Calculating Online Media ROI
It’s a question we’ve heard countless times:
“Should we choose to work with you, what ROI can you deliver?”
We would reply by stating the number of posts we would write and the social media exposure we would deliver across multiple platforms.
“Yes, but what is the value of that?”
We had no answer for that. It was a frustrating process for both parties so we decided to do something about it. We talked to PR agencies, DMOs, bloggers in other sectors and social media experts, but no one had quite figured out a way to calculate the ROI of online content and social media. There were various attempts to measure someone’s ‘influence’ on social media but none were conclusive. We then looked at how ROI is measured in traditional media and studied the workings of AVE (Advertising Value Equivalent), a widely-used model.
AVE basically looks at the size of an editorial and compares that with the price of an advertisement of a comparable size in the same publication. We were skeptical in the first instance. There were no values in that model that actually showed how many people had read an editorial in a newspaper or magazine or how much time they spent on that page. The model was too vague for us to take into consideration.
We then looked at our sites and our stats, and realised that the values missing in AVE calculations for traditional media were indeed present in online media. We could see how many people had read a specific post, how much time they spent reading it and where they came from. The powerful Google Analytics tool provides this information.
We can also see how many times a specific post has been tweeted (on Twitter), liked (Facebook), stumbled (StumbleUpon), +1 (Google+) and pinned (Pinterest). This prompted us to take another, closer look at the AVE model. We applied the model to a variety of sites and included traffic stats of individual posts.
An important component of online media is the exposure that can be generated via social media. Again, there are as yet no conclusive models that calculate the ROI of social media, i.e. the value of a tweet or a Facebook post. We decided to apply the same AVE principles to social media by researching the prices top social media influencers charge for a sponsored tweet. We created a basket of top influencers (using four different influence measuring tools) and gathered their prices. We then compared our reach and influence scores with this basket of top influencers and determined our prices on a pro rata basis.
Ad value of online content + ad value of tweet and facebook post = ROI
By applying the AVE model, we found a way to calculate the perceived ROI of the two pillars of online media – hosted content and social media reach. It can be used in a pre-campaign partner selection process as well as during the post-campaign phase (when detailed campaign-specific stats are available) to calculate the ROI of a campaign.
This method is by no means conclusive, and it will continue to grow, but it provides useful guidance to the perceived value of online publishers/bloggers. This method’s biggest merit is that it puts a number on the value of online media. By doing so, it offers a degree of clarity to understand the complex and rapidly evolving online world.
Melvin Böcher and Keith Jenkins.