MKTG 4508: Social Media Marketing
Social Promotion Exercise
This exercise is to be submitted via the Turnitin tool on the Blackboard platform no
later than 23:59 EST on Friday, December 11, 2015.
This exercise must be completed individually. Plagiarism of any form will not be
tolerated and will be severely penalized.
Please answer all six questions. For those questions that require calculations, please
show the steps you took to get to your final answer. If you believe that there is not
enough information to answer one of the questions, please outline all additional
necessary and reasonable assumptions that you have made in order to answer the
question.
Background
Imagine that you opened a small restaurant near the Northeastern campus several
months ago. You’ve built up some fan base already, and now you are considering
running a social promotion on Facebook. Your objective is to increase awareness of
your restaurant and to get more people to visit.
Based on Facebook Insights (which provides engagement metrics for pages on
Facebook), you see that the last ten posts on Facebook page have generated the
following engagement levels organically:
Number of likes Number of comments Number of shares
17 7 3
16 0 4
12 1 2
19 15 12
13 0 0
13 6 5
14 6 3
9 0 4
5 3 1
15 2 3
Assume that your restaurant has acquired 1,000 fans so far. Assume that the total
target audience for your restaurant (potentially reachable via Facebook) consists of
20,000 people. Finally, assume that the average fan on Facebook has 250 friends.
Questions
1) What are the organic engagement probabilities, based on the data in the above
table for (a) likes, (b) comments, (c) shares, (d) anything? Assume that all fans were
exposed to all posted content.
2) Assume that you want to run a social promotion targeted at existing Facebook
fans. Your objective is to reach each person in the target audience at least once
through word of mouth. On average, how many of your current fans need to be
activated by this social promotion in order to generate this reach? Note that based
on Facebook’s disclosures to marketers, on average only 16% of a user’s friends will
actually see a post/engagement they generate.
3) Based on your answers to Question 1, how reasonable is the requirement you
calculated in Question 2? I.e., relative to usual levels of organic engagement, how
much would you need to increase each potential metric?
4) Assume that you are happy to get any type of engagement here since you trust
that Facebook’s algorithms will generate word of mouth such that if a current fan
likes, comments, or shares, it will show up in some of their friends’ newsfeeds (16%
on average). You are thinking about offering an incentive to activate fans, such that
your fans can get the incentive in exchange for engaging with the post in some way
(i.e., liking, commenting, or sharing). What is the minimal engagement probability
for this social promotion that you must achieve in order to reach everyone in your
target audience?
5) You plan to offer an incentive to activate fans that consists of a free drink and a
free appetizer. Assume that your cost of this incentive is $15 (per redemption), and
the average gross profit per customer is $10. Assume that this incentive will
generate the required probability of incentivized interaction that you calculated in
Question 4.
(a) What is the value of a single social engagement (like, comment, or share) to
you if only 5% of those people who see a mention of your restaurant in their
newsfeed visit it and generate the average profit per customer?
(b) What is the expected value of all social engagements without any incentive?
(c) What is the expected value of all social engagements with the incentive at the
calculated probability of incentivized engagement?
(d) Your next step is determine whether the incentive is worth offering; you
need to calculate the ROI of this social promotion. Assume that all incentives
are redeemed. Note: compute ROI as the ratio of the net benefit of the
promotion to the cost of the promotion, such that ROI = 1 is the break point.
6) Suppose that the promotion works well and new customers are acquired.
However, not all of the new customers fit the typical customer type for your
restaurant and, while they generated revenues, they also scared off some of the
regulars. Regular customers come to you twice a week and generate an aboveaverage
profit per customer of $15 each time they visit. For every ten new
customers that were acquired, one regular customer was scared off and did not
return. What is the ROI of this social promotion taking into account this adverse
effect? Is it still worth doing? (Assume a time horizon of 4 weeks and no time
discounting.)

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