Destinations establish way of measuring ROI of social media
Since destinations are some of the most prolific users of social media in the travel industry, the social media agency Think decided to establish its own formula to evaluate whether the investment on social media channel is worthy.
Destinations are some of the most prolific users of social media in the travel industry – a trend that includes a wide cross section of channels and often backed by hefty levels of marketing spend.
In fact, it is unusual to find a tourism board or Destination Marketing Organisation (DMO) that isn’t regularly throwing out all sorts of content on YouTube, Facebook, Twitter, Instagram et al.
But how does an organisation establish if its efforts with social media are worth all the messages on Twitter, pictures on Instagram, videos on YouTube and interacting on Facebook?
In other words: what’s the return on investment for all that hard work?
Think, a social media agency that works with tourism boards and DMOs around the world, has developed what it claims is a measurement standard for organisations to use when they want to evaluate the success (or not) of a social media campaign.
Organisations that have collaborated on the project include Destination British Columbia, Illinois Office of Tourism, Innovation Norway, Tourism and Events Queensland, VisitEngland and Visit Flanders.
Think says DMOs typically use surveys to try and get some feedback from their respective followers or fans on Twitter and Facebook, but these are limited, for obvious reasons.
Tourism Ireland, it notes, created the Social Ad Value Equivalency (SAVE) metric a few years ago, but this only calculates the earned media value of social media activities, rather then establish the anything beyond the efficiency of a campaign.
So, Think decided to try and generate its own formula, known as Potential On Investment.
How does it do this? In its simplest form, DMOs work from three elements:
1. Total expenditure of a visitor
2. Multiply it by a percentage that represents a social media channel’s influence on purchasing
3. Combine with consumer interactions across a channel
Using data on social media impact from a Phocuswright report (Destination Unknown), Think has worked out how influential specific channels can be on purchasing behaviour.
For example, in the US: Facebook (4.51%), YouTube (3.01%), Instagram (2.21%), Twitter (1.52%) and Pinterest (1.35%).
With all this in mind, here is how it might play out for a DMO:
Destination X has established that the average consumer spends Euro 2,000 on a visit.
Across its social media channels, each has the following combination of hits, likes, interactions, etc:
Facebook – 10,000
Instagram – 2,000
Twitter – 2,200
Pinterest – 500
YouTube – 1,200
Therefore, the DMO’s Potential On Investment would be as follows:
To move it along even further, Think says the DMO can then establishing its Return On Investment by calculating the cost of social media divided by the POI figure.
“If the DMO invested Euro 50,000 in social media in order to arrive at the POI, the ROI calculation becomes Euro 1,143,020 divided by Euro 50,000 = 22.86.
“The ROI of social media for this DMO is therefore 22.86 to 1 (reminder: this is still based on potential revenue).”
Think concedes that there are various elements of the formula that need to be tightened up, such as relying on third party data such as the Phocuswright channel effectiveness figures.
The company also argues that the model should not be used to dictate “operation decision-making”, such as going on Facebook link-baiting drives that actually have little or no impact on promoting tourism.
CEO Rodney Payne says:
“This model provides a starting point for understanding the financial value that social media can provide for a DMO. The formula is easy to use and apply, and it does not require additional research.
“As with any other measurement formula, the POI methodology is not perfect and contains aspects that can and will be debated.”
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