Photos Are The Social Keyword

For most companies, there’s a gap between social media results and business results.  For example, growth of a fan page does not typically have a high correlation with an increase in sales, especially when you’re looking at short-term results.  I am not saying that a correlation doesn’t exist.  I think social media can generate business results, some of which are hidden on an income statement, but that’s a different conversation.  As a result of this gap between visible business results and social media activity,  companies often try to make sense of their efforts by benchmarking themselves against their competitors.

A company that I recently looked at had achieved some great results in terms of recent fan growth on Facebook, but wanted to get an idea of how they might better manage their social media presence moving forward to keep their growth rate up up keep their community engaged.

One of the drivers of both engagement and organic fan growth on Facebook is the fan interaction rate.   When fans interact with a brand’s content on Facebook, activity feeds on a user’s profile drive organic traffic to their Page.   I like to think of this as SEO for social.  When search became the emerging media, everyone wanted to optimize their websites for organic search results by dropping keywords and key terms on their pages in an effort to increase traffic from search engines. Fast forward to social: if you want to increase traffic to your social presence, getting your existing community to interact with your content is an effective tactic.

Below is a graph that shows what I believe to be a correlation between the amount of photo and video content that’s posted by a Facebook Page and the corresponding interaction rates for each.  This is pretty intuitive: photos get higher interaction rates then text alone when it comes to Facebook.

Here are the terms and definitions:

  • Page Size: Defined as the number of Likes on the Facebook Page, denoted below by the size of each bubble.  The biggest bubbles have the most “Likes” on Facebook, and the smaller ones less so.
  • Interaction Rates: [(Number of post likes + number of post comments) /  number of Page likes] *100.   For example, if a page has 10,000 Likes on Facebook and posts an update that generates 40 Likes and 10 comments,  that post would have an interaction rate of .5%: [(40+10)/10,000]*100=.5%.
  • % of posts that include photos: Looking back over a set period of time, finding the approximate percentage of updates that contain a photo or  video, not including link out thumbnails.

While I don’t think this is a particular shocking discovery,  I have been impressed to see that this correlation scales with Page size.   One would think that after a company gets into millions of Likes that interaction rates would fall because the denominator in the equation grows so large.   I’ve found that Page size has almost nothing to do with it.    Pages that post more photos in their updates tend to enjoy higher interaction rates, and higher organic growth rates as a result.

Driving Value In Social Media

My friend Tim Freestone reminded me of something recently that is so fundamental and simple, yet often forgotten in the world of community building and social media marketing.  He said “If you can drive value you can write your own checks”. Tim works in direct marketing for B2B clients and has a very clear path to revenue contribution.  It’s measurable.  It’s obvious.  You either generate transactions or you don’t.   In Tim’s world, value is measured by a clear increase in revenue that is greater than the cost of the marketing services he offers.  Tim generates value.

Social media, depending on how you define it, works differently.  Marketers often analyze what they’ve invested in social media and don’t see lift in revenue, or they may see a lift in revenue but it’s impossible to correlate with their social media efforts.  Social media tends to look ineffective when measured directly against revenue growth (this is very similar to the Public Relations industry issue- but that’s a different post.  For this post, I’m talking about social networks and blogger outreach).

Today I want to play with the equation up top.  ROI is calculated by measuring what you made, subtracting what you’ve invested, and then dividing that sum by what you’ve invested (expressed as a percentage).   So, if you spend $1, and you make $2, then your ROI will be [(2-1)/1= 1]  = 1.00 = 100%.

I believe social media generates a lot of value for brands, but I believe it shows up in strange places on a financial statement.  Here are a few examples of why it’s difficult to measure:

Most of social’s revenue contribution is credited to other channels

A lot of consumers who engage with brands in social do not take a revenue-driving action directly from Facebook, or blog, or any other social network.  Some do, but a lot don’t.   Most of them consume some type of content, maybe interact, and then go about their day.  In the digital space, it’s often insightful to look for correlations between increases in direct traffic and search volume against social media efforts (try this and let me know what you find).
Just because a consumer doesn’t click out of a Facebook status update does not mean that they haven’t been impacted.  On the contrary, getting “into the stream” is far more effective than being on the periphery (in a digital ad).  Marketers who think of streams as ads are often missing the point, or not looking closely enough at their digital presence.

Most of the value in social media comes from cost savings and increased customer lifetime value

If you are a consumer brand and someone has an axe to grind, you really need to be in social media.  Consumers are fickle and tend to drag brands into a very public conversation when they feel wronged.  On the other side, people use social platforms to evangelize brands and you’ll probably want to be around for that, too.

Creating a platform for customer engagement decreases customer service costs (as less people lodge complaints through other channels), but more importantly decreases the cost of having to acquire new customers (to replace the ones you lose by not being respondent).  These metrics go into the “what you made” section of the ROI equation, but they don’t directly affect revenue growth, they affect profit by lowering operating costs.  New customer acquisition costs are usually the highest marketing expense a company has.  I can’t understand why more brands don’t measure the customers they keep.

Increasing intangible asset value isn’t necessarily a revenue driver…

By extension of the point above, maintaining brand awareness, increasing customer lifetime value and increasing brand affinity also show up in intangible assets (brand value). This isn’t something that marketers with short and mid-term goals look at, but it’s definitely something CEOs want to look at.  Again, contribution from social media to brand value is difficult to measure, but it’s certainly one of the biggest pieces of value offered.

Social media can increase lifetime customer value, decrease your customer service costs, and make a significant long-term contribution to revenue through the viral nature of word-of-mouth marketing.   But I think marketers need to stop looking at their social media efforts with the same microscope that they measure their SEM campaigns- it just doesn’t make sense.

Facebook Fans are worth $136.38 per year

A new study was just released by Syncapse, a Canadian social media agency, that tries to calculate an annualized dollar value for a Facebook Fan,  and has landed on $136.38 per year.  Gigaom posted a great, quick writeup summarizing how this value was derived, and the folks at Syncapse have posted an easy to download PDF,  so I’m not going to regurgitate on this post what you can read elsewhere.  I think that the agency did a wonderful job performing their research and making their arguments, and because I think that the number number is a bit silly, especially as an annualized value.

There’s No Causality

The report hits the nail on the head by identifying that a Fan base is a self-segmented group of highly valuable customers.  That is absolutely true.  What is also true is that the majority of value accredited to these fans is based on the fact that Facebook Fans surveyed spend over $71/year more than their non-fan counterparts.  Well,  that’s great–  but it doesn’t imply causality. These consumers aren’t necessarily spending more because they are fans.  From a behavioral standpoint, I believe brand evangelists will tend to flock to communities where they can wear the badge of being part of the brand.  I’m a little less sure of the causality going the other direction.

Earned Media Is Still the Best Metric

Assuming this is true (the core fans flock to pages),  it presents a fantastic opportunity for brands to engage a core group of their ambassadors and get brand messaging distributed organically.  A more meaningful metric that Syncapse discusses in their report is the earned media value measurement.  The idea that Facebook Fan (being a brand evangelist) is likely to share content and spread brand messaging seems more valuable to me than stating that a fan spends more than a non-fan.  This word-of-mouth recommendation system is still the number one reason for any brand to exist in social media.  Organic fan and customer growth cannot be accomplished with media placements and Facebook Pages are a proof of concept that supports this idea.

According to Syncapse,  68% of Facebook Fans indicate they are very likely to recommend a product.  This is incredible news for brands that want to spread value through connections with their customer base.  The issue that most brands (and agencies) are suffering under with this new medium is that it does not scale to the levels of purchased media (Chris Brogan has good things to say about this).  My personal take is that,  often in traditional media you can reach scale of impressions while generating very few connections.  Social media (ideally) starts with connections and grows from there.  It’s a different approach, but highly valuable if leveraged efectively.

Part II: Facebook and Open Graph API

I’ve had a few insightful conversations over the past week on the Open Graph topic (I did a post on the changes, you can find it here.  I also recommend checking out this ReadWriteWeb article by Alex Iskold on the topic).  I’ve had a little more time to explore the subject, so the purpose of this post is to continue the conversation.

The stickiest topic has been about why Facebook would encourage an increase in off-platform activity by pushing to get  Like buttons on non-Facebook sites.  At first glance, it seems that an increase in these semantic bookmarks across the web might discourage marketers from establishing brand pages, applications and custom tabs on the Facebook Platform.  If brands can push content into Facebook users’ streams without having to develop extensive branded experiences inside Facebook, then they will be less likely to buy media from Facebook.  Yes, the value of community will still be important and Facebook Pages will still have value. But invariably brands want to be in users streams and they can easily accomplish this without a Page if Like button use is adopted.

So, there will be less need to buy Facebook media, unless Facebook starts serving ads outside of the platform, which it can easily do with the information it’s collecting:

If Facebook continues to collect user preference data from across the web, it’s ability to target you anywhere (as long as you are logged into Facebook) with relevant information on products and services that you will “Like” becomes a fairly simple process.  This presents a fairly elegant solution for Facebook, which is struggling (I believe) with the challenge of serving users advertisements when they’re ready to buy.  Right now, Facebook serves ads inside Facebook; and users typically aren’t interested in clicking out to make purchases elsewhere on the web (while click-through rates from the stream may be higher,  Facebook media historically doesn’t perform this function well).  If Facebook starts negotiating for inventory outside of its platform, the game changes significantly.

Twitter Ad Networks: Paid-Earned Media

A Friend of mine sent me a link to 140 Proof, an ad network that serves up sponsored ads in Twitter and asked me for my onion on the network. I’m not going to link out to the network, but I would like to talk about my thoughts on this approach as a business model.

I went on the site to find out a bit more information on the company. It was interesting to click on either the “Publishers” or “Advertisers” links on the site, because they both attempted to access and update my Twitter account. I find this unusual behavior for a company who is trying to sell me ad inventory on Twitter, while simultaneously asking to borrow mine without offering any value first. Anyway, here was the email I replied with:


Quick response:
* I don’t know anything about this specific agency, but I’ve spoken to others
* I’ve never run a paid media campaign in Twitter
* I find these networks somewhat objectionable and annoying because it’s interference marketing with very little value (I may change my opinion on this, but Twitter is so self-promotional as it is that it seems ridiculous to purchase tweets). With that said, it’s certainly gaining popularity.
* A colleague of mine purchased this type of media for {a client} and reported that it didn’t perform.

If you want to purchase this type of media, make sure it can be performance-based (number of clicks or registrations- not CPM) and understand that you will not be able to target it very well.

That about sums up my opinion of buying earned media. This type of advertising strikes me as being no different from advertorials, and brands wishing to establish relationships and drive beyond a click should be careful when purchasing media like this. Duping someone into clicking on your ad is not advertising.

The “Death” of Publishing

My friend Rubina Aggarwal sent me this video on social marketing and the future of publishing.  I thought is was a “cute” way to talk about what’s happening right now on social platforms.  I find it compelling that there remains a level of idealism about the power of social media with respect to brand building:

I was also reading Brian Solis and got to thinking about the idea that all brands are now to become publishers of media and content. Here’s a quote from Brian’s article.

As brands, we become media.

Through the democratization of publishing and the equalization of influence, we can create, connect, and attract a wider reach, establishing meaningful connections and building dynamic communities and interactive paths along the way.Everything starts with creation of a mission and purpose and fortified by the content we create, the processes in which we distribute it, and the activity that supports social objects and the reactions they engender.

Perhaps among the most powerful rewards we procure through dedicated publishing is the generation of good will, social capital, and influence. It comes at a price however, and the price is defined by the cost of resources, production, distribution, and support. In the end, you get out of it what you invest in it and the investment represents time, money, creativity, and passion.

While I agree with the sentiment, I tend to be a bit more realistic about what a major brand should hope to extract form social media. As a professional in the space, I’m obviously an evangelist of brands creating platforms for social relationships. However, I do not believe that all brands need to create deep content and media to be relevant in social media. In fact (sacrilege!) , I’d prefer that some brands do not spend their time creating content and instead, spend their energy creating great products, listening to consumers, and communicating only their value propositions that support their products.

Yes, all brands need to be in social media. However, content development without strategic merit is a waste of time, energy and money. I do not like to see brands wrap themselves in social platforms simply for the sake of “having to be there”, only to wonder what they got out of it when it’s complete.

Think about value. Think about outcomes. Building a social media platform should evolve naturally from there.

Social Gaming & Not-So-Virtual Currency

I was just discussing virtual currency and the recent announcement from Zynga confirming the availability of their Game Cards with a colleague at 360i, and I got to thinking about the exponential growth of virtual currency and online/social gaming that’s finally coming to the United States.

While the worldwide explosion of both virtual currencies and social gaming is undeniable, I can’t help but wonder where all of this is going and if it’s bringing media and online content to a good place.

The Good
Social games have simply exploded. Zynga alone has over 235 million monthly active users (MAUs) playing its games; all of which (I believe) exists in Facebook. That is a lot of time spent playing, engaged and ready to view ads, purchase virtual gifts, or perform any number of monetize-able actions.

The future is bright. This year alone, virtual goods revenue in the United States is projected to hit $1.6 Billion and about half of that is supposed to come from social gaming publishers (Zynga, Digital Chocolate and others). For a business that barely existed a few years ago, this is astonishing growth. What’s more, we’re well behind Asia in virtual goods revenue (they’re at about $4 Bn in annual revenue now), so there is still :money on the table”.

The Questionable
Despite recent success getting pre-paid cards out into the world, monetization has been a slippery slope. The TechCrunch Scamville callout with regards to offer media was a pretty big shake-up (Zynga handled this extremely well).  As a professional who has purchased various performance media, some with virtual currencies involve, I can say that getting a user to sign up for a subscription service in exchange for virtual currency is simply a terrible idea for this reason: at the end of the day consumers aren’t considering the product’s value proposition when making the transaction, so they inherently will not value the product.  Also,  if 66% of players are women between 35-44, why do publishers need to resort to these performance tactics?  It seems that this demographic can be spoken to on a higher level.

Also, and this is about as unscientific as it gets, the experience of social gaming just isn’t that cool. I realize that sounds like a ridiculous criticism, but if an industry plans to offer real long-term value to consumers, it should really start by maintaining some level of user experience integrity. When you scroll through the top social games in the world, there are two game formats: the “Mafia Wars” experience, and the “Farmville” experience. That’s really about it. Every other game is a slight tweak on those basic formats (with the exception of online poker). I’m not much of a gamer, and I’m far from what anyone would consider an avid social gamer, but I believe that, from a marketing standpoint, the industry needs to expand it’s experience if it’s going to see growth beyond a core market.

If you’re interested in the development of the industry, I’m a fan of Inside Social Gaming and Games Beat