Assessing the contribution of your Social Media interventions to Brand Equity

The has been a lot of business commentary lately asking where the return (ROI) on social media is, or indeed, whether there is any return (ROI) on it at all. In counter-argument, many supporters of social media as a business tool have suggested that while it does not necessarily generate cash flows just yet, that it is perfect to ensure you engage your current customers and also to attract potential customers. All this is happening while investors and executives see huge energy being poured into social media, from both a time and money perspective, stakeholders that are becoming increasingly hungry for tangible returns. This article argues the value of social media to business, a return or ROI of sorts, whether or not you have made your first sale yet.

Firstly, to ensure we're all talking about the same thing, we need to consider brand specifically in in the context of the brand equity it represents. We need to think of brand equity as a reservoir of unrealised cash flow. This implies that the way that we actually generate sales and profits is by appropriately building our brand equity, with our brand becoming the bait that attracts customers to us.

Figure 1. Source: www.thefinancialbrand.com

Now we know that brand equity takes years to build, and is a costly undertaking, all with the aim of attracting customers to the brand over time. The same holds for social media, perhaps not so much in cost, but creating a sustainable, consistent presence that attracts perhaps even a different segment of followers and believers in what the brand stands for to us. Even then, the volume of customers social media attracts is still tiny in the context of the market as per Figure 1.

Figure 2. Source: www.thefinanser.co.uk

Furthermore, as much as we would like customers to buy from us the moment they see our first tweet, the point is they don't, as marketers in both the UK and US, as examples, are beginning to see per figure 2. Could it be that the process of building brand equity in the social media space is different to the brand equity created in the physical world? Could it be that as our social brand equity becomes established, that selling becomes easier? Well, the answer to the first question is probably one for research, while the answer to the second question will be found over time. Note that generating sales is only cited as a social media objective by about 20% of the US and UK sample in this case.

Figure 3. Source: www.trak.in

And that's not all. Not only does the type of content being posted matter in terms of whether or not it engages your current and potential customers, what also matters is how many social media channels you are present on, as per the example for the banking sector in a particular geography in Figure 3.

It's one thing being on Twitter, probably the de facto and most instantaneous standard, but to be truly competitive in this space, you also need to have an engaging presence on the likes of Facebook, LinkedIn, YouTube, and perhaps even have a corporate blog, all making up a portfolio of social media engagement mechanisms. And on all of these channels, if your content doesn't engage your followers, as measured by reaction rates like retweets or mentions, you probably need to rethink your social media strategy.

Figure 4. Source: www.closingbigger.net

Great, so we know we still only impact a small number of consumers by means of social media, that most social media departments seem to take to the media to enhance their brand equity rather than necessarily explicitly to generate sales, and that a multi-channel approach even to social media is desirable, how do we measure its ROI anyway? Well, it depends on what type of ROI you wish to measure, as the example in Figure 4 shows.

My particular measurement interest is in Brand Equity, which would encapsulate elements from Figure 4 such as Reputation, Risk Reduction, Client Retention, Brand Association, Long-Term Revenue, Trust Building and quite a few others from that list.

Indeed, I will be presenting a keynote on traditional Brand Equity measurement, as well as Customer Equity measurement at a Global Banking Financial Services Branding conference this month. So it would be easiest to argue that the process to measure Brand Equity in the physical world (which involves both internal and external data) is the same as measuring Brand Equity in the digital world. However, it is immediately clear that I would not be able to gather the requisite data for the exercise for my consulting customers in the same way as I would for the physical world. Thinking about it, the methodology would also only really be true if customers were buying (i.e. converting Brand Equity to cash flows) proportionally as much on social media as they are in the physical world, and with the same lag, which for all intents and purposes seems not to be true to date. For example, if I don't understand the buying behaviour of my social network followers (because they are not buying), which would be a difficult sample for a market research programme anyway, how can I quantify that behaviour in terms I am best familiar with, which would be in terms of the median customer per market segment per best practice. A different approach is required.

Per normal social media analysis, you would need to understand the number of followers per medium (specifically those interacting at that touchpoint), the number of retweets, mentions, shares, likes, blog reads, newsletter downloads and much more, and you would need to understand the actual content of the social media messages (you don't have the benefit of market research to ask directed questions), using analysis tools such as those that have been developed by Stanford University. This analysis is used to assess elements such as keywords (nouns, verbs, adjectives) and degree of engagement, where positive engagement can be used as a proxy for brand affinity. If I have brand affinity, I probably have some form of top-of-mindedness, upon which every strong brand depends. And if I have top-of-mindedness, I probably have a potential purchaser.

Figure 5
Brand Equity value probability distribution (Horizontal axis in currency)

However, I still don't know the market segment of these prospects, so I have little further information from which to work, that is, if I desire to be truly customer-centric for a positive customer experience.

As a result, I will have to use an assessment of the parameters of my total median customer to quantify the brand equity in the social media space, where the most important element of the quantification would be simulation methodologies in order to create a probability distribution around the expected brand equity. At least this way, I now have an expected range to base my social media brand equity from!

At least now you will have some means of assessing the reservoir of value you are creating in the social media space, where the true test of its value would be to design social media acquisition campaigns based on the increased insight you now have.

It is also important to realise that this brand equity is probably in excess of the brand equity calculation of the physical world because of the diverse geographical footprint of your brand's followers. However, net analytics can point you in the right direction in this regard - if the geography is mostly local, then the assessment above is mostly included in your physical brand equity calculation. If not, then this value is probably additive.

This encapsulates a quite interesting and highly relevant topic in the digital space today. I hope I have added some further insight into what it will take to determine the ROI of your social media investments. The approach highlighted here is practical, and I look forward to talking about it at the global branding conference later this month to get further feedback.