If you struggle to achieve ROI using social media, you’re not alone – multiple studies, including the latest from Awareness Inc., reveal that measuring ROI is still the top challenge for the majority of marketers. For those worrying about its unobtainability, measuring the correct metrics, and implementing the right social marketing strategy means revisiting the value of a ‘Like’ versus capturing the value these fans represent.
The value of a ‘Like’ can be hard to attach to a direct increase in revenue, which is exactly why the 60% of marketers who used ‘Likes’ and followers as success metrics in 2011 failed to achieve ROI . To truly measure the benefit of social marketing compared to other forms, you need to use comparable metrics. To that end, I decided to take a step back and analyze two often-overlooked, quantifiable benefits of social media compared to traditional email: the lower cost of unique impression and the cost per acquisition (CPA) of new customer emails acquired.
Top of the funnel: Unique impressions from email vs. Facebook
Many marketers claim that traditional email marketing is losing steam, and for a good reason. Using a comparison of the cost of unique impressions delivered via email vs. unique impressions delivered via Facebook from Jeff French, Founder of LoudDoor, it’s clear that reaching and engaging customers using social is more cost-effective than traditional email marketing.
You can find Jeff’s numerical crunching here, but the bottom line is that unique impressions delivered via Facebook’s sponsored posts average out to be 18x more cost-effective than those delivered via traditional email acquisition methods. And this only accounts for paid posts reaching 100% of your fan base; using standard posts reaching about 10% of your fan base, your cost per unique impression can be lower, although actual visibility will fluctuate more.
On a repeat basis, after obtaining fans on Facebook and email information from subscribers, reaching your Facebook fan base still only has an average CPM of $2.14, compared to $7 for email.
Image 1: Facebook is 18x more cost effective than traditional email campaigns for driving unique impressions for Discovery 
CPA of email acquisition using Facebook:
While traditional email marketing isn’t as effective as it once was, it still plays an important role in building a complete customer profile; many customers respond well to email and expect companies to reach them via that channel. To that end, social media can also drive a lower CPA of new customer emails than traditional methods like list buying can.
CASE STUDY: Kirkland’s success driving social email acquisition
Using a sweepstakes app to offer a free coupon for fan’s email addresses, home décor retailer Kirkland’s created great value for both fans and the company. Fans entered their basic information without ever leaving the newsfeed for point-of-impression transactions, combining all four steps from the DITE framework for quantifying social media results: Discovery (newsfeed), Interaction (promotion), Transaction (entry-for-email), and Endorsement (likes, comments and shares). Using this value-creation tactic, Kirkland’s was able to gather new emails for an average CPA of 66 cents.
Image 2: Kirkland’s drove a customer email CPA 6x lower than average using Facebook
Compared to average email acquisition costs of $4-5, Kirkland’s used Facebook to achieve an email CPA at least 6x lower than standard tactics, proving the effectiveness of Facebook for new customer email acquisition.
The importance of value-creation
Regardless of whether you rely on organic posts, paid promotions, or both, engagement through value creation plays a key role in any social marketing effort. Make sure to meet your fans in the newsfeed and offer them something of value, either through an exclusive deal, a free coupon, or incentives for sharing to entice them into completing whatever CTA you’ve included in your messaging. This will maximize engagement with the post and extend the reach of organic posts so you enjoy ROI from Facebook regardless of your marketing budget.
Companies succeeding with social marketing
It’s time for marketers to embrace a new way of thinking about social media – one that follows an iterative process that allows consumers to discover, interact, and transact with brands on a two-way street, ultimately benefiting all parties involved. Gartner predicts that 50% of all web sales will come from social and mobile within the next few years, so ask yourself: will your social presence help you take advantage of this shift?
For those ready to do social marketing right, download our newest white paper Top Social Engagement Lessons from Jetblue, Zappos, Fab.com, and Kirkland’s and learn from the best social success case studies of 2012.
Feel free to leave a comment on your own social ROI story in the space below, or continue the conversation with me on Twitter.
