Social media embodies Silicon Valley values. Social media communities are collaborating in innovative ways to create entirely new approaches to business and communication problems. It’s no wonder then that many Silicon Valley companies have embraced social media as a platform to engage with users and customers. But Silicon Valley also values pragmatism and ROI. Many PR professionals and social media marketers shudder at the thought of fielding this question in a new business pitch: “Social media sounds like something we should be doing, but how does it measure up to other marketing activities that I use to support critical business goals?” At Page One PR, headquartered in Silicon Valley, we understand that this question should not only be expected, it should be welcomed.

From a public relations perspective, the value of social media is greater than any one ROI metric can capture. Digital communities are providing avenues for scaling the kinds of close customer relationships that weren’t possible just a decade ago. But especially in today’s economy, we need to reach for more defined metrics in discussions with marketers who prefer to speak in terms of ROI.

There’s another field that has made this shift with a great deal of success, moving from more abstract impression estimates to more concrete action-based metrics: advertising. Internet advertisers understand the power of the click. With the advent of Google Adwords and other search ad networks, the Cost per Click (CPC) metric has become a common method for determining the success of campaigns in influencing target audiences to take specific desired actions.

At Page One, we have started the process of converting Twitter and YouTube ROI into CPC metrics. My colleague Craig Oda wrote on his personal blog about this topic recently. A major goal of social media promotional campaigns is to drive traffic to content pages where potential customers can gain rich information about the company. The content pages may include corporate websites, registration pages, blogs, and videos. To give marketers a comparison to advertising activities, we can use the cost of Twitter and YouTube campaigns along with the number of clicks on unique URLs or video views to determine social media CPC. While I’m not saying social media campaigns should replace advertising, the comparison will be highly useful to marketers attempting to justify spending a portion of limited budgets on social media.

Let’s first compare advertising to Twitter CPC. Our client base is largely business to business high tech software companies. Although CPC in search ads for this sector can vary widely depending on the competitiveness of the bidding process for keywords, the $1 – $2 range is typical. In the month of May, one of our clients, an open source software company, averaged about $1.50 CPC for Google Adwords. For a fair comparison with Twitter ROI, it is important to include the entire cost that companies incur for ad campaigns – this includes the initial set up and testing of messages, keyword selection, and management over time. Many service firms charge about 15% of the advertising spend for basic management costs. This number can increase depending on the level of testing and analytics. Companies with small ad spends often pay up to 30-40% due to minimum fee policies. Including management fees, a $1.50 CPC could easily increase to $1.72 – $2.10.

Since Twitter is a free tool, the cost of a Twitter campaign is solely comprised of the people-hours that go into activities such as determining strategy and voice, updating the feed, engaging with followers, monitoring the Twittersphere, and reporting results to clients. We include all these services within the cost for the CPC, because even Twitter activities not related to unique URL linking can grow the feed and contribute positively to click rates. To make a fair comparison to the content of advertisements when calculating Twitter CPC, we only include clicks on unique URLs that point to the client’s corporate website, blog or other content that gives a prominent impression of the client in a positive light (e.g. a feature story on an external news website).

We are in the process of collecting data across several accounts, and an initial measurement based on the Twitter feed of the Linux Foundation, the non-profit Linux consortium, yields a $0.12 CPC. The Linux Foundation Twitter feed is highly popular and has been in existence since July 2008. We’d expect that younger feeds for less well known companies would yield more costly CPC rates. Rudimentary and partial data from June for the Twitter feed of Appcelerator, an open source application development platform, shows an approximate $1.00 CPC. The Appcelerator feed is another popular, high quality feed.

Now, let’s compare advertising to YouTube video CPC. Page One offers professional video production services. In the past, projects have included short client vision videos and comical videos at technical conferences. We host these videos on YouTube and other platforms, and track the number of times that people view each video. This process is similar to tracking clicks on a search network advertisement or interactive ad, but the content in YouTube videos is arguably richer than that of internet ads. The cost of a video campaign includes messaging strategy, scripting, professional videographer production costs, direction and promotion. In some cases, the cost of promotion may be difficult to determine when the campaign blends with more traditional PR services, resulting in overlapping costs. For instance, media relations activities may result in an article that links to the video. Since this increases the number of views, these activities should at least be considered in the CPC metric. We’ve seen that campaigns are most successful when PR is integrated with social media activities, creating a multiplier effect.

Our initial measurement of video CPC across several accounts shows an approximate $0.32 CPC for strongly developed campaigns. A vision video for Appcelerator yielded $0.14. A vision video for Cloudera, a high-end data storage and processing system, yielded $0.32. Both of these videos were associated with major product launches, so we’d expect relatively high view counts. Conversational videos at a developer conference yielded $0.50. A big difference between CPC for video campaigns and CPC for ad campaigns is that the former tends to decrease over time while the latter tends to remain relatively flat assuming that market conditions remain steady. Whereas the cost of a video is incurred at the beginning of the project, the cost of an ad campaign increases with time. To be sure, clicks for ads also increase over time but in proportion with the ad spend. On the other hand, if a YouTube video goes viral, it’s the gift that keeps on giving. You continue to get clicks without additional cost.

Since Craig’s initial blog post on this topic, we’ve collected more data and can now update our CPC comparison chart. We’ll continue to refine these metrics going forward, especially as we gain more Twitter data from our client accounts. We’d appreciate your comments and thoughts on social media ROI.

This week Page One PR celebrated the first birthday of the Social Media Team (SMT).  As I was setting up the cake and lighting the birthday candles in our San Francisco office, one of my fellow Page Wonders asked me if a year ago I would have ever thought the program would be where it is today.  My answer? No way! I was just hoping to hang on for the ride.

Craig Oda and I founded the SMT during the spring of last year. We feared Page One was lagging far behind the industry and had a lot of catch up work to do.   It turns out we were right and wrong about that assumption.  In the past year we’ve worked many long days and nights to figure out how to define and run social media for the agency.  I honestly never imagined we would have come as far as we have though.

Today we are running social media programs for some of the biggest brands in the world and helping our start-ups to become the next big names in the Valley.  We were the first agency to differentiate our services by defining social media metrics and demonstrate that you could measure social media spend and ROI.  We’ve developed a standard process (The Page One Process) that has produced outsized results for our clients.  It’s not all work – we’ve also managed to have a lot of fun along the way!

When I reflect back on the past year I’ve noticed three critical turnings points in the development of our program:

The first was Wine.com.  I was so excited to start working with Wine.com last fall!  They were the very first pure social media play we scored and – just stating the obvious – the product was wine!  We developed a three-month program aimed at increasing online wine sales.  We’d bring wine to the consumer, through Twitter, Facebook and a Wine.com blog, to boost sales.  Meet the consumer at their desired online channel.  Seems simple right?  No.  We found out quickly that it is very difficult to entice people to buy wine through Twitter.  I think the founder of Page One and I single handedly floated the total Twitter wine sales through the better part of the program.  (I still have Wine.com purchased wine at my apartment.)  That’s when we realized the importance of social media metrics.  Metrics quickly became the defining characteristic of our program and the trait that differentiates us from other PR agencies.  Social media is not about the tools you use, it’s about the strategy and campaign you create around those tools. We discovered the value of measuring specific metrics to justify social media ROI.  If you can’t measure it, it’s not worth doing.

The next critical turning point came with Appcelerator, a start-up creating software for developers.  Up to this point we had learned that social media was much more than the tools, but Appcelerator’s launch of Titanium showed us that social media cannot be a stand-alone campaign. It must fit into a larger marketing campaign if it’s going to be sustainable.  For Appcelerator, we really started to integrate social media and PR very closely.  I took the traditional PR skills I had learned in my first year at the agency and combined them with the social media lessons I had learned on Wine.com and previous social media campaigns to produce a new hybrid product launch.   The results we got for Appcelerator’s first launch (an alpha launch, mind you) were crazy!   Imagine a 3,500% increase in website traffic and more than 10,000 product downloads within the first few hours of the announcement.  Craig and I were even in shock.  During the weeks leading into the announcement I had an inkling that we were doing something big, but on launch day last December I realized that by combining social media with traditional PR we had created a service that we could actually sell.

I will be eternally grateful for the clients we worked with in the very beginning and for the programs they allowed us to run – there is definitely something to be said for client trust.  The opportunities to experiment and take a risk are really what allowed us to learn the most valuable skills along the way.

The third critical turning point came with our next big break, Cisco.  I still remember when I got the Facebook message from my old manager from my intern days at EMC, asking if we could talk about Page One’s social media services.  If Cisco had heard about us this was big!  We initially started working with them to support and promote their AXP Developer Contest.  Now let’s just be honest – the client calls were incredibly confusing. There were so many people on every call! There were product-marketing people, PR people, social media people and roles I never knew existed. I quickly realized that the mere task of trying to figure out whom everyone was, what group they belonged to and what that group’s motives were was going to be challenging.  However, Cisco is a very well oiled marketing machine.  We learned during the AXP social media campaign that social media does not cleanly fit into PR or marketing, either as a program or budget item – it sits somewhere in between (I’ll blog about this more in a week or so).  In today’s social media industry, no one group owns responsibility (or budget).  Because of this everyone in a company is a stakeholder and has to actively participate for the campaign to be a success.

While these three campaigns – and dozens of others over the past year – have allowed me to define social media and its role for our agency, the main lesson I have learned is to never compromise.  We have never settled for average results or average campaigns for our clients.  With each passing month and year, we’re steadily improving our social media services. We’d like to share what we are learning with you too.  I hope you’ll sign up for our newsletter or follow us on Twitter, Facebook, LinkedIn or YouTube to stay up to date on the next year’s discoveries!

There are many services to shorten URLs for posting on Twitter, Facebook, blogs, and LinkedIn. A popular service, bit.ly, recently added analysis capability which makes it much more useful to assess the success of social media campaigns. The basic idea is to apply a unique URL to each specific channel, Twitter, blogs, YouTube. Although the use of unique URLs is an old technique, bit.ly makes it easy to set up unique URLs without having to ask technical staff for help. The bit.ly service, which sees about a third of the monthly visitors as the more popular TinyURL, also presents the data as a set of graphs that are easy to view. Marketers can now set up and track things on their own.

I previously used notlong.com which has a similar tracking capability and the additional advantage of creating unique URLs. For example, I used notlong.com to create and track this URL for a blog posting on social media ROI.

http://mediaroi.notlong.com

Although it is nice to have a custom URL, a feature that bit.ly lacks, the analysis capabilities of notlong are much weaker than bit.ly.

If you set up a bit.ly account, you are presented with a dashboard of all your links. In addition to total views by date, bit.ly also presents charts and tables for Referrers, Locations, retweets on Twitter, and FriendFeed usage.

This level of features is much much better than TinyURL, a service with 1.75 billion hits per month. TinyURL does have a stealth feature that hides the original URL. This is a useful feature that bit.ly lacks, for those cases where you want people to get information but you may not want them to know who hosts that site.

The is.gd service offers URLs that are one character shorter than bit.ly. However, it lacks the tracking and analysis features. The is.gd service has shortened 5.5 million URLs to date.

There are numerous other URL shortening services, including budURL, eweri, hex.io, idek.net, lin.cr, POPrl, snipurl, twurl, and urlBorg. budURL, designed by Andy Meadows, has features for marketing people at small businesses, including a useful dashboard and a clickstream of URLs. However, the level of analysis isn’t as deep as bit.ly right now. POPrl has a dashboard for tracking and a nice web page to view the most popular content that is being linked to.

bit.ly has a edge over the other services right now due to very strong analytics. It seems that they could easily turn their dashboard into revenue by placing advertisements on the side of the dashboard. I think that they should also develop more analytic features and offer a commercial service to marketing firms. There’s an opportunity for bit.ly to become the Google Analytics of URL shorteners, the preferred tool of choice in any marketer’s toolbox.

Here’s another screenshot of bit.ly analytics.

This one shows a view of retweets.