Tom McClintock gave a presentation on calculating the return on investment (ROI) of social media. He discussed two viewpoints - that ROI from social media cannot be calculated since much of its value is indirect, and that ROI can and must be calculated. He provided examples of companies that successfully measured ROI. McClintock also outlined new approaches to calculating ROI from social media, such as measuring retention, research, and sentiment. He concluded by discussing tools and case studies for measuring social media ROI.
7. VIEW 1: No ROI from SM
Having thousands of followers doesn’t necessarily translate into SM
marketing success
You can easily measure only some things
• Coupons
• Contests
• Clicked links
• Signups
Much of SM’s benefit is indirect or intangible—not
an asset purchased and placed on
balance sheet
8. VIEW 1: No ROI from SM
SM is an investment in a
relationship with your audience
that converts them into advocates.
Value is derived from qualitative
benefits.
9. VIEW 1: No ROI from SM
Qualitative Benefits In Each Stage of Your Marketing
Campaigns:
Research
Strategic Planning
Implementation
Evaluation
Source: Synovate Research, Alexa Global Traffic Ranking,
Morgan Stanley Research
10. VIEW 1: No ROI from SM
Implementation
Driving traffic to your website
Branding
Risk management
Conversions based on goals
http://annualreport.pg.com/annualreport2011/innovating/oldspice.shtml
11. VIEW 1: No ROI from SM
If you need to calculate ROI, think of it as activity-based, not
medium-based—i.e., Focus on the relationship between the
activity and the outcome.
Social Media is a tool, just like a telephone, email or computer.
13. VIEW 2: Calculating ROI from SM
Comcast Starbucks Livestrong
Twitter customer Goes to customers Raised $10.8 million
service center attracted through SM for new with Livestrong
2,700 followers. Many product ideas. Now Challenge through SM
critics of the company when it launches a new channels with blog as
converted to raving product, it already has hub.
fans. millions of fans.
Source: Petersen, Rob. 34 cases that prove social media ROI,
http://barnraisersllc.com/2010/10/33-13-social-media-case-studies-prove-roi
14. VIEW 2: Calculating ROI from SM
Low investment in SM leads to high ROI when
organizations:
Have a clear business strategy
Aren’t afraid to jump in
Make imaginative use of social
channels, customer engagement and
brand relationship
Source: Petersen, Rob. 34 cases that prove social media ROI,
http://barnraisersllc.com/2010/10/33-13-social-media-case-studies-prove-roi/
15. VIEW 2: Calculating ROI from SM
So how did BarnRaisers find an ROI when so many others couldn’t?
Let’s take another look at the formula that the naysayers cite:
(Return – Investment)
Investment
16. Must all SM ROI Be Sales-Based?
If your goal is sales, you can
measure ROI using the standard
financial formula:
(Return – Investment)
Investment
But what if you’re, say, an
Association…with returns less
tangible, e.g., raising consumer
awareness about your industry?
17. New Math
BarnRaisers and others realize that social has not only
decentralized and disaggregated, but it’s also dematerialized
—things are less tangible
Less Tangible Today
• Publishing • Hollywood Studios
• Content • Trade Shows
• Workplace • Friendships
• Corporate Structure • Business Contacts
• Pricing (Freemium Model) • Assets, too!
Great Idea #1: social redefines how we generate and
value returns in a less tangible world
18. New Math
Great Idea #2: Untethered, ROI metrics can now go beyond
sales dollars to include Retention, Research and Sentiment
values as major currencies to track your messaging
19. Don’t Base ROI on Sales
If Sales isn’t Your Goal
Great Idea #3: when sales aren’t the goal, calculate the ROI
Return using the Persuasion Index
Defined by 5 levels of agreement:
• Strongly agrees (5)
• Partially agrees (4)
• Neither agrees nor disagrees (3)
• Partially disagrees (2)
• Strongly disagrees (1)
20. Five Steps to Calculate SM ROI
Step 1: Identify Objective sales, retention, market research—or
for most associations—sentiment
Step 2: Define Metrics
• sales: thank-you page visits from tweeted landing page
• retention: repeat customers/Facebook posts
• market research: likes to announcement of potential new
product/number of Facebook fans
• sentiment: shift in percentage of conversation participants who agree
vs disagree to message point over time
Step 3: Estimate SM campaign costs labor + ad spend +
premium value
Step 4: Estimate SM Return against Objective via Metrics
Step 5: Measure and report regularly
21. Measure ROI to Improve ROI
Great Idea #4: Measure SM ROI with an eye
to improving it by:
• Increasing campaign impact
• Reducing campaign costs
22. Measure ROI to Improve ROI
Increase campaign impact
Define goals
Empower users through transparency
Research offers
Employ relevant premiums
Utilize split-tested landing
pages
Develop relationships
Promote synergistic third party
offerings
Establish social partnerships
23. Measure ROI to Improve ROI
Reduce campaign implementation costs
Leverage SM team
Establish SM culture
Employ Twitter client
Utilize SM browser
Repurpose content
Establish social partnerships
24. NSI CASE 1: Sentiment Measurement for
American Chemistry Council
ROI: Message Point Delivery
Problem: Regulators can’t keep up with
the latest in materials science, like Life
Cycle Assessment (LCA)—a methodology to
measure a building’s lifetime
environmental impact
Objective: Raise Sentiment for LCA
Across Target
25. NSI CASE 1: Sentiment Measurement for
American Chemistry Council
Messaging
• LCA reviews building materials through
all phases, from manufacture through
recycling
• LCA contrasts with single-attribute
assessment, such as whether the
product is made from recycled
material or whether it emits VOCs
26. NSI CASE 1: Sentiment Measurement for
American Chemistry Council
Goals:
Increase web traffic by 10% by December 2011 (+60%)
Create regular weekly blog content on highest visibility sites
Use Social Media to reach public and key Building & Construction
audiences
27. NSI CASE 1: Sentiment Measurement for
American Chemistry Council
Methodology: 4-Phase Strategy
PHASE 1: PHASE 2: PHASE 3: PHASE 4:
Listening Strategy via Increase Change Blog and
ReputationConnect™ Social Voice Sentiment Twitter
Listening Platform Outreach
31. ROI Measurement Tools
Google Analytics
Track Goals via
Conversion Funnels
• SM Traffic Only
• Review Correlations
Between SM Referral
Traffic and Goal
Conversions
Utilize a Variety of Tools
Define, Track, Measure,
Change, Repeat
Source: Lane, Brett, Engine-ius Marketing,
CEO Workshop 2011, Colorado Springs Marketing Group
32. ROI Measurement Tools
Google Webmaster Tools
Source: Lane, Brett, Engine-ius Marketing,
CEO Workshop 2011, Colorado Springs Marketing Group
33. ROI Measurement Tools
Facebook Google Analytics Tracker
Source: Lane, Brett, Engine-ius Marketing,
CEO Workshop 2011, Colorado Springs Marketing Group
34. ROI Measurement Tools
Involver’s Static HTML for Pages
Source: Lane, Brett, Engine-ius Marketing,
CEO Workshop 2011, Colorado Springs Marketing Group
35. ROI Measurement Tools
AddThis
Source: Lane, Brett, Engine-ius Marketing,
CEO Workshop 2011, Colorado Springs Marketing Group
36. ROI Measurement Tools
PowerReviews
Source: Lane, Brett, Engine-ius Marketing,
CEO Workshop 2011, Colorado Springs Marketing Group
37. Contact Information
Tom McClintock
NSI Partners
719.328.0042 x801
tom@NSIpartners.com
www.NSIpartners.com
Editor's Notes
The power to define and control a brand is slipping out of the hands of corporations and institutions and into the hands of individuals and communities online.The conversations are not limited to Facebook and Twitter either.They can be had using:News and BookmarkingBlogsVideo SharingPhoto SharingMessage BoardsWikisSocial GamingPodcastsRSS Feeds
Is there an ROI from SM? Many would say no and they are not necessarily wrong. Here is why:The “investment” of ROI refers to assets purchased and placed on your balance sheet. All the brick and mortar stuff. It is often something you can sell later if you no longer need it. Marketing activity is not seen as an investment, but an expense entered into your Profit and Loss statement.Why do so many use ROI and Marketing together?
Maybe we’re not asking the right question. Instead of trying to calculate ROI, we should think about the value of social media.
During this process you can keep track and learn form what people are saying about you, create buzz, increase your brand’s exposure, identify and recruit influencers to help spread your message to their communities, improve your search engine visibility, gain competitive intelligence, keep fresh and relevant by getting your messages out fast, build customer loyalty by building relationships, and emerge an industry leader, NOT a follower.
Let’s take a look for a moment at the components of implementation
What is your ratio of cost to gain?This is something you can measure.It can be a lot of work, but it is up to you to figure out if time and money spent on Social Media are worth it.
We are still in the early days of understanding how advertising and engaging on Facebook can result in positive, measurable returns.A survey by David Berkowitz, media director at 360i, and BarnRaisersllc.com founder Rob Petersen, compiled 100 case studies to prove social media ROI.By engaging customers through its Twitter customer service center, Comcast changed sentiment about the company through quality of attention and dialogue.Livestrong’s fundraiser succeeded in 2009 during the deep recession that was especially hard on nonprofits.
Berkowitz and Petersen concluded that low out-of-pocket investments in SM lead to high ROI when organizations do certain things.ROE = Return on EngagementEstablish goals and conversion funnels in GA
They reexamined the traditional definition of “investment.”
Remember when George Will said “nothing lasts”? Suddenly the SM asset can go on the balance sheet
intangible investment with tangible results
Refer to handout
One of NSI’s clients has a particular interest in messaging about Life Cycle Assessment — that a building material’s environmental and energy impact must be measured throughout its entire life cycle.
a cold-war incident in which President Johnson’s Secretary of Commerce, Sandy Trowbridge, apparently was so obsessed about bugs in his Intourist Hotel that he rolled back the carpet and clipped all the wires leading to a suspicious metal cap bolted into the floor—only to find out the next morning that the chandelier of the room immediately below had crashed onto the bed of the unsuspecting occupant.
Facebook analytics allow you to calculate the cost of adding a fan.Above example: Expenditure ($92.08) divided by Connections (new “likes”--35) = Cost Per Like of $2.63.
A more cost-effective campaign, where ads were tested and best performing ads kept, shows a better ROI. Expenditure ($17.73) divided by Connections (new “likes”--22) = Cost Per Like of $0.80.
Define Your Conversion Funnels or Goals ViaPurchases Link ConversionsRSS Feed SubscriptionsWhite Paper DownloadsSocial Profile Click-ThroughsEtc.