There are frequent debates in our workshops about whether the time andÂ effort spent on building a Facebook marketing or brand experience is worth it. Is it really positive when it comes to return on investment?
Let me walk you through an interesting example of an ROI evaluation of an Indian brandâ€™s community on Facebook. Chingâ€™s Secretâ€™s Facebook community has around 120,000 fans.
According to Ajaay Gupta, chairman and managing director of Capital Foods Ltd., the brand owner of Chingâ€™s Secret, Smith and Jones and Raji brands, this is how he compares the ROI of its community on Facebook with the ROI of advertising in print:
1. A half page ad in a city tabloid (with a circulation of around 100,000 readers) costs around 200,000 rupees ($4,350). The â€œopportunity to seeâ€ as defined by the same tabloid is around 300,000 (100,000 multiplied by three, the average number of readers per household). In reality, only a fraction of readers actually see the advertisement.
2. The OTS of any message posted by an administrator of Chingâ€™s Secretâ€™s community on Facebook is 18,000,000 (120,000 multiplied by 150, an average number of connections on a Facebook user page). Surely, this number is theoretical and will never happen. However, to whatever fraction you may want to discount this number, the final number of people who will see the message will still be much larger than the reach of an advertisement in print.
But the real ROI of the Facebook community, based on the parameters below, is extremely positive when compared to other competing advertising media:
â€“Recurring Cost: To reach out to the same readers they reached earlier through print, they will need to pay for every new advertisement. InÂ the case of Facebook, itÂ doesnâ€™t cost them any money for a new message.
â€“Engagement Level: The quality and quantity of engagement on Facebook far surpasses the potential engagement opportunity in print. According to the company, they can expect 0.5% to 1.5% of fans to engage with their message on Facebook. In the case of print, if they present an opportunity for readers to respond through an SMS, they can only expect 0.2% as the response rate.
â€“Visibility: In theÂ case of Facebook, they have complete visibility of their audienceâ€™s profiles while they get negligible visibility through print.
â€“Virality: Finally, the opportunity of their existing Facebook fans bringing new fans or influencing other peopleâ€™s decisions toward their brand almost doesnâ€™t exist in the case of print but is exponential on Facebook.
These are smart rules of thumb that can be applied to any business, small or large, while measuring or planning a Facebook presence in a marketing plan.Â I look forward toÂ hearing about anyÂ arguments or models of evaluating Facebook effectiveness for business growth.
This article was originally published at WSJ.
Pradeep has personally trained & advised over 2000 professionals including CEOs across Asia in helping them grow their businesses through Digital Vidya’s hands-on Digital Marketing trainings.
Pradeep is one of the most sought after international speakers on Digital Marketing and Entrepreneurship. His speaking assignments include ad-tech, SES (USA), World Social Media Summit at Kuala Lumpur, Social Media Workshops across Asia, Click Asia Summit, Global Youth Marketing Forum, TiEcon and NASSCOM India Leadership Forum. He writes on Entrepreneurship and Digital Marketing for Wall Street Journal, Inc & Entrepreneur Magazines.
Pradeep is also the recipient of Social Media Entrepreneur Award (at Global Youth Marketing Forum), PIMR Marketing Excellence Award and CMOAsia’s Brand Slam Leadership Award for his contribution to Digital Marketing industry.
A graduate from IIT Delhi, Pradeep is a core member of the Global Committee at SEMPO USA, a non-profit that nurtures the growth of Digital Marketing globally. He also sits on the advisory board of Social Media Chambers Malaysia. His obsession for the digital medium has led him to believe that the Internet connectivity is more important than the water supply :). He’s a tweet away @PradeepChopra. Find more about Digital Vidya at http://www.digitalvidya.com
Latest posts by Pradeep Chopra (see all)
- The Future of Search (Wall Street Journal) - October 6, 2010
- The â€˜Costâ€™ of Facebook Marketing (Wall Street Journal) - July 15, 2010
- Tracking Your Company Facebook Page (Wall Street Journal) - July 9, 2010