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Guest post on blog Brian Solis by Jaap Favier, Managing Director The Small Circle

Brian SolisWhat is the secret of bars? Why do we happily pay four times as much for beer in a bar as in a store? We pay this brand premium to be with friends. The secret of bars is that they convert our quality time into cash. Like bars, social media are places where friends meet. The best social media programs also convert the consumer’s social time into a brand premium, reaching a return on investment (ROI) up to four times as high as the ROI of a TV commercial.

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Calculate the ROI of Social Media (part 4 of 4)

This is the fourth post in a series of four
presenting the theory behind our
 ROI model for social media

The previous three posts in this series showed how much consumers invested in a brand when they “like,” share, comment, follow, retweet, and repin. The sum of all their small investments in time and trust equals the brand’s ROI of social media—the collective brand premium consumers are willing to pay. That’s the consumer’s perspective of social marketing, but does it match the marketer’s point of view?

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Calculate the ROI of Social Media (part 3 of 4)

This is the third post in a series of four
presenting the theory behind our
 ROI model for social media

The previous two posts in this blog series demonstrated that the value of every interaction between consumers and brand is defined by the time spent by consumers, the trust between sender and receiver, the sentiment exchanged, and the average income of the involved consumers. The ROI of social media is simply the sum of all the touchpoints in a campaign or social media program.

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Calculate the ROI of Social Media (part 2 of 4)

This is the second post in a series of four
presenting the theory behind our
 ROI model for social media

The first post in this series showed that every interaction on social media, from watching the online video to digesting a friend’s like, has a trust-tag attached to it. Every interaction also carries a time-tag. In the Dove campaign, all these little time-tags add up to 382 years of consumer time, including the time spent reading the blog posts on the dedicated discussion forums on the Dove Web site. For consumers, time is money. Instead of socializing with the Dove content, they could have spent these 382 years making money in the office. But they didn’t because an hour of socializing has the same value as an hour of work. The time with friends and relatives is worth a lot to us. It’s worth our paycheck.

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Calculate the ROI of Social Media (part 1 of 4)

This is the first post in a series of four
presenting the theory behind our
 ROI model for social media

Marketers complain that social media has no reach. They are right. The 50 million fans on the Coca Cola Facebook page are just a tiny fraction of the number of consumers the brand reaches with commercials every day. But reach and frequency metrics only tell half the story. The other half is told by two branded YouTube videos which both reached 100 million views, the same as a Super Bowl commercial. A typical $3.3 million Super Bowl ad gives its brand a temporary 1% sales lift while one of these two videos, Roller-Skating Babies, made its brand Evian more than $40 million and gave it a 7% lift in market share. The other, called Dove Evolution, even set off a 25% increase in market share, which equates to a whopping $135 million return on investment (ROI) for the cosmetics brand Dove. Classic marketing ROI models that look at reach and frequency only, fail to explain these enormous differences. What do these models miss? What is the other half of the story?

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The Small Circle B.V.

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