Sunday, February 1, 2009

Razorfish Study Measures Direct Response to Social Media

I’ve been spending more time than I should recently on Twitter (follow me at @draab). It provides a fascinating peek into the communal stream-of-consciousness, which would be pretty horrifying (“Britney…Brad…Jen…Obama…groceries…Britney…Britney…Britney”) if you couldn’t choose the people and search terms you follow. This filtering (which I do via a great product called Tweetdeck) turns Twitter into a very efficient source of information I wouldn’t see otherwise.

Naturally, my interest in Twitter also extends to how you measure its business value, and by extension the value of social media in general. Since the people I follow on Twitter are both marketers and Twitter users, they discuss this fairly often. One recent post (technically a “tweet” but the term seems so childish) pointed to a study Social Media Measurement: Widgets and Applications by interactive marketing agency Razorfish.

The study turns out to be a very brief and straightforward presentation of two projects, both involving creation of downloadable widgets. One was promoted largely through conventional media and the other through widget distribution service Gigya. For each project, we’re told the costs, number of visitors and/or downloads, how much time and money they spent, and the return on investment. The not-very-surprising findings were that people who spent more time also spent more money and, more broadly, that “social media may be used effectively as a way of engaging users and potential customers.” A less predictable and potentially more significant finding from the first project was that people who were referred by a friend downloaded more often and spent much more money than people who were attracted by the media. The numbers were: downloads, 23% vs. 8%; spend any money, 9% vs. 1%; and amount spent, $23.00 vs $3.14. But the study points out that the numbers were very small—only 216 individuals arrived at the landing page as a result of a friend’s email, vs. 41,599 from media sources. These figures are drawn only from the first project because the second project couldn’t be measured this way.

From a marketing measurement standpoint, none of this seems break any new ground. Visitors are tracked by their source URLs and subsequent behavior is tracked through cookies. The ROI is calculated on straight revenue (it really should be profit) and seems to include only immediate purchases. This is particularly problematic for the second project, which promoted a $399 product with very limited supply that sold out in one minute. (The study doesn’t say, but based on this award citation it seems to be a special edition Nike Air Jordan shoe.) Clearly the point of such Air Jordan promotions isn’t immediate revenue, but brand building at its hard-to-measure best. The real challenge of evaluating social media is measuring this type of indirect impact. This study makes no claim to do that, but I’ll keep my eyes out for others that do.

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