2 tips for smart cost management: Brand promotion on Facebook

by Urs E. Gattiker on 2011/03/07 · 17 comments 14,230 views

in a analytics smarter & actionable KPIs,e marketing 101 cost-benefit ROI

Two weeks ago we launched the ComMetrics social media cost classification model (see also 2011 trends: The social media cost-benefit pyramid). Previous posts have addressed the social business maturity model, how to achieve better cost management – particularly while maintaining a high-quality Facebook page, and setting up a Facebook fanpage. Finally, we also outlined how to achieve better cost control for your Facebook activities.

Today’s focus is on running promotions and how they may help or hurt your bottom line.

A consumer brand can offer exclusive deals and discounts to its Facebook fans, but if you manufacture trains or planes, giving away free samples probably will not work.

We demand careful cost accounting and value demonstration from social media marketing. However, things are often less clear when it comes to public relations and image advertising. To illustrate, a bank running a PR campaign using print media and featuring David Beckham or any other sports celebrity must ask:

    What are the true benefits of this campaign when compared to its full costs?

Image - ComMetrics' full cost accounting model for social media marketing - using Roger Federer to push the Credit Suisse brand - GET IT RIGHT - it helps improve ROI.
Too often, the above question is not answered in sufficient detail by PR work, but we nevertheless expect such information from all our social media activities.

Put differently, demanding complete cost accounting before deciding how and what activities to sponsor for social media marketing is a smart move – it will help you better focus on your objectives and assign resources.

We may discover that social media is a very cost effective method that provides a bigger bang for your buck, but in order to reap the rewards we have to begin by focusing on strategic cost management issues systematically.

    Tip 1: Transforming a Facebook fan into a customer takes hard work.

Facebook’s own guidelines (see point 3) dictate that anyone running a sweepstakes on their Facebook page must get written approval from a Facebook account representative. In order to get one of those, you have to spend about US$10,000 on advertising with the company. Some have suggested that Facebook has eased on these rules – anyone who knows for sure, please let me know by leaving a comment on this blog post.

Image - ComMetrics' full cost accounting model for social media marketing - costs for preparing special campaigns & promotions on your Facebook page - GET IT RIGHT - it helps improve ROI.

Remember that setting performance objectives is critical for the campaign, and metrics must be developed and agreed upon as outlined in our blog post Measuring Facebook engagement: What is good? (published 2011-03-14). Accordingly, if you have less than 10,000 fans (individuals that clicked Like), increasing engagement from about 0.6 to 1.2 percent could be considered a success.

    Tip 2: Make sure you account for all costs of your campaign.

In Table 3a we outline the costs of preparing a promotion, as we see them. For instance, content to give away, such as eBooks, must be created and readied for distribution. Running a Facebook campaign also requires an advertising budget, as well as product to give away.

Image - ComMetrics' full cost accounting model for social media marketing - Calculating costs for exclusive deals and discounts on your Facebook page - GET IT RIGHT - it helps improve ROI.

Remember the “Buy 2, get the 3rd FREE” promotion? Even though we might not need that many of whatever is for sale, we still buy them because people always love specials. But this also means lost revenue and any other costs incurred by the campaign must be assessed, as outlined in Table 3b.

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    Bottom line

Distilling direct and indirect costs can be somewhat tricky early on in the social business maturity model. Nevertheless, keeping track of them is a must to be able to show beneficial links.

What happens after someone clicks the Like button to get a free sample of your product? Will they ever come back? This is the million-dollar question everyone wants answered.

Facebook works better if you are a luxury brand like Christian Dior, with actress Natalie Portman serving as your ambassador. People may love to get a free sample of a Dior perfume and even come back to get more news about the actress… But, will they purchase because of this so-called engagement?
Image - Just because I love butter does not mean I have to be a Facebook fan and have its news show up on my Wall.
Just because you once clicked Like for Lindt chocolate does not mean you engage with, care about or purchase more product. Keeping this in mind means that you have to work to relate to your customers, not just fans and users on Facebook (the latter may never pay to play).

Okay, here are the questions I have for you:

    1. How many new customers do you estimate you have gained thanks to your brand’s Facebook fanpage?
    2. Are you sure your 20,000 fans really care about what you post on your Wall?
    3. How do you know that more than 1 percent of the people clicking Like in the last six months have engaged with you and/or your content in the last 30 days?

Please leave your answers in the comments section, and as always, thanks for being a part of our community!

By the way, just because the world is obsessed with Facebook does not mean you need to be…

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  • S Ullrich

    Thanks, this is really helpful. I also like the video “the world is obsessed with Facebook”… interesting statistics!

    • http://My.ComMetrics.com Urs E. Gattiker

      SusannennThanks Susanne. Appreciate your feedback. nnI agree, the video “the world is obsessed with Facebook” is very interesting indeed.nnBut like everything else, unless social media does something for your business, why engage. I still follow this motto:nn===> If you are not driving business with social media then it is just a hobby of yours. nnHaving an idea of what it all costs is surely a good way to get a better handle on your social media activities. nnI hope these tables are useful to you and I appreciate your feedback you gave me on earlier versions of this.

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