The ROI of Social Media

You won’t succeed unless you’re holding all the cards

 

Today I’m going to go a bit off the beaten path and talk about something that isn’t virtual worlds related, though it very well could be applied to virtual worlds like Second Life if you really wanted to. Of course, by the title of this post, you might already get the idea that this post is going to be about that ultimate of intangibles – the ROI of social media.

 

 

 

Why is it intangible, you might ask?

 

Well, for a number of years I’ve listened to people like Gary Vaynerchuk give a brilliant summary of how social media is a different breed of animal in marketing, but he always brings up the concept of not knowing the ROI of a Piano as a reason for why we have to stop asking what the ROI of Social Media is. After all, how does one quantify those metrics?

 

We can easily qualify the metrics for impressions and reach, and indeed most marketing folks will wave those around like they are proof of their amazing social media strategy. Companies who hire them will see those jumps in impressions and reach thinking (erroneously) that their campaign must be getting the job done, and so they shell out more money to keep it going. Ultimately, it becomes a vicious cycle.

 

But there is a little known (apparently) method to quantify the engagement metric, and ultimately the ROI of Social Media. It’s something that quite a lot of marketing firms don’t talk about and this in and of itself is a bit disturbing to me.

 

Social media is an interesting case, because prior to it existing in the form we have today where it is a dynamic and engaging conversation, we essentially had impressions and reach as our only guide. This gave rise to the infamous SEO gurus who made a really good living (and still do) optimizing your search results and keywords, and producing tons of back links along with mountains of content to throw into the ecosystem as link-bait.

 

Of course, this was ultimately sabotaged when places like Google started favoring relevance and social search over search engine optimization alone. Now, instead of getting a top spot on a search engine based on your keywords or SEO tactics, you’re almost entirely at the mercy of the social interaction and the relevance of people.

 

Google will now show top results based on what other people in your sphere of social influence think, which means you no longer are optimizing for search engines but instead optimizing for humans.

 

This in and of itself is a game changer because no amount of keywords or content creation is going to translate into engagement. What matters now is whether what you are producing is relevant to the people you are targeting and whether they share and engage with it.

 

At this point it is safe to say that the old ways of doing things are right out the window, but a lot of marketers haven’t gotten the memo (or are kicking and screaming trying to hold on to their tried and true old ways).

 

I suppose this is also why there is such a fervor about Facebook marketing and posting best practices about Facebook, with a very biased lean on impressions and so-called reach. This is, after all, the bread and butter of the last generation of marketers in the scene and they are loathe to give it up.

 

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Social Media Poker

 

If content is King, then engagement is Queen... and let’s add into the mix context being your Jack. One card in your hand does not equal a Royal Flush, and in fact to have only one card is a losing hand.

 

There are a number of marketing firms worldwide that follow me in social media, and I’ve had the pleasure of engaging with most of them. When I recently put out the HEO metric equation, a handful of marketing places jumped on it because it’s that holy grail of social ROI.

 

It’s the thing they’ve been trying to quantify for years...

 

That being said, it’s also a disturbing metric that validates their fears as well but in the same light gives a lot of insight into trends that they’ve noticed all along but couldn’t really measure in anything tangible. This is why that popular thinking is on impressions and reach, while the engagement and social ROI is left more to unknown and mysticism.

 

But here we are in the age of social media and most of us completely suck at it, even the high paid marketing firms who are supposed to be wizards at it for their clients.

 

So let’s quantify the ROI of Social Media for a second...

 

SEO gets you the impressions and reach, but that’s only one part of the equation. relying on this alone is like showing up to the Indy 500 rolling a single tire and proclaiming that you’ve already won the race.

 

What we need is to figure out our engagement score. Which is to say, if content is king... engagement is queen.

 

Let’s say you are the New York Yankees, and as a brand on Google+ you have a brand page and plenty of posts. Your “Follows” for the brand are 748,037 which is your impressions/reach number. That’s how many people chose to hear about what you have to say.

 

We’ve already got the King down pat... but where’s the Queen in our hand?

 

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The Queen of Hearts

Do they love your content?

 

As of this moment in the equation, you’re reaching 748,037 people... or are you?

 

We know from traditional marketing that stuffing people’s mailboxes with junk mail constitutes “reach” and “impressions”. This is roughly where you are at right now if you’re riding on impressions and reach alone. But that’s just the tip of the iceberg.

 

Being a well known brand, you come with a pre-existing fan base, and so those people liked your brand well before you had a page, so it’s not a measurement of reach that counts here or impressions. That’s just the tire on the car.

 

So let’s look at the other numbers for a moment.

 

 

 

As Gary Vaynerchuk would say – Social is like a cocktail party. You walk into a crowd and you engage in conversation. You’re not on a stage blaring out a message to a silent audience, they are engaging and discussing things as well. If you wander into a cocktail party and start shouting over everyone or constantly try to steer the conversation back to you or make everything about you...

 

People generally think you’re self-centered and obnoxious.

 

If you’re the most popular person in the room and are generally great fun to be around, genuinely engaging and authentic... people will talk to you and also positively about you.

 

So let’s find out who is talking about and with you using the handy-dandy HEO Metric Score calculator.

 

 

The HEO Metric Score (Human Engagement Overview) is a simple equation and goes roughly like this:

 

Take the average number of “Likes” for your posts, average number of reshares, and average number of comments on your posts (discussion), add them together.

 

This is your base number.

 

You can add other numbers in there as well, if you want to get a completely accurate number based on extended engagement and ripples, but for now we’ll just deal with the brand page for a statistical sample which should be in the ballpark.

 

You can do this for every post you’ve ever made, or just take a random sample to get your average. Either way you’re likely to get roughly the same score depending on how much time you want to put into collecting that information. For this example I’m taking the quick n dirty route and going with median and calling it average.

 

Mostly because I can’t be bothered to run a full analysis to get numbers that would likely make the HEO lower than what I’d get if I were just going with the median... so I’m erring in favor of the brand.

 

Now, in the circumstance of the NY Yankees on Google+ we get roughly the following numbers for their brand page:

 

 

Average # of Likes (+1s): Between 50 and 500 on a good day. So let’s go down the middle and say 250 is a good average.

 

Average # of Reshares: Between 0 and 20, so we’ll go with 10 average.

 

Average # of Comments: The highest number I saw (off hand) was 66 and the lowest was 0, so down the middle again – 33.

 

 

Of course, these averages are just off the cuff and to get a full average we have to take into account total comments (etc) divided by total posts, but for this example we’re going to use rough ballpark estimates here.

 

This gives us 293 to begin.

 

So to calculate the engagement score, we divide that number by the total number of followers/impressions. In this case, 748,037.

 

That big number is your “reach” or impressions number... the one that so many marketers hail as the proof that their strategies are working miracles. But of that reach, who is engaging?

 

Who thinks what you have to say is actually important enough to share, like and discuss?

 

0.00039169185

 

If a score of 1 is 100% engagement and 0.1 is 10% and 0.01 is 1% then 0.00039 is about 4/1000th of a percent.

 

Ouch.

 

This is actually down since the last time I did the metric score for them a week ago when somebody who used to work for the New York Yankees asked me to calculate it. Last week they were at a solid 0.0004

 

So what changed from last week to this week?

 

Well, they gained more followers but remained stagnant on engagement, which lowered their effectiveness overall.

 

This works the same with Twitter and Facebook. High Followers/Impressions do not mean you’re always doing better and in a lot of cases it actually sabotages your engagement metrics.

 

What this HEO Score does is more or less validate the Quality over Quantity thinking and actually quantifies the ROI of Social – or as Gary Vaynerchuk would say “The ROI of Your Mom”.

 

Impressions are important still (reach) but we must take into account what happens after we reach those people if we want to get an accurate picture of our marketing campaigns.

 

After all, reach/impressions only account for inviting people to the party and may as well be akin to people who have driven by the party on their way to somewhere else or who may have heard about the party but didn’t stop by.

 

 

 

So we’re littering the Internet with flyers for our party but we seem to have nothing interesting to talk about or offer at that party when people show up.

 

Which more or less is an accurate picture of how social media marketing works today. Publish a bunch of content, put it out there, pay for impressions/reach and not pay attention to who is actually joining the discussion or sharing it.

 

One would think this is like missing the elephant in the room when it comes to social media...

 

Big numbers for your reach are important only in the context of how many of that number engage with you or your brand.

 

Otherwise, you may as well be telling your client to add a hit counter to their website and using it to justify the marketing. We realized long ago that the hit counter on websites had nothing to do with the bigger picture and wasn’t indicative of ROI... so I’m puzzled that today we point to essentially the same thing in social media and act like it’s different.

 

Impressions/reach is just the modern day hit counter on a website.

 

Let’s look at this another way for a moment...

 

It’s unreasonable to expect an HEO Score to be 100% but a measure to go by is that at roughly 10% you have enough to kick off a viral spread. So if your HEO Score is .0004 you are getting 4/1000th of a percent engagement. There are (of course) a ton of marketing “experts” that will tell you another story and how you can get 140 or 2000% engagement with their secret recipe... and they’ll tell you how when you buy their book or purchase their video seminar.

 

But in reality, you’re looking at initial impact and HEO. The rest are essentially echoes in the valley and amplifiers (reshares and ripples). The one thing you can control is that initial impact and try to get as close to 10% as possible for an HEO score in order to kick it over to double, triple, etc impact in ripples on social media (“going viral”).

 

The 10% rule is not something made up, but scientifically shown.

 

So let’s apply this to our HEO Score.

 

What will it take for something the New York Yankees posts on Google+ to effectively go “viral”? We have our number... and that would be 10% of their Reach.

 

Roughly 74,803 versus 283

 

So for the New York Yankees on Google+ to have near viral engagement, or reach that tipping point for “trending” they’d likely have to average 74,803 as an average engagement which would be indicative of 10% engagement across their social media presence.

 

They aren’t even breaking a half of a percent engagement right now, and instead are actually sliding backwards despite their impressions/reach.

 

Now, that doesn’t mean the New York Yankees are failing as a brand overall. It means they are liked as a brand but not seen as worth discussion or engagement in the social sphere. In short; Sure we like the Yankees (Go team!) but we’ve got more important stuff to talk about.

 

Like this cute cat picture.

 

 

 

Let’s talk a little bit more about that phenomenon for sliding backwards into the non-engagement trench for a moment.

 

In the bigger picture, if your HEO Score is in the hole, then adding a bunch of impressions/reach will only further dilute that number and actually make you look worse. See also: The New York Yankees

 

This can be dangerous because in social media, the internal metrics for relevancy and engagement are calculated automatically based on what each person actually engages with (those three numbers I gave you). If they aren’t sharing, liking, or commenting on your posts... those algorithms think your stuff isn’t important to them, and will begin pruning you out of their social feed until you no longer exist to them other than that initial “like”.

 

In a flood of information and posts, how did you think these social media companies were effectively tailoring each person’s stream to them?

 

Back to the bigger point: If you have a low HEO Score, and you are foolish enough to flood your brand page with impressions/reach, you have literally just wiped out a massive block of people who will likely never see your content again.

 

Effectively you are mass burning bridges, while also burning money.

 

Let’s run that HEO Metric against my own Google+ stats for a second -

 

Avg # Likes : 10

Avg # Comments: 10

Avg # Reshares: 15

 

Total Impressions/Reach (followers): 4,106

 

50/4,106 = 0.007 (%) HEO Score

 

Not super impressive, but fantastic compared to the New York Yankees at 4/1000th of a percent (0.0004). I’m just shy of 1% while the Yankees are barely breaking the silence at all. So I’m doing almost 1000 times better in the bigger picture – and that’s just on my personal page.

 

I’ll take 7/10th of a percent over 4/1000th of a percent any day.

 

 

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One Eyed Jack

Is it relevant to the situation?

 

The next question is always whether or not what you are posting in a particular context has any relevance to the situation. This is a bit of insight as to why the HEO Score is so poor, and needs to be analyzed and understood on a per-case basis.

 

For instance, we take into account your audience.

 

Are you on Google+ posting about your phenomenal Facebook Business Strategies?

 

If your HEO is in the can, and you’re doing this... then you have a problem with context of your content and refusing to understand your audience.

 

In the social media world, if people use Facebook – they likely don’t give a toss about Google+ strategies and if they are on Google+ then they likely aren’t interested in Facebook Strategies. What you will attract are other marketers who are preaching to the same choir.

 

If you’re not actually engaging natively with the audience in their own ecosystem, then you really have no idea what they are interested in, and so you aren’t posting anything that is relevant to them or compelling them to engage. See also: your HEO Score.

 

This is most obvious in the SEO and Facebook marketing scene showing up on Google+ to tell the people who aren’t using Facebook about how awesome Facebook is.

 

 

 

Know your audience.

 

You might as well be standing in a Burger King parking lot telling people about the new combos at McDonalds. This strategy doesn’t make you clever, it makes you look absolutely naive and desperate. Which is why your HEO Score is in the toilet.

 

Of course this works both ways as well... one wouldn’t justify spamming Google+ stuff on Facebook because it’s irrelevant to that audience.

 

But it’s cross-promotion!

 

I hear you say.

 

Authoring an article that applies to social media in general and then sharing it on multiple social media networks is cross-promotion. Writing an article about Facebook and promoting it on Google+ or vice versa is fishing.

 

For instance, the HEO Score can be applied to Facebook, Google+, Twitter and likely any social media aspect to get an estimate for engagement metrics and the impact of your actual reach and impressions.

 

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Ace in the Hole

 

After this very long post, you’re probably wondering what the Ace is in your metaphorical poker hand?

 

Content is King

Engagement is Queen

Relevance is Jack

 

Then the Ace is Authenticity.

 

And to round it all out – give your audience Ten Diamonds (reasons to like, share and discuss). If you can’t think of ten reasons why your audience would like, share and discuss what you’re about to post... then it’s time to rethink it.

 

Going forward, if you want to succeed in social media – remember the winning hand and don’t try to bluff.

 

Engage with your audience, and encourage them to engage with you. No single card is a winning hand... and there really is no way to bluff. Get involved and stop trying to pull cards out of your sleeves.

 

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