August 05, 2008

The Lifetime Value Of The Blogger Who Voluntarily Promotes Your Brand

Let's assume that you sell widgets. Your widgets are stylish and well built.

And then a blogger writes about your widgets. You're probably already measuring the impact bloggers and social media have on your brand, right?

Here's what you learn:
  • 500 individuals visit your website, with a referring URL from the blogger. 10% of those visitors purchase something, 50 in total, spending $200 each, for a total of $10,000.
  • 10 bloggers link to the blogger who wrote the original article. Another 500 individuals visit your website with referring URLs from these ten bloggers. 5% buy something, 25 in total, spending $200 each, for a total of $5,000.
  • Total sales = $15,000.
  • Total gross margin = $7,500.
  • Total contribution = $6,000.
Your brand generates $6,000 of profit because of the voluntary efforts of one kind blogger.

How do you, the executive of this brand, measure the lifetime value of a positive blogger? Do you choose to reward the blogger for her efforts, and if so, how?