Understanding How Social Media Impacts the Purchase Path

inspection

Few marketers dispute PPC as an effective and measurable online channel.  Social media, in contrast, is currently subject to dispute.

One of the more compelling arguments for pay-per-click search marketing is the ability to attribute web sales directly to clicks from search advertising.  ROI can be measured to multiple decimal points tying the amount of spend invested in bidding on keywords to the direct revenue and conversion.  When the conversation changes to social media, there are debates about ROI, a lack of proven approaches and many marketers still viewing social media as experimental.  [“Conversion” for those not familiar with web analytics is defined as a visitor to a web property who completes a targeted action, including signing up for an email newsletter, adding a product to a shopping cart, or completing checkout.]

Skepticism Abounds

A way to address the skepticism marketers have about social media is to draw the same correlation to the purchase path as search marketing.  Notice I did not suggest “the” way to address the skepticism —  providing better metrics won’t give the complete picture of social media benefits, but it will start to quantify the role social media can play in a marketing strategy in terms that internet marketers deal with already.  For example, today Webtrends and Radian6 made a joint product announcement tying traditional web analytics to social media monitoring, through Webtrends’ Open Exchange platform.  This is just the tip of the iceberg.

Establishing Credit

Traditional analytics tools give credit for conversion to the tracked marketing activity before the conversion takes place – a “last click” methodology.  This could be a search query prior to a site visit, an ad clicked through on a search results page or a banner ad.  Those in the SEM and Display Advertising industries would tell you that while these metrics are precisely measured,  a major challenge is to quantify all the “other” touchpoints a consumer has prior to conversion.  (Rosetta, my agency, has a differentiated approach to marketing analytics that does capture “view-thru” – tracking that a user saw a display ad days or even weeks prior to a conversion event).

Here is what I would like to see analytics vendors or social media monitoring platforms do to start to quantify the measurement:

  • Track participation in social technologies in similar fashion to traditional ecommerce sites (defined conversion events, page views, length of visit).  A potential limitation is that brands may only be able to track measurements based on assets they control (hosted communities, hosted blogs, custom widgets, etc).
  • Tie search engine queries, organic search site visits and PPC ad clicks – and ultimately, conversion – back to whether the user had participated in a social technology, and measure typical length of visit/level of engagement both before and after conversion.
  • Provide in one dashboard the ability to identify the direct correlation between social marketing initiatives to conversion and revenue.

This level of data would help marketers more directly measure the success of social marketing initiaitves and make at least part of the intangible, tangible.  Is that a lot to ask?

Photo credit: premasagar via flickr

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  • But what about Social Network Analysis? Or how about Text Analytics & Sentiment Analysis & other Natural Language Processing to extract quantitative social data from the qualitative social data?

    Social Media Metrics is just one part of the Social Web Metrics. Traditional Web Metrics still hold good too. Just add Social Network Metrics to the mix & you’ve got some good Social Web Metrics.

    Provide the Social Web Metrics to a DW/BI tool along with the enterprise CRM metrics and voila! You have a very heady mixture! 😀

  • But what about Social Network Analysis? Or how about Text Analytics & Sentiment Analysis & other Natural Language Processing to extract quantitative social data from the qualitative social data?

    Social Media Metrics is just one part of the Social Web Metrics. Traditional Web Metrics still hold good too. Just add Social Network Metrics to the mix & you’ve got some good Social Web Metrics.

    Provide the Social Web Metrics to a DW/BI tool along with the enterprise CRM metrics and voila! You have a very heady mixture! 😀

  • Eric Karofsky

    Another nice post and good ideas Adam. After doing some research, I’ve found that CFOs are getting remarkably skeptical of the whole ROI concept if “return” = “revenue” or “profits” to the point where its starting to ruin the marketers credibility. i like the idea of making “return” = “conversion event” and then having a rational discussion on how social (or any other marketing event) can improve conversion.

  • Eric Karofsky

    Another nice post and good ideas Adam. After doing some research, I’ve found that CFOs are getting remarkably skeptical of the whole ROI concept if “return” = “revenue” or “profits” to the point where its starting to ruin the marketers credibility. i like the idea of making “return” = “conversion event” and then having a rational discussion on how social (or any other marketing event) can improve conversion.

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  • Adam, nice post, I like how you have identified the shortest path to measurability for social media/marketing. There are other paths (@scorpfromhell mentioned some) – but from experience they are more convoluted and require more assumptions (assumptions raise CFO eyebrows, as Eric mentioned). My one comment would be that the third thing you ask for might be the most difficult, as isolating the effect of social “events” on purchasing behavior in a statistically significant way might be nearly impossible. I think that’s one reason why “last click” is so popular. Perhaps we could use social activity to segment audiences and link that to likelihood to purchase?

  • Adam, nice post, I like how you have identified the shortest path to measurability for social media/marketing. There are other paths (@scorpfromhell mentioned some) – but from experience they are more convoluted and require more assumptions (assumptions raise CFO eyebrows, as Eric mentioned). My one comment would be that the third thing you ask for might be the most difficult, as isolating the effect of social “events” on purchasing behavior in a statistically significant way might be nearly impossible. I think that’s one reason why “last click” is so popular. Perhaps we could use social activity to segment audiences and link that to likelihood to purchase?

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    Understanding How Social Media Impacts the Purchase Path | :: a …: [“Conversion” for those not familiar with w.. [link to post] – Posted using Chat Catcher

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    Understanding How Social Media Impacts the Purchase Path | :: a …: [“Conversion” for those not familiar with w.. [link to post]

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  • Doug, “using social activity to segment audiences” – are you alluding to tribes? Thats certainly a new way of looking at things in the Social Web. And wrt other paths for measuring metrics & convolutedness, just have a look at this social media metrics mindmap. 😉

  • Doug, “using social activity to segment audiences” – are you alluding to tribes? Thats certainly a new way of looking at things in the Social Web. And wrt other paths for measuring metrics & convolutedness, just have a look at this social media metrics mindmap. 😉

  • @scorpfromhell I definitely agree there are many ways to measure social media networks, sentiment and engagement. NPS (net promoter score) is a great metric I think should be factored into the mix somehow. I believe many marketers today are struggling with how to integrate that stuff with the more traditional metrics they get from web analytics. My suggestion is a start to trying to bridge the gap. Bigger picture – a company that can merge CRM, web analytics and social measurement will really be able to gain true insight to customer engagement and develop programs that target underserved segments…but let’s start with bridging the gap between web analytics & social first.

    @Doug – I think you are heading in the right direction and agree it is difficult to tie to specific social events. For starters I’d recommend we segment by “any” social participation vs. traffic/conversion originated without it. For a retailer, for example, I think it would be compelling to understand if someone who had interacted on a social asset online has a higher conversion rate (suspect: yes) than someone who had not.

    @Eric – If you are saying CFOs are skeptical of ROI from social media, I understand. But I would be surprised if CFOs are skeptical of the traditional ROI calculations from paid search and display advertising initiatives since they can really be spelled out. I’m suggesting the industry go in the direction of trying to quantify the value of social media assets in the same way as any other online marketing initiative, so conversion (for a retailer, that could directly equal revenue) can be tied to social media participation. Let me know if I’m not making sense – really appreciate your input.

  • adam

    @scorpfromhell I definitely agree there are many ways to measure social media networks, sentiment and engagement. NPS (net promoter score) is a great metric I think should be factored into the mix somehow. I believe many marketers today are struggling with how to integrate that stuff with the more traditional metrics they get from web analytics. My suggestion is a start to trying to bridge the gap. Bigger picture – a company that can merge CRM, web analytics and social measurement will really be able to gain true insight to customer engagement and develop programs that target underserved segments…but let’s start with bridging the gap between web analytics & social first.

    @Doug – I think you are heading in the right direction and agree it is difficult to tie to specific social events. For starters I’d recommend we segment by “any” social participation vs. traffic/conversion originated without it. For a retailer, for example, I think it would be compelling to understand if someone who had interacted on a social asset online has a higher conversion rate (suspect: yes) than someone who had not.

    @Eric – If you are saying CFOs are skeptical of ROI from social media, I understand. But I would be surprised if CFOs are skeptical of the traditional ROI calculations from paid search and display advertising initiatives since they can really be spelled out. I’m suggesting the industry go in the direction of trying to quantify the value of social media assets in the same way as any other online marketing initiative, so conversion (for a retailer, that could directly equal revenue) can be tied to social media participation. Let me know if I’m not making sense – really appreciate your input.

  • @Adam – I can only agree & amen to that! Folks are only now taking the baby steps towards a more wholesome world domination! Its probably ages or at least a couple of years before we start seeing even some of the metrics I have pointed out in the social web monitoring/metrics tools.

  • @Adam – I can only agree & amen to that! Folks are only now taking the baby steps towards a more wholesome world domination! Its probably ages or at least a couple of years before we start seeing even some of the metrics I have pointed out in the social web monitoring/metrics tools.

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  • Adam, I agree and think that’s a great place to start. The only potential downside is there are lots of the “wrong type” of social engagement out there. Facebook ads and the infomercially YouTube videos, for instance, might convert at much lower rates than PPC or certainly organic search. In fact, if you are focused on immediate conversion to purchase as your KPI, SEM might outperform any campaign on a third party social media destination (people just aren’t often there in product consideration mode). Just the downside of focusing on this path for ROI.

    Of course I’m biased philosophically because I work at a place that sells community for a brand’s web presence, but measuring the effect of social media / community on purchase behavior might be best done by turning third party social engagement into branded social engagement, then into purchase. For instance, if an ecommerce site has implemented Bazaarvoice ratings and reviews, they might advertise their review content on FB, then watch how the channel performs. Loving the comment thread, thanks Adam.

  • Adam, I agree and think that’s a great place to start. The only potential downside is there are lots of the “wrong type” of social engagement out there. Facebook ads and the infomercially YouTube videos, for instance, might convert at much lower rates than PPC or certainly organic search. In fact, if you are focused on immediate conversion to purchase as your KPI, SEM might outperform any campaign on a third party social media destination (people just aren’t often there in product consideration mode). Just the downside of focusing on this path for ROI.

    Of course I’m biased philosophically because I work at a place that sells community for a brand’s web presence, but measuring the effect of social media / community on purchase behavior might be best done by turning third party social engagement into branded social engagement, then into purchase. For instance, if an ecommerce site has implemented Bazaarvoice ratings and reviews, they might advertise their review content on FB, then watch how the channel performs. Loving the comment thread, thanks Adam.

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  • Hi Adam,

    Sorry it took me so long to get back around to you! The measurement and tracking of social analytics is really in its infancy, but bringing web analytics and social metrics one step closer together is a start.

    The trick is always going to be in understanding that buying behaviors and influence factors aren’t linear. They’re a combination of things that include many of the metrics we’re tracking, but drawing a hard line of causality between X post and Y purchase behavior is always going to be a bit nebulous.

    Instead, what we can do is better refine our filters to understand indicators and guideposts for behavior, and focus our efforts where they’re most likely to succeed. That also includes being willing to set clear objectives and measure against them from the start with a carefully selected set of metrics. A balance of quantitative and qualitative metrics is always going to be key, and we’re hoping that our partnership with WebTrends along with continued development of social tools and spaces will bring us closer to tying online experiences together across the web.

    Thanks for your thoughtful post, as always.

    Cheers,
    Amber Naslund
    Director of Community | Radian6
    @AmberCadabra

  • Hi Adam,

    Sorry it took me so long to get back around to you! The measurement and tracking of social analytics is really in its infancy, but bringing web analytics and social metrics one step closer together is a start.

    The trick is always going to be in understanding that buying behaviors and influence factors aren’t linear. They’re a combination of things that include many of the metrics we’re tracking, but drawing a hard line of causality between X post and Y purchase behavior is always going to be a bit nebulous.

    Instead, what we can do is better refine our filters to understand indicators and guideposts for behavior, and focus our efforts where they’re most likely to succeed. That also includes being willing to set clear objectives and measure against them from the start with a carefully selected set of metrics. A balance of quantitative and qualitative metrics is always going to be key, and we’re hoping that our partnership with WebTrends along with continued development of social tools and spaces will bring us closer to tying online experiences together across the web.

    Thanks for your thoughtful post, as always.

    Cheers,
    Amber Naslund
    Director of Community | Radian6
    @AmberCadabra

  • Hi Amber – As always you bring a balanced perspective. I think marketers do need to be able to point to metrics that quantify, not just qualify – so any step to merge social media measurement (which has a reputation for being more subjective) with traditional analytics is a big step in the right direction. I’m looking forward to seeing what the combine product announcement of Radian6 and WebTrends will yield – and also to see what competitors in both markets do. Thanks for your input!

  • adam

    Hi Amber – As always you bring a balanced perspective. I think marketers do need to be able to point to metrics that quantify, not just qualify – so any step to merge social media measurement (which has a reputation for being more subjective) with traditional analytics is a big step in the right direction. I’m looking forward to seeing what the combine product announcement of Radian6 and WebTrends will yield – and also to see what competitors in both markets do. Thanks for your input!

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  • Adam,

    Good article. There is a lot of talk about the ROI of Social Media but nothing has yet been defined clearly. To try to put thoughts on a paper (or adding to the chaos…), I pulled together a Social Media ROI spreadsheet. It is based on work by Charlene Li (Forrester) and Bill Johnston (Forum One) in that it compares online and offline benefits and costs.

    The spreadsheet is downloadable at http://dagholmboe.wordpress.com.

    I am a firm believer that running a business, you need to define an ROI in basically everything you do. Some people might argue that Social Media is different and that calculating and ROI is impossible. There is some justification to their arguments – after all, how do you quantify engagement or sentiment? Nevertheless, it is simply not correct that you can not define an ROI.

    The problem with Social Media ROI is that it is difficult to define however Li and Johnston have done a great job defining it. My spread sheet is simply just an extension of their work.

    Best,
    Dag.

  • Adam,

    Good article. There is a lot of talk about the ROI of Social Media but nothing has yet been defined clearly. To try to put thoughts on a paper (or adding to the chaos…), I pulled together a Social Media ROI spreadsheet. It is based on work by Charlene Li (Forrester) and Bill Johnston (Forum One) in that it compares online and offline benefits and costs.

    The spreadsheet is downloadable at http://dagholmboe.wordpress.com.

    I am a firm believer that running a business, you need to define an ROI in basically everything you do. Some people might argue that Social Media is different and that calculating and ROI is impossible. There is some justification to their arguments – after all, how do you quantify engagement or sentiment? Nevertheless, it is simply not correct that you can not define an ROI.

    The problem with Social Media ROI is that it is difficult to define however Li and Johnston have done a great job defining it. My spread sheet is simply just an extension of their work.

    Best,
    Dag.

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