Facebook IPO Means Nonprofits Have to Get Serious About Advertising

[dropcap]O[/dropcap]rgSpring turned up on the front page of Technorati today in a mention about our campaign for the Scleroderma Foundation’s Advocacy Call-in day. The article discusses the Facebook IPO and how it is likely to increase advertising prices – which will undoubtedly affect how nonprofits go about marketing their brand throughout social media. It’s a topic we’d like to explore in more detail, and one which we believe nonprofits, in particular, should pay close attention.

[custom_frame_center shadow=”on”]Facebook IPO - Mark Zuckerberg - Nonprofit Social Media[/custom_frame_center] Over the years Google’s advertising prices have increased too, as more and more organizations became familiar with using adwords and as certain keywords became known as higher value target. But our experience shows more nonprofits use Facebook’s advertising platform than Google’s, citing ease of use and quicker understanding of results – more likes, fans, friends. But make no mistake – Google analytics is a robust tool, and when combined with adwords you can glean much information about the success of your campaigns and the livelihood of your audience (more about that in another post).

For now, we discuss cost. It’s important that nonprofits use their marketing budgets wisely and stretch each dollar as far as it will go. For nonprofits who have not yet entered the world of Facebook they’ll likely not experience the difference of higher cost advertising, but for those already placing ads – they’ll likely notice a drop in new friends and fans per dollar they spend. That’s why it is so important to understand your metrics – so you can make informed decisions on where to place your money.

Here are a few metrics nonprofits should track in relation to overall operations. Keep in mind, we’re not discussing all the things that need to be done before a company takes on a social media campaign – things like planning, research, competitive analysis, and goal development. We’re speaking about tracking and analysis measures. It’s important to realize that measurement is not about tracking static numbers, it’s about tracking change over time. This is frustrating for people who are new to measurement because they want results now.

Conversion

Click Throughs

This is the number of visitors who click links in your email and arrive at your site. This can be tracked in two ways, on the front end through your email marketing program or on the back end through your website analytics. It’s also important to note the change in click throughs over time. Are more people clicking your links per email or is that number retreating?

Community Building

If you offer an email list you want people to sign up so you can continue get your message out over time. You build your community by building your list. Here, you’ll track the number of signups, and the change in signups over time. You want to measure this against your content calendar. Are your blog posts helping to increase your membership or is it driving people away? Take notice of things like absolute signups per month, and the rate of signups per month. Absolute signups mean the number of people added to your list each month. For example, your numbers might look like this for the past six months:

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Month New Posts New Members Total Members % Increase in Members
January 10 20 20 n/a
Feburary 10 25 45 25%
March 10 20 65 -20%
April 10 15 80 -25%
May 10 50 130 233%
June 10 40 170 -20%

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You’d want to analyze why, after the same amount of monthly posts, did your membership increase 25% from January to February, and more than 200% from April to March. Did the content get better, did a post go viral, did you offer a free gift? Figure it out and replicate it. Also, find out what was making membership drop in the off months. Were the posts just news updates – not informational items, did you forget to update social media sites? Find out, and make sure you correct those errors.

Conversion

The number of conversions

Sign ups are nice – that means people are reading your material and visiting your site, but conversion is your main goal. For your nonprofit it probably means how many donations you are receiving online.

The rate of conversations

This is a ratio – it can be measured in the number of donations you receive per campaign or the amount of donations per campaign, or both. For instance, you might receive $500 over 10 donations for every email blast that goes out to your list of 1,000 supporters. In terms of conversion, you’d be earning $0.50 per supporter per email ($500/1,000 emails), or a 1% donation rate (10/1,000).

You can compare those numbers to industry standards to determine whether you are getting good engagement, but it’s even better to compare those to your own numbers over time. For example, if your second campaign to the same amount of people (1,000) generates $525 in donations, you’ll have increased your conversion rates by 2.5% in terms of dollars per campaign over that time period. A step in the right direction.

The Cost of Success

All the numbers discussed above are great, but at what cost are you achieving that success? If it takes $1million to generate 200 members, that’s probably not a huge success, unless those 200 members were generating more than $1million in donations. Chances are that’s not the case.

So let’s analyze the cost effectiveness of your campaign by factoring in your marketing costs.

Assume it costs you $50 per month to maintain your email list, and another $2,000 to manage your campaigns (value or cost of time and advertising). That’s a total of $2,300 over six months. If your efforts generated  2,000 clicks and $5,000 in donations over that same time period, your cost per click is $1.15 ($2,300 / 2,000 clicks). Your donation per click equals $2.5 ($5,000 / 2,000).

You would look at this data and say, for every click I get, I can assume I will bring in $2.5 of donations at a cost of $1.15, or a net profit of $1.35 per click. Then your goal would be to increase clicks accordingly and measure the change.

Coming Full Circle

To bring this back where we started, if your advertising costs increased (like what we think will happen on Facebook) your net profit per click will decrease, if everything else remains unchanged. For example, if advertising now costs you $4,000 over six months, and you still bring in only 2,000 clicks and $5,000 in donations, your costs have risen to $2 per click, and your net profit has dropped to only $0.50 per click.

It’s important for nonprofits to get every drop of profit from a marketing campaign, and to do so you need to be meticulous with your planning, measurement, and adaptation. Consider the old saying regarding insanity – “insanity is doing the same thing over and over again, and expecting different results.” It’s not enough to know the numbers and to analyze them. You need to be agile and respond to changes in the market.

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If you need help analyzing your marketing methods or planning your next campaign we encourage you to find out what OrgSpring has to offer.

Join our tech tips newsletter using the signup form in the sidebar, or leave a comment on this post and we’ll try to help in any way we can.

 

 

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Craig Grella

Founder and Executive Director at OrgSpring
Craig is the founder and executive director or OrgSpring, a nonprofit dedicated to helping other nonprofits achieve their missions online. Through tips and tutorials, Craig's goal is show nonprofits how to use technology to become more efficient, grow their list of supporters, and increase online donations.