Quantifying the value of digital content
During the last two weeks of my digital marketing internship I was tasked with the daunting goal of placing a value on different types of digital content. What is the value of a tweet? A blog post? A video? A Facebook status update?
Try doing a simple search and youâ€™ll quickly see that everybody has their own opinions but nobody has a concrete answer. Calculating ROI (return on investment) or NPV (net present value) of social media content? Impossible, some say.
Moreover, a universal value simply canâ€™t exist – the value that Dell places on its Twitter activity (accounting for $3 million in sales from 2007-2009) would wildly vary from the value I place on my personal Twitter activity, for example.
So how can you value digital content? Should we be trying to place a monetary value on content that largely has qualitative outputs? If we donâ€™t, how can we truly price our services?
We all know that having a presence in a network where you can listen to your prospective customers and engage with current customers is worthwhile. Building name brand recognition, generating trust, and securing loyalty are all unmeasurable but imperative goals.
The problem arises when determining ROI of an investment in one of these channels – is it worthwhile, for example, to invest 300 hours a year maintaining a presence on Twitter if that 300 hours could be better spent turning prospects into customers on Facebook? Should I get a part-time job paying an hourly rate instead of spending that time blogging with hardly any tangible return? (I say tangible because again there are countless intangible returns like invaluable relationships with readers, etc).
After spending countless hours debating this issue with myself and others, Iâ€™ve come to the realization that new metrics and benchmarks must be put into place if we want to appropriately quantify value of digital content. Time spent on production isnâ€™t sufficient, and the traditional marketing metrics such as CPM (cost per thousand impressions), PPC (price per click) and CPA (cost per action) simply wonâ€™t work for social media and multimedia content. Hereâ€™s why:
Example: Valuing a tweet
You cannot state that it takes roughly one minute to tweet and one minute equates to 50 cents of opportunity cost (the value of my time tweeting, which prevents me from using that time to do something else), thus 50 cents is the intrinsic value of a tweet.
Why is this wrong? Think about it this way: One tweet valued at 50 cents has no link and garners no RTs, thus quickly getting buried in the abyss of tweets. Another tweet valued at 50 cents has a link and a catchy lead attracting a solid number of RTs and clicks, thus extending its shelf-life. Some of the clicks turn into email subscriptions, or even potentially sales revenue. Obviously in this case you cannot say that the two tweets have the same value.
Display advertising has clear-cut calculations for quantifying a value for impressions and clicks. Try replicating CPM and PPC calculations for tweets like I did and youâ€™ll likely stop with a massive headache. Hereâ€™s why:
To calculate CPM on Twitter, you have to determine what percentage of your followers likely saw one of your tweets. Four percent? Six? Eight? Ten? Nobody knows! (For validation, I asked a Twitter salesperson during a sales pitch to test out their advertising program and she admitted that there is no way to currently determine an accurate percentage). This percentage will change depending on what time of day you tweet, what day of the week, and time of the year. Moreover, if you hardly ever tweet the chance of one tweet being seen is much less than if you tweet every five minutes. As users get more savvy parsing tweets effectively (via services like TweetDeck or the list functions in Twitter) your chance of them viewing your tweet will increase or decrease, depending on whether you were one of the lucky chosen ones (which, to make things even muddier, you wonâ€™t know!).
Say we estimate four percent of your followers see a tweet and you have 5,000 followers. Thus, weâ€™re estimating you have 200 impressions. Again using the incorrect-but-all-we-have-for-now 50 cent â€œcostâ€ of a tweet, your CPM would be $2.50. (.50 / (200/1000))
What does this really tell you, though? You canâ€™t compare it alongside an average CPM rate for a banner ad to compare effectiveness. First, two of the three inputs are extremely rough estimates. As they say, analysis is only as good as the data on which it is based. Second, I would argue that an impression of a clearly displayed ad is different than an impression of a tweet simply because users have learned to largely ignore advertisements, whereas a tweet isnâ€™t immediately flagged in a viewerâ€™s head as an ad to ignore.
To add to the problem, when you try to calculate CPC you think itâ€™d be easy to aggregate number of clicks from a link thanks to services like bitly or cligs. However, Wall Street Journalâ€™s â€œAll Things Digitalâ€ blog recently reported that less than 25% of all links on Twitter in the past six months correctly credit Twitter as the referral source. For instance, if users interact with the links outside of a traditional web browser (such as on a mobile phone) it is marked as a direct source rather than coming from Twitter. Moreover, if users click on a Twitter link that is embedded into someoneâ€™s LinkedIn profile, the click is credited to LinkedIn, not Twitter. Hopefully you can quickly see why this is a problem.
So if we canâ€™t determine an accurate number of impressions or number of clicks to potential lead gen or conversion opportunities, how can we accurately trace revenue back to its correct source?
Why this matters
The 2007 rationale â€œyou should do it because everyone else isâ€ simply wonâ€™t work anymore to convince your boss, client, or customer why you should invest time and effort into a particular network or piece of digital content. These statements wonâ€™t get very far: â€œWe should do a video because it feels like we shouldâ€ or â€œLetâ€™s launch a Facebook fan page because all of our competitors are doing it.â€
Should we be trying to place a monetary amount on a single unit of content? Obviously a piece of content can vary drastically; the value of one video will unlikely be the same as one tweet, for example. But, we all need to begin thinking about the inherent value in what we provide to our company or to our customers so that we can place tangible goals and determine success based on them.
Thus, I’d love to hear your thoughts on how your team is tackling this issue, or how you as a freelancer are competitively pricing your digital services. I added a number of different links I came across as I was researching this topic. If there are others not listed below, please include them in the comments!
Additional resources on the topic
The Maturation of Social Media ROI
In Social Media, Your Return Represents Your Investment
The ROI of the Tweet
Tools To Measure and Impact Social Media ROI
â€˜Hardenâ€™ Your Social Media Marketing ROI
What is the NPV of Social Media?
How to Calculate the Net Present Value of Social Commerce
Social Media ROI
Social Media ROI: ROI Doesnâ€™t Stand for Return on Ignorance (Book Forward)
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Tags: digital marketing, Facebook, NPV, ROI, social media, social networking, Twitter, valuation