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On Sm Valuation


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#1 iamlost

iamlost

    The Wind Master

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Posted 19 August 2011 - 12:50 PM

There are many pseudo-calculation formulae, often proprietary, i.e. undisclosed, out there trumpeting an ability to determine the 'value' in dollars and cents of various social media participants, i.e. FaceBook fans, Twitter followers, to a business. Why 'pseudo'? Because no two agree; I've seen amounts from under a dollar to over a hundred. And also because the entire premise is flawed:
* arbitrary averaged values assigned across an entire SM platform and all business divisions are simply not useful.
* neglecting costs of acquisition inflates the illusion and compounds the uselessness.

Let's get real and leave the hocus-pocus behind:
* while there can be a determined value of a SM platform it is the aggregate of the business value of each user to the company in question. It can not be determined without first determining the value, to your business, of each of it's users with whom you interact. And, generally, that value changes by measuring period.

* there are two broad value inputs: direct, based on conversion; and indirect, based on influencing others to convert.
Direct is most easily determined although there are problems assigning credit to the various conversion steps.
Indirect is difficult, much more fuzzy, and many tracking methods are currently often expensive and proprietary.

* just as the old forum participation rule: for every 1000 who visit: 900 lurk, 100 register; of the 100: 10 participate; of the 10 only 1 or 2 post frequently. Similarly for SM and business interaction. A like, follow, or similar is really equivalent to fora lurking - there is no value passed to the business. And when value is passed it might be a one off never to be repeated (the 90 fora equivalent), or seasonal or of otherwise infrequent value received (the 10 of fora equivalent)... Much of course depending on your niche, your business model, customer behaviours, etc.

* SM can only be truly valued individual by individual - and that requires utilising an appropriate CRM and analytics solution. Unfortunately that is a problem: if you are unable to develop your own many/most available are expensive, inadequate, or both.

Whatever, when you hear someone talking fan/follower value remember the once upon a time webdev measurement HITS (all files requested) or as Katie Delahaye Paine famously put it, How Idiots Track Success.

Create a strategic SM plan based on business model requirements.
Use that plan to determine your SM goals.
Use each goal to determine how to measure success.
Use those measures to determine appropriate analytics.
Create an initial benchmark.
Engage with and track individuals.
Assign appropriate real values derived from each individual 's influence and conversion - and do not confuse the two.
Acknowledge value changes over time.

Analyse and hypothesise and test and improve.
Person by person where practicable.
Retention is significantly less expensive than acquisition. That is where the most effort should be focussed. Especially in SM where reputation and recommendation are arrows shot in all directions by all involved. Work at the arrows being more positive than not and let others do much of your acquistion.

#2 Ammon

Ammon

    Unlurked Energy

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Posted 21 August 2011 - 12:03 PM

Nice post iamlost.

Like you, I am endlessly struck at idiotic generalisations of value, as if even something as basic as leads had a fixed value to all companies, markets, etc.

The truth is more complex, by far, and cannot be simplified.

Clear example:

A company (hypothetical example) sells furniture, and has decided to do some careful active marketing via facebook. Among their activities they have created a group of their own that they promote to both previous and prospective customers. This group promotes special offers, and generally gives a social side to their marketing in general.

Additionally, they have joined some other groups. One group is for people suffering from certain mobility problems that mean they have trouble getting on and off of 'regular' seating, and our example company has a wide range of furniture that is suited to such mobility issues. Another group is about a specific style of furniture and decoration that the company do have some of in their prestige range of high-quality furniture (the high-ticket end of their products).

In this case, we are solely dealing with a single platform of social media (Facebook for this example). However, there are three differing avenues for contact, one of which is their own 'fan club' type group, and the other two being special-interest groups that the company has been able to communicate with well.

It is almost a guarantee that members of each different group will represent a different average value, even on one single platform.

Sometimes, people just don't get it.



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