The importance of social media for business
The potentiality of social media is too important to ignore because of the experience and the possible benefit brought by its functionality to users and firms. An example can be seen from Lay’s potato chip’s case as follows:
Lay’s created a campaign “Do Us A Flavour” through the social media channel and provided a $1 million prize for the winning flavour. Lay’s invited its customers to share ideas about the new potato chip flavour on the Lay’s Facebook page and received 3.8 million submissions across 14 countries (David 2013). Then Lay’s narrowed down the choices to the top three flavours: Cheesy Garlic Bread, Chicken & Waffles and Sriracha. ...view middle of the document...
On the other hand, the campaign also enhanced the correctness of market research by listening and adopting customers’ opinion. It reduced the risk of launching an unfavourable new product and ensured it can achieve customers’ satisfaction. Therefore, based on Lay’s new flavour campaign, it can be induced that the main important functionalities of social media are increasing customer engagement, sharing ideas, building groups, creating or reinforcing brand relationships and enhancing brand awareness.
Measuring the ROI in social media
To avoid any uncertainties, usually managers demand for evidence of potential ROI before allocating budgets to marketing efforts. However, ROI is seems to be an economic term, so they quantify the ROI through traditional approach such as calculating the launching cost and the return on sales. This narrow focus is short-term oriented and ignores the underlying value of social media. According to Hoffman and Fodor (2010), an effective social media measurement should start by emphasizing the returns of customer response by considering customer motivations and evaluating the level of engagement to use social media. This suggests that the ROI will not always be monetary performance, but qualified results. Moreover, Social media is a world that fully controlled by customers through their experience and comments (Kietzmann et al., 2010), firms should focus the feedback from customers’ sides, not only the sales numbers.
According to Owyang, cited by Fisher (2009), to measure the effectiveness of social media effort, companies should first set goals, which will be the benchmarks to judge success, companies should then track on the four main attributes as follows (Benson, cited by Fisher 2009):
Web traffic, number of followers, fans or subscribers, duration on the sites, search ranking.
Number of comments, level of involvement, sphere of impact.
Number of user-generated contents and replies, types of opinion.
Spread over time, the percentage increase of conversations over time, trackbacks.
After monitoring the aforementioned attributes, companies can start addressing them to measure the ROI of brand awareness, brand engagement and word-of-mouth in social media (Hoffman and Fodor 2010).
1. Brand awareness:
Brand awareness can be measured based on the number of views of photo or video, tweets and re-tweets, followers and posts. Hoffman and Fodor (2010) identify that companies increase exposure of their brands whenever a person uses an application designed about the companies. A paradigm can be seen from Starbucks, which has 1.5 million Facebook fans and 183,000 Twitter followers (Grand Social Central 2013) and exerts this advantage wisely in social media marketing to increase brand exposure and reinforce brand awareness:
Starbucks launched an online/offline campaign in 2009 as they found people tend to share feelings and photos about what they have been doing...