Sanjay Dholakia, CEO of Crowd Factory, a leading social targeting platform, spoke with DIGIDAY: DATA about how the significance of data is changing the face of social marketing.

What trends are you seeing in the use of data in social marketing?

One big trend we’re seeing is companies looking to add social to all their programs, moving away from the "walled garden" approach.  Companies started doing social by creating closed communities on their websites.  Then, along came the “social graph” and all efforts shifted to Facebook Fan Pages or tweeting on Twitter.  Now we’re seeing companies trying to add a quantifiable social connection and to boost ALL of their online and offline campaigns.  Marketers are looking for ways to embed social into the consumer experience of all their promotions and campaigns. We’re also seeing an increased focus on data about customers and influence.  A marketer’s main job has always been to bring more customers to a company’s products and services – as part of that effort, marketers have always tried to learn as much as possible about the prospects and customers they were trying to serve.  What many marketers are beginning to realize is that social could help them develop a deep database of demographic and behavioral information that they just don’t have today. 

And they’re looking for ways to do this in an "opt-in" fashion so they don’t have to worry about the privacy issues that dog other efforts.  They are realizing that they want to actually “see and measure” word-of-mouth impact with social: who is carrying my message and who is responding as a result? Finally, measuring and showing ROI on social activities has become an absolute imperative.  Companies’ initial efforts in social media were very basic, but they’re now realizing that they must tie social marketing to real value and results.  According to a recent study by the Altimeter Group, creating ROI measurements is the #1 social strategy objective for 2011.

How are some of your customers measuring value?

One way of measuring value is by looking at the reduction in customer acquisition costs.  A customer that used to cost them a few dollars to acquire through Google AdWords might now only cost 50 cents through social.  For example, one of our customers — a leading global media agency — used Crowd Factory to provide a social and viral lift for a contest run by a Fortune 50 client. Not only did Crowd Factory provide an uplift of 73 percent in traffic and responses for the contest compared to the online ad campaign, but the company did it for a tenth of the cost – delivering over 700% ROI. Others measure the dollar value of purchases or conversions made by consumers coming to them through the social channel.  For instance, with one retailer, we saw all sources of consumer traffic yield a 1% conversion rate, while the conversion rate through the social channel was 3 to 5% — a 300% ROI on average. These are just two measurements out of many – others include improvement in cost per lead, an increase in page views or in unique users if they are a CPM-based revenue site.

What are some creative or unconventional ways customers are adding social component to their marketing?

We see lots of different ways marketers are using social media – again, the key is that they are integrating it into the rest of their campaigns. More and more companies are looking to launch social contests, promotions and coupons and reward their customers for playing an active promotional role. For example, one customer is launching collective buying for a space travel company by giving away a free trip to space.  You can enter once by registering for the site, enter again each time you refer a friend and also get one entry for each dollar you spend on the site. Another is launching a social campaign around the Oscars: vote for who you think will win best picture, best actress and best actor, and share this out to your network of friends, starting a conversation around who should win. The share will enter you in a giveaway for an iPad, and the campaign will also create stickiness to the site to come back during the Oscars to see who won.

What are the most important criteria for agencies and brands to judge if a data-driven campaign will be effective?

This depends on the agency or brand, but most would agree that conversions are still king.  People want to know: did we bring more people to the campaign than we would have otherwise?  Did we do it at a lower cost? Did we learn something new about our target consumers and who they are influencing? Did we sell incremental product?

Any parting shots?

I see our current market opportunity in a very similar light to that of Google.  Ten years ago, there was a fundamental revolution in web behavior called "Search."  And, everyone knew intuitively that it could be powerful for brands.  If someone was searching for "car" and GM showed up, that would be a good thing, right?  But, how could a marketer actually spend against that goal and measure it?  That was the genius of AdWords when it was introduced – the marketer finally had a way to spend on Search, know exactly what they were getting back for that investment, and have control of the dial.  If you fast-forward 10 years, there is a new revolution in web behavior called Social."  And, again, intuitively everyone knows it could be powerful for brands.  But, no one has known how to spend against it and measure it– until now. A marketer can embed social into all of their campaigns, see that activity connect to conversion events and control that data.