Chapter 1: Introduction
1.1 Problem indication
Over the last years, the evolution of the Internet has significantly impacted our society. Web 1.0 technologies primarily facilitated one-way information publication and distribution with limited opportunities for user engagement and interaction (Scott & Orlikowski, 2012). However, the expanding use of Web 2.0 technologies has generated complex information dynamics that are propelling organizations in unexpected directions, redrawing boundaries, and shifting relationships (Scott & Orlikowski, 2012). Such technologies have become known as social media, and enable users to collaborate, communicate and publish original content such as blogs, videos, wikis, reviews or photos (Ellison, 2007). The Internet is now comprised of a huge amount of information, which essentially represents the external memory for many people, resulting in an increased reliance upon the Internet in daily life (Sparrow, Liu & Wegner, 2011).
The Internet has also fundamentally reshaped the way tourism-related information is distributed and the way individuals plan for and consume travel (Buhalis & Law, 2008). Especially the social media platforms have become increasingly popular in the tourism industry. Online travelers use various forms of consumer-generated content platforms, such as online communities and media sharing sites like Youtube (Gretzel, 2006; Pan, MacLaurin & Crotts, 2007). Such platforms can, inter alia, be used to share travel experiences and reviews with other travelers. Due to this new trend, consumers can gain substantially more power in determining the production and distribution of information due to the flattening of access on the Internet. Tourism organizations can benefit from the increasing popularity of social media, by adapting their business and marketing strategies. Wang and Fesenmaier (2004) argue that social media are useful for managing customer relations by attracting customers through in- depth, focused and member-generated content, engaging them through social interactions, and retaining them through relation building with other members. Furthermore, social media can provide tourism companies with unprecedented opportunities to understand and respond to consumer preferences (Dellarocas, 2003).
Due to the strong impact of social media on the travel industry, many scholars have studied the topic. Despite the wide adoption of social media by both consumers and suppliers in recent years (Chung & Buhalis, 2008; Leung, Law & Lee, 2011), there is limited information available regarding the return of investment (ROI) of social media strategies in the tourism industry. Existing literature also indicates the need for future work on the ROI of social media expenditures, especially the need for proposing methods or instruments with theoretical meaningfulness to assist practitioners measuring their social media marketing effectiveness (Leung, Law, Van Hoof & Buhalis, 2013). Furthermore, Xiang, Magnini and Fesenmaier (2015) state that there is a need for research identifying more reliable and valid means by which to gauge social media ROI.
Accordingly, this thesis focuses on the needs for social media in the tourism industry, accompanied by scientific methods on how to calculate the return on investment of the social media expenditures by tourism organizations.
1.2 Problem statement
This study attempts to answer the following research question:
“What is the need for social media investments in the tourism industry and how can the return on social media investments be calculated?”
1.3 Research questions
To be able to provide an answer to the research question, this study aims to answer the following sub-questions:
1. What is the need of social media investments in the tourism industry?
2. How can the return on social media investments be measured?
3. How can the return on social media investments in the tourism industry be calculated?
1.4 Research methods
The research design used for this bachelor thesis is a literature review, in which secondary data from previous studies is used. Therefore, any conclusions drawn in this study will not be tested empirically. The main variables studied in this thesis are social media and return on investment in the tourism industry. The literature used for the current study comes from academic articles from various high-quality journals regarding social media, information management and tourism. Furthermore, when searching for appropriate sources, attention will be devoted to the relevance of the article, the context of the study, the number of citations and the date of the article. This will increase the reliability and validity of the current study. The mechanisms used to find the literature are the online library of Tilburg University and other academic databases, such as JSTOR. Advantages of these databases are the accessibility of the data and the ease of use. However, only a limited number of publications are available in these databases.
1.5 Structure of the thesis
The content and structure of this thesis is based on the framework as presented in figure 1. The first chapter illustrates an introduction into the research topics and presents the problem statement and research questions. Furthermore, the methodology used for the study is discussed. Chapters two until chapter four provide answers to the five sub-questions, using an extensive literature review. Finally, chapter five displays the conclusion of the study, as well as academic and practical recommendations.
Figure 1: Structure of the thesis
- Need for investment and measuring social media ROI in the tourism industry.
- Measuring social media ROI in the tourism industry
- Measuring social media ROI
- Need for social media in the tourism industry
Chapter 2: Social media in the tourism industry
2.1 Web 2.0
Web 2.0 has emerged from the original version of the World Wide Web. This original version, Web 1.0, facilitated primarily one-way information publication and distribution with limited opportunities for user engagement and interaction (Scott & Orlikowski, 2012). This allowed a large number of users to view the contents of a comparatively small number of sites (Goodchild, 2007). Contrary to Web 1.0, Web 2.0 is a bidirectional collaboration. This study uses the definition of Web 2.0 as stated by Constantinides and Fountain (2008, p. 232):
“Web 2.0 is a collection of open-source, interactive and user controlled online applications expanding the experiences, knowledge and market power of the users as participants in business and social processes. Web 2.0 applications support the creation of information users’ networks facilitating the flow of ideas and knowledge by allowing the efficient generation, dissemination, sharing and editing/refining of informational content.”
Overall, Web 2.0 sites share common traits such as being participatory, collaborative, inclusive, creator/user centric, unsettled and very information intensive (Dearstyne, 2007). Besides that, Web 2.0 facilitates the integration of information representation, collaboration, communication, interactivity and transactions (Gretzel, Fesenmaier & O’leary, 2006). This evolution of the Internet has enabled a large number of new business models and offers new opportunities for organizations to reach their customers. According to Berthon, Pitt, Plangger and Shapiro (2012) Web 2.0 technologies have caused three major effects:
1. A shift in locus of activity from the desktop to the Web;
2. A shift in locus of value production from the firm to the consumer;
3. A shift in the locus of power away from the firm to the consumer
2.2 Social media
The concepts of Web 2.0 and social media are often used intertwined. Although the concepts are closely related and interdependent, they are conceptually discrete. Web 2.0 can be considered as the technical infrastructure that enables the social phenomenon of collective media and facilitates consumer-generated content (Berthon et al., 2012). Social media, on the other hand, can be defined as activities, practices and behaviors among communities of people who gather online to share information, knowledge and opinions using conversational media (Brake & Safko, 2009). Kaplan and Haenlein (2010) state that social media is a group of Internet-based applications that build on the ideological and technical foundations of Web 2.0, and that allow the creation and exchange of user-generated content. Overall, Web 2.0 enables social media, which allows users to share knowledge, information and opinions.
The content of social media can be distinguished into text, pictures and videos and is a mixture of fact and opinion, impression and sentiment, founded and unfounded tidbits, experiences and even rumor (Blackshaw & Nazzaro, 2006). Furthermore, there is a shift from the individual to the collective, as social networks leverage the power of relationships and collective wisdom of many (Berthon et al., 2012). The content can be shared via a wide range of online, word-of-mouth (WOM) forums including blogs, company sponsored discussion boards and chat rooms, consumer-to-consumer e-mail, consumer product or service rating websites and forums, Internet discussion boards and forums, moblogs (sites containing digital audio, images, movies or photographs) and social networking websites (Mangold & Faulds, 2009). Well-known examples of social networking websites are Facebook and MySpace.
Kaplan and Haenlein (2010) have created a more detailed classification of social media based on four important concepts in media research: social presence, media richness, self- presentation and self-disclosure. First of all, the social presence theory states that media differ in the degree of contact they allow to emerge between two communication partners (Short, Williams, & Christie, 1976). It can be stated that the influence that communication partners have on each other increases with the level of social presence. Secondly, media richness refers to the amount of information media allow to be transferred in a given time frame (Daft & Lengel, 1986). Media with a higher level of richness reduce the level of ambiguity and uncertainty. Thirdly, self-presentation refers to the desire of people to control the impressions other people form of them in any type of social interaction (Goffman, 2002). Finally, the concept of self- disclosure can be defined as the conscious or unconscious revelation of personal information that is consistent with the image one would like to give (Kaplan & Haenlein, 2010). A classification framework of social media based on these four concepts can be found in figure 2.
Social presence/Media richness
- Low
- Medium
- High
Self- presentatio n/Self- disclosure
Fig
High
Blogs
Social networking sites
Virtual social worlds
Low
ure 2: Social media cla
Collaborative Content Virtual game
projects communities ssification based on Kaplan and Haenlein (2010).
worlds
Figure 2: A social media classification based on Kaplan and Haenlein (2010).
Social media significantly impact organizations and consumers, as social media is where actual and potential customers are interacting and it shapes how they think (Fisher, 2009). Furthermore, social media influences several components of consumer behavior such as awareness, information acquisition, opinions, attitudes, purchase behavior and post-purchase communications and evaluations (Mangold & Faulds, 2009). Because of this, the emergence of social media has also significantly influenced the tools organizations can and should use to communicate with their target audience. According to Mangold and Faulds (2009) social media is a hybrid element of the promotion mix because it combines characteristics of traditional communication tools (companies talking to customers) with a highly magnified form of WOM (consumers talking to one another), whereby marketing managers cannot control the content and frequency of such information.
2.3 Social media in the tourism industry
Before the emergence of the Internet, the tourism industry depended upon traditional marketing and distribution channels to connect and engage with consumers. Various intermediaries such as tour operators and travel agencies were necessary to reach consumers in different places. Because of this, the distribution of travel products and customer services were limited in scope and reach (Sheldon, 1997; Werthner & Klein, 1999). The adoption of the Internet in the tourism industry allowed organizations to reach a larger customer audience and enter the market directly. Online travel agencies, such as Expedia, offered new opportunities and benefits for both consumers and suppliers due to a decrease in transaction costs, increased volume discounts for consumers and the elimination of coordination mechanisms from other sales channels (Werthner & Klein, 1999).
The tourism industry was quick in adopting the Internet. In the early 2000’s, many tourism organizations had already created a website and more importantly developed highly interactive systems that support reservations, search and virtual tours (Xiang, Schwartz, Gerdes, & Uysal, 2015). Therefore, the website had become the primary source of contact with potential visitors (Zach, Gretzel & Xiang, 2010). The rapid transformation that happened in the tourism industry was not surprising, as the use of computers was already common in the industry. The greater change in the tourism industry came with the emergence of social media and social networks. The Internet, together with the new interactive way of communicating through social media, fundamentally changed the nature of travel and tourism communication and marketing (Gretzel et al., 2006).
Travelers generally try to collect and review a lot of information related to their travel for the decision-making process (Leung et al., 2013). Sirakaya and Woodside (2005) state that travel- related decisions involve high risks due to the nature of tourism services and therefore require risk reduction strategies such as extensive information search. Traditionally, consumers could consult books, physical advertisements in for example newspapers and physical brochures. However, over the past couple of years the traditional information sources have been substituted by websites and social media feeds, which provide travel information to users and allow them to share their experiences in an interactive manner (Chung & Koo, 2015; Kim, Lee, Shin, & Yang, 2017). According to Foux (2006), consumers now regard social media as a much more trustworthy source of information regarding products and services than corporate- sponsored marketing communication channels, which have traditionally served as the means of promoting goods and services. Particularly during the online planning process, looking at comments and materials posted by other travelers has become one of the most important online activities (Xiang et al., 2015). Overall, travelers mainly benefit from social media due to the increased level of information publicly available.
Concurrently, social media can provide tourism organizations with unprecedented opportunities to understand and respond to consumer preferences (Dellarocas, 2003). By analyzing the comments on online communities such as TripAdvisor, tourism organizations are able to better understand what travelers like and dislike about them and their competition (Leung et al., 2013). Rashidi, Abbasi, Maghrebi, Hasan and Waller (2017) state that there are significant potentials for using social media data to develop models for estimating travel demand, managing operations and long-term planning purposes. Besides that, social media usage is still growing due to the inflation in mobile devices, leading to an increase in geolocation information, which is valuable information for transport planning, management and operation purposes (Rashidi et al., 2017).
Despite the industry-wide use of social media and the value-added potential of social media for tourism organizations, the successful practice of manipulating and managing social media still remains largely unknown to practitioners and scholars (Leung et al., 2013). Among tourism organizations, social media are still not widely recognized as a vital tool in marketing strategies (Hays, Page & Buhalis, 2013; Wozniak, Stangl, Schegg, & Liebrich, 2017). Tourism organizations often underfund or neglect this channel and thereby miss the opportunity to fully exploit social media’s potential to effectively interact and engage with customers (Hays et al., 2013). Besides that, even if tourism organizations do acknowledge the importance of social media, they may still lack the staff with the right competencies and skills (Wozniak et al., 2017). Harrigan, Evers, Miles and Daly (2017) state that social media are ideal channels through which customers can be reached, but organizations must understand how to effectively use various functions of social media to foster customer engagement with their organization over another. One possible explanation for the lack of commitment to sustain social media efforts is the uncertainty about the return on investment in social media marketing (Leung et al., 2013).
2.4 Need for investments in social media in the tourism industry
With the advancement of Internet technologies, increasing numbers of travelers are using the Internet to seek destination information and to conduct transactions online (Litvin et al., 2008). Social media is changing the way that travelers search, find, read and process information about tourism suppliers and destinations (Kim et al., 2017). As hospitality and tourism product offerings cannot be evaluated before their consumption, there is a significant importance of interpersonal influence (Lewis & Chambers, 2000). Besides that, hospitality and tourism products are seen as high-risk purchases, for which the emotional risk of reference group evaluation is an important aspect of the decision-making process (Lewis & Chambers, 2000). Driven by user-generated content – including the ability to share photos, videos and comments with other readers – academic scholars have noted the capacity of social media in helping tourism and hospitality companies to engage potential guests, increase their online presence, and thereby lead to greater online revenues (Leung et al., 2013).
Tourism organizations must find ways, particularly optimal combinations of channels and sources, to distribute their products and better communicate with their prospective and returning customers in order to develop sustainable competitive advantages (Xiang et al., 2015). Through activities such as providing entertaining blogs, organizations can develop a unique image on social media that can enable customers to identify with their brand over others (Harrigan et al., 2017). Furthermore, there is an increasing trend to extend the ability of organizations to create more visually appealing content (Perez-Vega, Taheri, Farrington, & O’Gorman, 2018). According to Kim et al. (2017) relevant and complete information contents posted on a well- designed social media web page are positive associated with users’ cognitive image formation about the destination, whereas value-added, relevant and interesting contents are positively associated with their affective image formation. Furthermore, sufficiently qualified staff is needed to manage the immediate and multi-way nature of social media (Kaplan and Haenlein, 2011; Peters, Chen, Kaplan, Ognibeni, & Pauwels, 2013).
Besides investing in skilled employees and well-designed advertisements, tourism organizations must also pay attention to the dominant role of search engines. Search engines provide travelers direct access to social media sites during their information search. Search keywords as well as the way search engines present results will determine the likelihood a traveler will review and choose to visit a specific website (Jansen, Brown & Resnick, 2007). It will be useful for marketers to, for example, know what type of search queries will likely generate more search results representing social media content, in order to develop successful strategies for their online marketing efforts (Xiang & Gretzel, 2010). Besides that, social media management demands proactive monitoring of relevant platforms and short-term reactions to wanted and unwanted developments (Wozniak et al., 2017).
Furthermore, marketers might experience several challenges regarding social media, which require additional investments. A significant challenge for marketers in the travel and tourism industry is the increasing importance of electronic WOM, influencing consumers’ attitudes, perceptions, intentions, as well as choice of products in the planning context (Xiang et al., 2015). Xiang et al. (2015) support that the travel planning behavior is dramatically changing in that travelers are now postponing many decisions they used to make prior to departure. Overall, social media has increased the level of power of consumers. To become and remain successful, organizations therefore have to accept that within the social media-environment, consumer power is much stronger than their own (Knoblich, Martin, Nash, & Stansbie, 2017).
Chapter 3: Return on social media investments
3.1 Return on social media investment debate
Return on investment (ROI) can be defined as the relationship between profit and the investment that generates that profit and is widely used to examine the performance of an investment (Friedlob & Plewa, 1996; Buhalis & Mamalakis, 2015). It simply refers to the idea that something of value has resulted from an investment of time, energy or money (Gilfoil & Jobs, 2012). Measuring the effectiveness or success of social media activities is of increasing importance to make sure that scarce resources are allocated in the most productive way (Wozniak et al., 2017). However, measuring the ROI of social media activities is a complex process. Contrary to traditional media, social media resemble living, interrelated and interactive organisms, which are out of the control of organizations (Peters et al., 2013). This requires organizations to use specific metrics to measure social media success.
Several studies have investigated the ROI of social media, specifically focusing on the appropriate measurement tools. In finance, ROI is calculated by subtracting the cost of an investment from the proceeds received from the investment, divided by that same investment cost (Gilfoil & Jobs, 2012). However, social media marketing represents a complex phenomenon and success measures can often not be quantified; rather qualitative metrics, that take into account more interpersonal aspects, have to be considered (Fisher, 2009; Weinberg, 2009; Gilfoil & Jobs, 2012). It has been found that various aspects of regular ROI assessments have been declared inadequate for measuring the success of social media (Wozniak et al., 2017). Examples are the ignorance of long-term effects, the difficulty of forecasting returns and the insufficiency of purely financial measures of justifying marketing investments (Kaske, Kugler & Smolnik, 2012). Furthermore, the lack of easily quantifiable returns and budget allocation leads to ambiguity and brings into question the validity of social media ROI calculations (Weinberg and Pehlivan, 2011). Some scholars even indicate that measuring social media ROI is not possible; an overview of arguments in the social media ROI-debate can be found in table 1.
Table 1: Overview of arguments in the social media ROI debate
Author(s)
Publication date
Argument
Zeng, Chen, Lusch and Li
2010
It is nearly impossible to measure social media ROI due to difficulties quantifying measurements.
Duboff and Wilkerson
2010
Social media ROI can be measured using a method that will allow marketers to estimate (in terms of money) the impact of a marketing initiative.
Hoffman and Fodor
2010
Social media ROI can be measured by not only considering financial metrics but also including consumer motivations to use social media.
Hanna, Rohm and Crittenden
2011
Social media success can be measured by defining the key outcomes associated with the social media activities and quantify the related metrics wherever possible.
Lovett
2011
Social media ROI can be measured but is rarely straight math. Intangibles like exposure, interaction, and advocacy should be factored in.
Powell, Groves and Dimos
2011
Social media ROI and marketing strategy can be measured following an eight-step process, including consumer motivations.
Hall and Hume
2011
With a six-step evaluation approach ROI of social media and other digital marketing programs can be measured.
Kaske et al.
2012
It is possible to measure social media ROI by extending the financial ROI framework, including long term marketing.
Gilfoil and Jobs
2012
Social media ROI can be measured using both financial and non-financial measurements. Many non-financial metrics could eventually be converted into financial ROI.
Kumar, Bhaskaran, Mirchandani and Shah
2013
By measuring the value of social media in monetary terms, marketers can calculate the ROI.
3.2 Social ROI
Due to the inadequate quantitative measurements, many scholars have tried to modify the traditional ROI measurements by including qualitative metrics. Hoffman and Fodor (2010) suggested turning the traditional ROI upside down by creating an approach including consumer motivations to use social media. This approach is referred to as ‘social ROI’ (Weinberg & Pehlivan, 2011). The approach suggests that returns from social media investments will not only be measured in financial outcomes, but also in customer behaviors tied to particular social media applications (Hoffman & Fodor, 2010). Organizations should set specific goals for their social media marketing actions, which are not necessarily financial. Examples of goals are increasing the number of followers or the number of online reviews. Hoffman and Fodor (2010) further state that there are three categories of social media objectives; (1) brand awareness, (2) brand engagement and (3) WOM. Buhalis and Mamalakis (2015) argue that customer engagement is the most important element of the non-financial ROI.
Based on the social ROI framework, organizations must first develop specific social media marketing strategies based on the objectives the actions might satisfy. Powell et al. (2011) distinguish between three different actors that need to be considered when developing a social media marketing strategy: influencers, individuals and consumers. Influencers on social media exhibit high levels of engagement in three aspects: (1) message spread, (2) influence and (3) social impact (Watts & Dodds, 2007; Kumar & Mirchandani, 2012). Furthermore, Kumar and Mirchandani (2012) have found four ideal characteristics of influencers, namely activeness, clout, talkativeness and like-mindedness. Due to the emergence of social media, marketers also have to pay attention to the engagement of the organization or brand and the individual on social media. In social media, individuals join a community, actively participate in the community by conversing and invite other people to participate in the community (Powell et al., 2011). Consumers, on the other hand, can be persuaded to buy products, as social media attract information seekers to obtain information about a product which they are going to purchase and leads to an enhancement of the buying intention of consumers (Hajli, 2013).
Furthermore, for organizations to understand how to optimally use social media, it is important to understand the behaviors and motivations of consumers on social media. According to Novak and Hoffman (2010) there are four key motivations that drive consumer use of social media, namely (1) connections, (2) creation, (3) consumption and (4) control. This is a world in which individuals are completely in control of their online experiences and where their motivations lead them to connect with other individuals and create and consume online content (Hoffman & Fodor, 2010). Powell et al. (2011) further argue that a distinction can be made between individuals who are more likely to respond to marketing efforts than others, namely due to the level of connectedness, privacy, demographic markers and behavioral markers.
The main challenge in the measurement of social media ROI is determining the actual costs of social media efforts. Determining the true incremental costs from personnel and other sources to drive the social marketing activity is critical when measuring the investment element of the ROI equation (Powell et al., 2011). The costs associated with social media are dependent on the strategy a company follows (Buhalis & Mamalakis, 2015). Lewis (2012) distinguishes three different cost categories; (1) social marketing budget, (2) people and resources and (3) technology investments. Buhalis and Mamalakis (2015) have created a classification with four different cost categories, namely (1) staff costs, (2) external costs, (3) advertising and (4) other costs. Costs regarding marketing and employees are recurring topics. Qualified employees are needed to manage the immediate and multi-way nature of social media (Kaplan & Haenlein, 2011; Peters et al., 2013).
An eight-step method regarding social media marketing developed by Powell et al. (2011) can be used to create effective social media marketing strategies. As discussed, marketers should first determine the strategy and objectives of the social media efforts. Secondly, the target audience must be identified. After that, the campaign message must be determined. In a well- designed social media campaign, consumers are likely to spread viral videos, create brand- related content, tweet about the brand and post about their experiences on Facebook (Hoffman & Fodor, 2010). A fourth step is to tactically execute the marketing campaign. Hereafter, the exact metrics should be determined. The sixth step involves monitoring the campaign. Organizations should for example monitor brand-related conversations that are happening on social media. This way, organizations can gain access to valuable information, influential people and relevant conversations that already show engagement with the brand (Kumar and Mirchandani, 2012). After monitoring, organizations can start calculating the ROI of their social media efforts. The last step involves evaluating the success of the campaign, compared with the initial objectives.
3.3 Calculating social media ROI
As discussed, organizations should both use financial and non-financial measures to determine the success of social media efforts. The non-financial measures are not ROI, but can eventually be converted to financial ROI (Gilfoil & Jobs, 2012). To measure the financial ROI of social media marketing, marketers can use the Return on Marketing Investment (ROMI) formula. It is calculated as follows and represents a simple index that can be used to compare investments between different media channels (Powell et al., 2011):
𝑅𝑂𝑀𝐼 = 𝐼𝑛𝑐𝑟𝑒𝑚𝑒𝑛𝑡𝑎𝑙 𝑣𝑎𝑙𝑢𝑒 𝑀𝑎𝑟𝑘𝑒𝑡𝑖𝑛𝑔 𝑐𝑜𝑠𝑡
The non-financial returns can be measured based upon different metrics. The number of visitors, incoming links, the level of social network activity, conversations and contributions, references in the blogosphere, RSS subscribers, views on social media sites and social bookmarking are metrics that can deliver ROI measurements (Barefoot & Szabo, 2010). Combined, these metrics are referred to as e-metrics. E-metrics can be formally defined as performance criteria that measure the success of Internet sites (internal and external), e- business and e-commerce (Fisher, 2009). Organizations can use different sources to generate the necessary data for the e-metrics, such as insights provided by Google Analytics.
There are different e-metrics for the three social media objective categories as defined by Hoffman and Fodor (2010). First of all, brand awareness refers to the rudimentary level of brand knowledge involving, at the least, recognition of the brand name (Hoyer and Brown, 1990). Lovett (2011) indicates that three specific metrics can measure the level of exposure, which leads to awareness and is considered a precursor to starting a dialogue, engaging customers or encouraging interactions. The three metrics are reach, velocity and share of voice. Reach refers to the size of the audience that can be addressed during a social media marketing campaign. Velocity is the speed at which an idea, a campaign, a video or any other concept travels across social media (Lovett, 2011). Lastly, Lovett (2011) defines share of voice as the relative percentage of brand mentions in social channels. An overview of the calculations for these metrics can be found in table 2.
Table 2: Brand awareness measurements based on Lovett (2011, p.176)
Reach
Seed audience x Shared network audience
Velocity
Reach x Time
Share of voice
Brand mentions / Total mentions (brand and competitors)
Secondly, brand engagement can be defined as the establishment of a strong and enduring bond between a brand and consumers based on an ongoing effort of the brand to activate the consumer (Schultz, 2007). According to existing literature, brand engagement is the most important aspect of the non-financial ROI of social media activities. The total engagement can be calculated by multiplying time by the number of visits, the number of comments and the number of shares (Lovett, 2011). Organizations can also determine the engagement rate using the following formula as stated by Lovett (2011):
𝐸𝑛𝑔𝑎𝑔𝑒𝑚𝑒𝑛𝑡 𝑟𝑎𝑡𝑒 = (𝐶𝑜𝑚𝑚𝑒𝑛𝑡𝑠 + 𝑆h𝑎𝑟𝑒𝑠 + 𝑇𝑟𝑎𝑐𝑘𝑏𝑎𝑐𝑘𝑠) 𝑇𝑜𝑡𝑎𝑙 𝑣𝑖𝑒𝑤𝑠
Finally, WOM can be measured through for example the number of retweets, the number of incoming links or the number of citations on other sites. Goldenberg, Libai and Muller (2001) argue that one of the most important roles of social media is diffusing information by electronic WOM. Traditionally, companies can estimate WOM through surveys that measure the likelihood of recommendation or can use customer satisfaction, loyalty and purchase likelihood as proxies for WOM, but online, WOM can be measured directly (Hoffman & Fodor, 2010).
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