites that you like are also sites that a lot of other people like.  So what is it with these sites that makes people coming back to them.  Content, content, content – content from where you learn, that is humorous, that you have to think hard, or not hard at all, to understand and so on.
3. Well-organized content – without good organization, people cannot find it.
4. Community Responsiveness – there has to be a certain responsiveness behind the site.  Lithium argues that 1,000 minutes (16 hours and 40 min) is the longest that a post or a comment should go without a response.
5. Site/technical Responsiveness – the site needs to be quick to view (quick download) and quick to move around with. Delays cause membership drops.
6. Interaction – as a site owner, you need to be responsive to you members but you also want your members to interact with each other.  You need to think hard on how you can make your members to interact with each other.
7. Interaction and visual design – if the site is impossible to use, your members will go to a site that is easier to use.
8. Happy site – you want your site to display a positive attitude where members and you converse in a civil manner.  You need to build trust between members by building trust between you and your members.  You need to ensure that no antisocial behavior is allowed.  You need to have your Code of Conduct easily accessible at all times and also make sure that the Code of Conduct is written in simple language.  Ensure that the Code of Conduct is read and approved by a lawyer but the it can not be written in legalease.

More:

1. Communication – ensure that all posts, comments can be commented upon.
2. Offer you content instead pushing your content.
3. Keep the site simple and intuitive – good visual and interaction design is key components of a simple site.
4. Freshness – keep the site fresh with new content and new design.
5. If you need to advertise, do so but in a non-annoying way.
6. Credibility – without credibility, you site is void.
7. Members – always remember that the site is about users/members and how to make your audience feel welcome and to give them a place to hang out.
8. User preferences – store user preferences to make the site easier to use for users.
9. Well-organized content.

When a user logs in to Facebook, there are normally many more posts destined to a user than that can fit on a user’s ‘top news’.  Therefore, Facebook uses the Edgerank algorithm to determine which posts should go on top of the ‘top news’.

It is absolutely key for a digital marketer to understand how the Edgerank algorithm works.  The reason is that if you can write posts that raises your posts’ ranking based on the Edgerank algorithm, your posts will have a higher probability of being shown.  In fact, it is very similar to Search Engine Optimization.

We have pulled together a short video that explains the Edgerank algorithm.  Please feel free to contact us for further questions.

I thought it was a good segway in to how to use our Social Media ROI application analytically.

Normally you start with the strategy and then you estimate the ROI on the strategy. I would like to suggest a different approach in that you start with the ROI and then based on the ROI you select and execute on a social media strategy. What do I mean with that?

Like Robert suggests (see question to see what Robert Burns wrote), do your required upfront research. A solid understanding of your customer base is absolutely key to move forward into the next phase. You also need to figure out your goals; for instance is your goal to increase short-term sales, increase long-term brand awareness and purchase intent, support call savings, increase consumer insight, increase SEO, increase media mentions and word of mouth?

Next you need to decide if you want to optimize your social media strategy based on social media return or social media ROI. There is a difference here. You might be able to achive a higher return but it might cost you more thus lower the overall ROI. On the flip side, you might be able to raise your social media ROI by lowering the investment but the return might suffer. In our example, lets try to raise the social media ROI.

Now, based on your understanding of your customers, you need to create a few different social media strategy scenarios to estimate the best ROI. For instance, should you go all out with a Facebook-only approach, should you do a combination of Facebook, Twitter and Youtube? Should you do blogging and/or community forums? Should you post once a day or many times a day? Say your goal is to raise the number of useful consumer insights, you then want people to talk to each other a lot and therefore a community forum might be a good idea. If you are looking for short-term sales, then Facebook and Twitter posts with discount coupons might be another idea. Or a combination of approaches.

Using social media ROI applications, you can play different social media strategy scenarios until you find the strategy that seem to generate the biggest bang for the buck, eg highest social media ROI. As you select your social media strategy, you can create best, worst and anticipated case scenarios to see where you land.

As you execute on the social media strategy, you would periodically go back to your social media ROI application to plug in the correct numbers to see if you are tracking accordingly and based on the calculations, you can make mid-course changes.

So you see what we are doing; instead of starting with a strategy and then checking the ROI,

1. we start with a few different social media strategies,
2. then we compare each strategy based on our goal of higher social media return and/or higher social media ROI.
3. Then we select our social media strategy knowing that we used analytics to select a strategy based on our or our client’s bottom line.

If you are interested in seeing a demo, please contact us directly.  Also please download our free light Social Media ROI application.

A quick comment about quantifying the social media ROI

The ROI, as we by now know, is a business formula that calculates the ratio between an investment and the return. To quantify the social media ROI, we need to determine both the return and the investment in dollars and cents, and we need to ensure that the return has a direct correlation to the investment, ie the return was generated based on the investment.

Please look here for an in-depth discussion three types of returns.

So lets look at ways to quantify the Social Media ROI

1. During or after you have run your social media campaign, you look at when and where the investment was made, you look at when and where the return were made.  If you can determine and quantify the correlation between the return and the investment, you can quantify the Social Media ROI.
2. By physically link each of your sales back to a social media campaign, you can quantify the Social Media ROI.
3. Before, during and after a social media campaign, you determine the total return from different return channels.  Using the total return and the investment, you can quantify the Social Media ROI. Examples of return channels are cost savings from not having to purchase impressions, or savings on focus groups because your social media campaign generates consumer insights, or savings in support calls.

In our application, we use the third way to quantify the Social Media Return. Please see here for a discussion and here for a video.

Comments are a fundamental part of social media, so do your social duty and add a comment with your thoughts.

We just released an awesome online Twitter campaign return and ROI calculator.  You can play with it here.  The calculator figures out your reach, the return on your brand awareness, and the return on your click-throughs.  Together with the social media investment, the calculator also returns the monthly ROI.  In addition, the online calculator gives you the value, investment and ROI of your average Twitter follower. For instance, in the screenshot below, a Twitter follower is worth $2.38/month, the cost is $1.67 with a total individual ROI of 43%.

The Twitter calculator is used to maximize your Twitter campaign.  By testing different campaign models, you pick the model that yields the highest return.

Leverage your community

It is important to note that if you engage your community (send more posts), the value of your community goes up. For instance, in the calculator, try to enter one Twitter post per month, then enter 30 Twitter posts per month and see the difference in total and individual return and ROI.  It is quite dramatic.

Warning – remember that if you send your community too many messages, the calculator will tell you that the value of the community goes up, while in fact, you are turning off your community by spamming them.  So be a bit careful, right?

Another important thing to remember is that these values are estimations.  Even though the online Twitter calculator gives you a reasonable sound foundation to maximize your Twitter campaign return,  each Twitter campaign and each community is different.

Increase our understanding of the return and ROI of your social media campaign

This version of the calculator gives a lower return than the true return on our Twitter campaign.  The reason is that this light version does not take into account things like the return on consumer insight, the return on avoided support calls, or the return on trade media mentions among other things.  Our full version calculates the return and ROI of your community forum, blog, Twitter, Facebook, YouTube and SlideShare communities.

For a more accurate estimate, please contact Klurig Analytics directly.

Comments are a fundamental part of social media, so do your social duty and add a comment with your thoughts.

First of all, the measurement “$$/fan” is misleading.  The measurement should state “$$/fan/year” or month or some time period.  Otherwise, it simply doesn’t make sense.

Now, how do we determine the value of a fan?  The following is a short list of fan-added values.  For a longer description, see Social Media ROI – Part 3:

1. Brand Awareness – a fan reads your messages.  That is value.
2. Click-throughs – a fan clicks on a link. That is value.
3. Fans create buzz such that trade media writes about it.  That is value.
4. Fans generate consumer insight.  That is value.
5. Fans help each other thus preventing support call costs.  That is value.
6. Fans without actions.  A fan that doesn’t do anything is a dud.  Having 10,000 fans that don’t contribute give you bragging rights but no value.

By adding these and other value (return) channels together, we get the total value per fan per year.  But, again, that is only part of the story.  Look at our post from yesterday, Social Media ROI – three types of Social Media Return, and suddenly “fan value” got more complex.  Nevertheless, simple is good so lets stay with that.

Also, take a peek at our Social Media ROI video for more info how to calculate fan value.

Comments are a fundamental part of social media, so do your social duty and add a comment with your thoughts.