The document summarizes six models for calculating social media return on investment (ROI). It describes each model, provides an example calculation, and discusses likely questions and considerations for each model. The models include amplification, value of social traffic vs display, quality of visitors from social media, revenue from Facebook fans, revenue from social media marketing, and social promotions sales ROI. The document aims to provide frameworks for attributing tangible business metrics and revenue to social media activities and investments.

1. Six Social Media ROI Models
We’ll begin show shortly…

2. Who’s presenting?
Jim Tobin Tom Webster
Founder, President VP, Marketing
Ignite Social Media Edison Research
@jtobin @webby2001
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3. Details
• Jim & Tom will lead Q&A at the end of the call.
• Tag your tweets with #igniteroi
• We’re recording the show.
• We’ll send an email follow up to everyone.
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4. Download the
White Paper
http://bit.ly/ignite-roi

5. We’ve come a long way.

6. The Models
1. Amplification
2. Value of Social Traffic vs Display
3. Quality of Visitors From Social
4. Revenue From Facebook Fans
5. Revenue From Social Media Marketing
6. Social Promotions Sales ROI
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7. None of the
models are
perfect.

8. All of the models
are better than
nothing.

9. Model 1: Amplification

10. Amplification Step By Step
Facebook impressions and clicks, Twitter
Calculate social
impressions and clicks, YouTube
impressions, actions
views, Online mentions, etc.
Assign value to impressions and actions,
Sum value of
weighting actions more heavily that
impressions, actions
impressions.
Compare to total Map social impressions and actions to
social media spend paid marketing value equivalency.
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11. Amplification Model Example
Social Impressions, Actions Paid Advertising Equivalent Value
2,000 Facebook impressions $10 CPM $20
100 Facebook clicks $0.50 per click $50
100 YouTube Views $0.20 per view $20
Total Value: $90
Social Budget: $30
Social ROI: 300%
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12. Likely Questions & Considerations
• Most of the social data inputs are available for free.
• The model is complex. It requires proxy values for
social actions based on non-social comps.
• The model aggregates cross-channel social data and
maps it to familiar marketing metrics.
• The output is a relative comparison, not an actual
sales return on investment.
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13. Model 2: Value of
Social Traffic versus
Display

14. Example Traffic Comparison
Description Display Social Delta
Net New Visitors 30,000 170,000 Social drove 5.67X
Above baseline more visitors
Cost $150,000 $130,000 Social cost only
86.7% of display
Cost per visitor $5.00 $0.76 Social generated a
6.5X better return
This data reflects actual performance from an Ignite Social Media client.
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15. Likely Questions & Considerations
• This approach is less complicated than others, it
requires fairly simple inputs.
• The model works well if you have an active display
advertising campaign as a basis for comparison.
• The model doesn’t incorporate impression
value, only traffic value.
• The channels are the variable, so try to keep other
variables constant.
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16. Model 3: Quality of
Visitors From Social
Media

17. Example Traffic Quality
Comparison
Description Display Social Delta
Pages per Visit 1.57 2.84 Social drove 1.8X
more pages per
visit.
Time on Site 0:40 2:18 Social visitors spend
3.45X time on site.
Bounce Rate 81.40% 45.46% Social visitors had a
44% lower bounce
rate.
Goal Conversions 3,098 12,603 Social drove 4X
conversions.
This data reflects actual performance from an Ignite Social Media client.
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18. Likely Questions & Considerations
• You can compare social traffic against other
channels or “average” site traffic.
• Choose the most meaningful metrics, don’t
worry about comparing all of them.
• Factor in all costs related to social and other
channels for a final calcuation.
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19. Model 4: Revenue
From Facebook Fans

20. The Facebook Factor
Brand Purchase in Last Likely Consider Likely Recommend
12 Months
Fan Non-Fan Fan Non-Fan Fan Non-Fan
Bust Buy 79% 41% 78% 47% 74% 38%
Coca-Cola 95% 71% 85% 58% 83% 47%
Blackberry 55% 10% 69% 17% 62% 16%
Walmart 94% 74% 85% 56% 77% 39%
Source: Forrester Research, The Facebook Factor, April 2012
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21. Example Calculation
Net New Facebook Fans 283,786 For a year.
% Likely to Consider, Fan 69% Blackberry is closest comp brand in
this example case.
% More Likely to Purchase 16% Conservative estimate from 2011
Since Becoming a Fan Chadwick Martin Bailey data.
Price of Product $250 Fictitious.
Purchases per Year 0.33 Fictitious.
# of New Fans Who Are 31,330 New Fans X % Likely to Purchase X %
New Customers More Likely Since Becoming Fan
Total Estimated Revenue $2,584,723 New Fans Who Are New Customers X
Product Price X Yearly Purchases
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22. Likely Questions & Considerations
• This is an admittedly rough estimate.
• Additional data from comScore further
indicates that Facebook influences purchase
behavior.
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23. Model 5: Revenue
From Social Media
Marketing

24. Example Calculation
Visitors to Goal Pages 4,830,827 For a given time period
Products Sold 345,324 For the same time period
Goal Pages per Sale 13.989 For the same time period
Social Traffic to Goal Pages 27,716 Visitors from social who landed on a
goal page during time period
Social “Sales” 1,981 Social traffic to goal pages / (goal
pages / sale)
Avg Transaction Value $135 Revenue from period / transactions
during period
Social Revenue $267,435 Social transactions X Avg transaction
value
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25. Calculation Continued
Social Revenue $267,435 From previous slide
Social Marketing Cost $97,500 For the same time period
ROI $1.74 (Revenue – Cost) / (Cost)
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26. Likely Questions & Considerations
• This is (also) an admittedly rough estimate.
• For considered, offline purchases, digital
marketers have limited visibility to impact.
• This model becomes more valuable the more
you know about your buyers’ aggregate web
behavior.
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27. Model 6: Social
Promotions Sales ROI

28. Example Calculation
Total Cost of Promotion $195,404 Including ads
# Goal Page Completions 34,812 Use actual if possible
Goal Pages per Sale 13.989 From model
Social “Sales” 2,489 Goal page completions / goal pages
per sale
Social “Sales” Revenue $336,015 Social sales X average transaction
value
ROI $0.72 (Revenue – Cost) / (Cost)
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29. Likely Questions & Considerations
• This model works well when you want to map
a specific promotion to purchase intent.
• Remember that you’re comparing the
effectiveness of marginal marketing spend – a
“low” ROI might not be a bad thing.
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30. BONUS MODEL 7:
Show Me Yours

31. Thanks for attending!
Tweet your questions
@ignitesocialmedia.
We’ll email you the slides, the whitepaper,
and the presentation recording.