Social Media Cost Per Click Analysis

Is social media becoming the most effective way to sell products at the lowest marketing costs? Or, is it just the latest Web 2.0 hype darling? As a marketing professional, I constantly try to answer these questions while I assess the cost of social media campaigns compared to advertising campaigns, traditional PR campaigns, and direct email campaigns.

All marketing campaign comparisons are flawed. Social media campaigns and advertising campaigns address different problems and often have different goals. However, I believe that a Cost Per Click analysis is good enough to be useful for most marketers, most of the time.

Over the next few months, I'll be explaining the Cost Per Click (CPC) of social media campaigns so that they can be compared to the CPC of advertising and email campaigns. My goal is to provide marketing managers with CPC examples for social media campaigns that help them decide how to use their marketing budget most effectively.

My initial estimates for business to business enterprise technology products are shown below. The data was crunched by my colleague, David Robbins, a hotshot graduate from Stanford University and a wizard with social media monitoring tools and metrics. We expect these numbers to drop dramatically.

Activity	Description	CPC
Video	Professionally produced YouTube video focusing on product or company, approximately 3 minutes	$0.30
Twitter	Message development and creation of Tweets, including community interaction.	$2.00

Twitter ROI
Although Twitter at first appears to be more costly than YouTube campaigns, I think that the data needs to be analyzed further. Our initial data relied on referral traffic from Google Analytics. Future campaigns are going to incorporate data from URL shortening and reporting services like bit.ly.

I also suspect that the audience on Twitter may be more likely to buy a product than a person that simply views a video. I'm hoping to verify this theory with more data from lead nurturing systems.

The higher cost of Twitter CPC is due to the ongoing cost of managing a Twitter feed. A typical channel needs daily updates and high interaction in order to drive the traffic back to the product site. We estimate that a Twitter feed needs 45 minutes of work a day to be most effective. This includes monitoring, response, analysis, reporting, and putting out standard informational tweets.

Twitter campaigns have many goals in addition to increasing traffic. For example, there is an increased awareness of the product and the company that is not reflected in the number of clicks to links. Twitter can also be an effective way to collect comments and feedback from customers, serving as an interactive platform to develop stronger relationships between buyer and seller. We track tone, sentiment, and analyze online interactions in addition to tracking ROI.

Although I appreciate the incredible value of social media campaigns that go far beyond CPC measurements, I am focusing on CPC as a ROI metric because it is an universal metric that can be applied to all online marketing campaigns. When I tell my friends in marketing that a typical Twitter campaign for a B2B technology company will deliver self-qualified website traffic at $2 per click, it makes it easier for them to compare the value of Twitter to other marketing campaigns that they have. I always strive to make things easier for marketing people.

I also believe that a $2 per click cost compares favorably to other traditional marketing campaigns. The cost of establishing a Twitter feed itself is zero. The only cost is the labor required to manage the feed.

For Google AdWords, you need to pay for the cost of each click on the AdWord and then factor in the cost of managing the AdWord campaign. For an email campaign, the cost of the list needs to be factored in. Even if the list is manually created, not bought, there is a labor cost associated with the list creation and management. Social media campaigns need to be compared to the total cost of a marketing campaign, including creative production, campaign management and the cost of placement.

YouTube Video ROI

YouTube video campaigns have a much lower cost per click, so low that the CPC alone compares favorably with the CPC for interactive advertising. In addition, the content of a YouTube video is often higher-value than an interactive advertisement. Clicking on a YouTube video in a social media campaign displays dense information on the product or company. The viewers of the YouTube video are a prime marketing audience. These people are actively seeking additional product information. The only downside is that compared to Twitter, the viewers of a YouTube video may not have a strong relationship with the company. Twitter is more interactive than YouTube and therefore Twitter followers will have a stronger relationship with the company.

The costs include of a YouTube video campaign include these components:

1. Message and positioning develop for the product or company
2. Script creation
3. Onsite video direction
4. Professional lighting, sound, and video creation by award-winning videographer
5. Editing of video
6. Distribution of video and channel management
7. Promotion of video on different social media channels

We analyzed the results from three different YouTube campaigns.

Video Type	Type of Product	CPC
Vision video with two company founders	Web application development toolkit	$0.14
Vision video with two company founders	High-end data storage and processing system	$0.35
Candid videos at technical conference	Web application framework	$0.50

Looking for Advertising ROI
Obviously, advertising is a big industry that is going to be around for a very long time. An integrated marketing campaign is going to combine advertising, PR, social media, and direct email programs to yield the best results. I'm looking for additional information on advertising campaign costs. If you have this information, please send me email at coda@pageonepr.com.

Future of Social Media ROI
If you have questions about how we're calculating the ROI of social media campaigns, feel free to write a comment on this blog post. We've only just started the process of calculating ROI and should become much more sophisticated in the next two months.

We've been cooperating with Brian Ellefritz, an awesome social media marketing manager at Cisco, and Jennifer Bocca, another manager at Cisco that works with Brian. They both have a strong background in lead generation ROI measurement. I feel that they'll have a lot to contribute to the discussion.

I'm also talking to Ralph Hibbs at Red Apple Marketing about SEO and PPC lead generation costs. We partner with Red Apple Marketing on a number of accounts and feel that marketers benefit from an understanding about how programs can be used together.

The primary cost of social media campaigns is labor. We have tens of thousands of time entries in our billing data, each tagged with a type of social media and PR work. The entries are usually in 15 minute increments. Based on this database and our experience analyzing the results of social media campaigns at dozens of companies, we're starting to form a view of how much time different types of social media take and what the results will be.

Since we know the time, we know the costs. The costs and the results are all that is needed to measure the ROI of any marketing campaign.

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Additional Information

Some of the example Twitter feeds used in analysis

• Linux Foundation - non-profit high-tech consortium
• Cisco - CiscoGeeks feed focused on a highly technical audience for major Silicon Valley B2B tech company
• Appcelerator - Silicon Valley startup focused on web application development tools

YouTube video examples

• Titanium vision video
• Cloudera vision video