Increasing the ROI of Social Media Marketing

By following a seven-step process to identify and recruit potential brand ambassadors in online social networks, an ice cream retailer substantially improved the effectiveness of its social media marketing.

Ice-cream retailer Hokey Pokey encouraged influential social media users to tweet about their custom ice-cream creations.

Image courtesy of Hokey Pokey.

Now that so many people worldwide participate in online social networks — 955 million on Facebook alone1 — influencing consumer preferences and purchase decisions through these networks and word of mouth (WOM) is an increasingly important part of every marketer’s job. Many enterprises are investing in social channels to rapidly create or propagate their brand through viral content, social media contests and other consumer engagement efforts. Their traditional campaigns are changing, too. Companies such as Geico, Dell and eBay are adapting the traditional “one-way” advertising message and using it as a stepping-stone to begin a two-way dialogue with consumers via social media.2

Marketers know that theoretically, social media should be a powerful way to generate sustainable, positive WOM. If they can only select the right social media platform, design the right message and engage the right users to spread that message, their campaign should be a success. But until now, that’s been a big if.

Creating Successful Social Media Campaigns

An effective social media strategy should clearly define the marketing objectives, evaluate the opportunities and select an appropriate form of social media to communicate. Today’s social networking sites are also equipping themselves with analytical capabilities to analyze the reach, spread and impact of a social media message. In light of these goals and tools, we developed a seven-step approach to ensure a successful social media campaign. (See “Seven Steps to Social Media.”)

The Leading Question

How can a company improve the ROI of its social media campaigns?

Findings
  • Identify social media users who are both influential and particularly interested in the company’s product or service category.
  • Incentivize those influencers to talk about the company’s product or service.
  • Use metrics to calculate the value of an individual’s influence.

Our research suggests that by developing and implementing this seven-step method to first identify the net influence wielded by a user in a social network and then to predict that user’s ability to generate the viral spread of information, businesses can identify the “right” individuals to engage in social media conversations to promote WOM.

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References

1. Facebook.com statistics on the number of active users at the end of June 2012.

2. P. Kotler and G. Armstrong, “Principles of Marketing” 12th ed. (Upper Saddle River, New Jersey: Prentice Hall, 2007): 481.

3. P.V. Marsden and N.E. Friedkin, “Network Studies of Social Influence,” in “Advances in Social Network Analysis: Research in the Social and Behavioral Sciences,” eds. S. Wasserman and J. Galaskiewicz (Thousand Oaks, California: SAGE Publications, 1994); and D.J. Watts and P.S. Dodds, “Influentials, Networks, and Public Opinion Formation,” Journal of Consumer Research 34, no. 4 (December 2007): 441-458.

i. V. Kumar, V. Bhaskaran, R. Mirchandani and M. Shah, “Creating a Measurable Social Media Marketing Strategy for Hokey Pokey: Increasing the Value and ROI of Intangibles & Tangibles,” Marketing Science, in press.

ii. For more details, see C.H. Hubbell, “An Input-Output Approach to Clique Identification,” Sociometry 28 (1965): 377-399.

iii. Kumar et al., “Creating a Measurable Social Media Marketing Strategy for Hokey Pokey.”

3 Comments On: Increasing the ROI of Social Media Marketing

  • jevedebe | December 4, 2012

    Congratulations. This is exactly what I am writing about in my book “Ik ben een aanrader” – soon to be published in English too.

    This is an excerpt

    “WHAT YOU NEED TO KNOW
    > You must be aware of the balance of power between the different
    recommenders in your market. They will decide your share in that
    market, which in turn will be a reflection of the up-and-down turbulence
    operating within the group of recommenders.

    > You must find out who are the recommenders of your brand and
    who are not, both at group level and individual level.

    > You need to know which recommenders are content-makers and
    which recommenders are networkers, who spread that content.
    Remember: they are both recommenders in their different ways!

    > You need to know why they recommend your brand – or why not.
    And what brands are they recommending, if they are not recommending
    yours.

    > Only when you collect and continually update all this data will you be
    able to understand the individual actors and the relationships within
    the recommender group.

    > Continually enrich your data with data from other non-competing
    brands, so that you can build up a comprehensive brand profile of the
    different recommender segments and the individual recommenders.”

    Jan Van den Bergh.

  • Aziz Memon | February 11, 2014

    Without malice or disrespect, but in all honesty this was the weakest so called “research paper” I have read on this subject. Sure the author’s Social Media campaign may have been tremendously successful, but one actual business case does not make a research paper. I am surprised the MIT Sloan Management Review would publish such amateurish content as a research feature. A waste of 17 minutes.

  • L’exemple d’Hokey Pokey. | April 17, 2014

    […] Cet article s’inspire en partie d’un article disponible à cette adresse (en anglais): MIT SLOAN. […]

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