Let me count the ways I ‘Like’ thee

13 Jun 2010, Posted by admin in Featured, Tools & Resources, 0 Comments

In the debate about how to measure the value of social media investment there seem to be a few areas of discussion currently standing out from the many threads.

The first is to ascribe a media value to your social media channels based on how many (impressions) ‘Likes’ or followers you have. The company currently pushing this view claim that, on average, a fan base of 1 million translates into at least $3.6 million in equivalent media over a year. They’ve even built a wizzy tool where you can calculate the media value of your fan page and set your CPM from $1 to $25.   Using their tool the top three brands on fb have page values ranging from $19million for Starbucks to $5 million for Coca-Cola. Their equation isn’t perfect but it’s a start at looking at how to value your social media channels when you are attempting to optimise your overall media budget.

The second avenue is to try and put value on word of mouth. What is the value of seeing a friend of yours ‘like’ a brand. The traditional way to measure WOM effectiveness was the Net Promoter Score. Customers who answer 9-10 on a ten-point scale to the question How likely are you to recommend this product or company to a friend or colleague? are considered Promoters, while those who answer 6 or lower are considered Detractors. To calculate your company’s Net Promoter Score (NPS), take the percentage of customers who are Promoters and subtract the percentage who are Detractors. To increase revenues, say NPS practitioners, simply evaluate and reward management on their ability to increase the company’s Net Promoter Score. Sounds a little flaky? The good folk at WOMMA are supposedly working on a new suggestion.

For some time there has been talk of applying PR calculations to online mentions. One of the most common, and perhaps most flawed – is the AVE or advertising value equivalent. This looks at the free coverage you received then puts a value on them based on how much it would have cost you to advertise in the same place. For newspaper it’s measured by size (columns) and for television it’s measured by time. This method is hardly comparing apples with apples and is based on the assumption that advertisers value an ad based on how much the media space cost but it does allow for an easy financial calculation that can keep a PR person in a job. Particularly when readership of online newspapers can be incredibly high

All of these areas of discussion point back to the question – what do you define value as?