Measuring Marketing

Chapter 72 Social Media Profitability

Measurement Need

Marketers need to evaluate whether their company’s social media efforts, such as blogging and tweeting, are producing profitable results.

Solutioni

$\left(R-Cg\right)*\left(F*Cr*Or*\mathrm{Pr}\right)-h*T=\text{Profit}$

Where

R = Revenue per sale

Cg = Cost of goods per sale

F = Number of followers/friends

Cr = Click rate (% of followers that click on the marketer’s social media links and then go to their company’s site)

Or = Opt-in rate (% of followers that opted to receive e-mail)

Pr = Purchase rate (% of followers that opted also purchased)

h = Hourly rate charged for marketer’s social media efforts

T = Amount of time marketer spends on social media

Example: The following assumptions are made:

–R = $500

–Cg = $80