Well what am I worth here on earth

If I ain’t worth nothin’ to you

- Sammy Kershaw

All marketing comes back to return on investment. The ROI decision-making process is very simple: if you can acquire a customer for less than the value of that customer, you should do it.

ROI measurement is a constant across all industries and marketing channels. It’s pretty straightforward to calculate online advertising ROI using the conversion tracking feature of any web analytics tool. It’s harder, but still common practice, in channels like TV, radio, and print. The math is more complicated, but there are geeks and models that will tell you the answer.

Our primary mission at Argyle is to help our customers measure and improve their social media marketing ROI. So we take it pretty seriously when we hear that most marketers don’t measure their social media ROI and that industry analysts don’t believe Facebook marketing has a positive ROI. What do we think? We think that social media ROI is measurable, and that marketers should be measuring it and optimizing it. We think that both Facebook and Twitter show positive results for companies that use them appropriately.

And we have the data to back it up.

Argyle Social tracks conversions generated from owned social media properties. Aggregating that data across our customer base tells us that our customers, at least, are #winning in social media marketing. We’ve found that the average value of a Twitter follower for our customers is $3.00 per year, and a Facebook fan is $16.08 per year.

At those rates, even a medium-sized company with 10,000 followers and 10,000 fans earns $191,000 from socially-generated business, easily enough to show positive ROI on top of a full time salary.

Obviously, results differ between companies. E-commerce retailers, in particular, fared quite well in our analysis with approximately 3x the average value of a follower/fan.

What should you do with this information? Should you look up your follower/fan count, multiply by $3/$16, and run off and tell your boss how amazing you are? No. In fact, if you just had that thought, I want you to close your eyes and imagine the sensation of me flicking you in the earlobe, hard.

Instead, you should realize that social media is just another marketing channel. Measuring your ROI is necessary and it is possible. If you don’t measure your ROI, you’re not really doing marketing–you’re just chatting.

How much are your followers and fans worth? Interested in finding out?

For the data geeks out there, here’s some more information on the numbers presented above.

  • Argyle tracks conversions, and associated value, that are generated from social media. See this blog post for more information on multi-touch attribution of social media conversions.
  • We also track followers and fans across all social properties that a company manages.
  • For a given company, the average value of a follower/fan for any given month was calculated as the total conversion value from that channel in that month divided by the number of followers/fans on the last day of that month. This was then averaged out across all months during which a company had been using Argyle, and then annualized.
  • To compute the average across the population, we took the numerical average (not the weighted average) of the population. We avoided weighting the average because that would have biased the results in favor of companies with more followers.
  • While we do track total social-media-attributed revenue by company and that’s actually a much more useful statistic, reporting this doesn’t control for company size and is therefore not useful on an aggregate basis. Dividing attributable revenue by follower count reports a statistic that is independent of company size; in fact, in our data company size had no impact on value per follower.
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