While Social Media traffic is not quite the gold-mine that it used to be back in late 2000, it is still regarded as an extremely valuable source of high quality traffic. Between its ability to scale into a PPV pricing model, and to segment into extremely narrow demographics, social media provides a web asset with access to cost effective traffic streams.
However, because of its paid nature, a web master needs to understand how to properly discount a social media campaign in order to fully evaluate the true value that it creates for the asset itself. The key to valuing social media traffic is to then break down the traffic stream into its keyword and demographic components, and respect the way in which they all contribute to the incomes created by the visitors themselves.
Analyzing keywords within a social media context is usually best done by comparing the results to a staple traffic benchmark. While social media traffic has been around for long enough to have begun establishing a fairly consistent price, paid search engine traffic is still considered to be staple source of visitors for the internet. As such, using paid traffic from search engines as a benchmark allows us to understand the value of the keywords being targeted through a social media campaign.
Specifically, we can use the benchmark to determine if it is worth our while to pursue the campaign at all. If the social media traffic is not able to out-perform the paid search engine traffic, it is not worth pursuing, especially because of its generally expensive nature. Similar to the make-or-buy decisions that were made in the design and functionality aspects of a web asset, the social media decision can be made as a search-or-social decision.
On the other side of the social traffic equation is the question of how the demographic specificity of the venue factors into the value that it brings to the page itself. Since we cannot use a search benchmark to determine this factor on a break-even basis, we need to evaluate it independently. This can be accomplished by tracking the conversion rates of specific demographics, and using that information to decide the incremental value of each demographic.
From there, we can apply that conversion ratio to determine if there is value in scaling the campaign itself. Specifically, many web masters find that the true value of running a social media campaign comes from switching the campaign into a PPV campaign, once click through rates begin to exceed the benefit of a PPC campaign.
So how do we turn this into a quantitative model? We start by determining how much more traffic is generated on a user/keyword-dollar basis in comparison to search engine traffic. This represents the premium or discount to which we can value social media traffic. From there, we can look at the conversion rate of search engine traffic against each particular demographic.
Since each demographic will convert within specific keyword categories at a different rate, we are able to re-calculate the premium/discount metric to determine exactly which campaigns are pulling in the valuable traffic to the asset. From there, a discounting decision can be made on the basis of whether or not there is an opportunity to improve the efficiency or overall profitability of the asset by cutting or adding specific campaigns.
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Daniel is freelance writer for many influential business websites which include Cap Credit ™ and the NY Times. To lean more about Skip or to contact him about freelance work visit his Google+ page.