Social Media ROI, why should we measure it? And how?

1. SOCIALMEDIA : ROI

2. { }
Social Media is like teen sex, everyone
wants to do it. No one actually knows how.
When finally done, there is surprise it's not
better.
- Avinash Kaushik: Google's analytics
evangelist via Twitter 2009

3. SOCIAL
MEDIA • Post, Listen, Reply, Encourage
feedback
MAXIMS
• Add Social Media to your
existing marketing channels
and hope to reach as many
people as possible – Wrong!
• Search and Social are integrated

4. THE MODERN ONLINE PRESENCE:
SIMPLIFIED
THEWEBSITE
SOCIALMEDIA
SEARCH ENGINE
OPTIMISATION

5. The Altimeter Group asked 140 corporate
social strategists about their 2011 planning
Creating ROI Measurements
48.3%
Internal Education and Training 37.3%
Determining an Organizational Model 34.7%
Applying Social Insights to Product Roadmap 34.7%
Getting Buy-In from Stakeholders 32.2%
Developing a Listening/Monitoring Solution 29.7%
Getting Tools and Technologies in Place 26.3%
Resources: Increasing budget/headcount 24.6%
Policies and Procedures 22.0%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0%
Source: Survey of Corporate Social Strategists, Altimeter Group, November 2010

6. WHAT IS SOCIAL MEDIA ROI?
„Social Media ROI is defined as a
measure of the efficiency of a
social media marketing campaign‟
- DAG HOLMBOE, 2011

7. THE
MILLION DOLLAR
QUESTION*
…
WHAT IS THE ROI OF SOCIAL MEDIA
*(AND WHY SHOULD WE MEASURE IT?)

8. WHY SHOULD WE MEASURE IT?
1 Compare the efficiency of marketing campaigns;
2 Negotiate budgets with your management;
3 Analyze and optimize current and future
campaigns;
4 Financial accountability - as social media
becomes mainstream, executives are holding
them to the same accountability as other
business initiatives, demanding financial returns
and ROI on social media investments.

9. THE FINANCIAL
ORIGINS OF
ROI
ROI = (return – investment) %
investment

10. LET‟S
ADAPT IT
Social Media ROI =
(SM return – SM investment) %
SM investment

11. A WORKING EXAMPLE
Last month, we attributed R50,000 in sales to our
social media campaign. This is our „social media
return‟. Let‟s assume that our investment in our
social media campaign was R10,000.
Using the ROI formula: Social media ROI =
(R50,000 – R10,000) / R10,000 % = 400%

12. SOCIAL SOCIAL MEDIA
RETURN IS
MEDIA THE VALUE THAT YOU
DERIVE FROM YOUR
RETURN?
SOCIAL MEDIA
CAMPAIGN
• Sales
• Customer Insights
• Net New Customers
• Brand Awareness
• Etc…
• *Not Likes
• *Not Followers

13. QUANTIFYING SM RETURN
• Sales • Brand Awareness
• Net New Customers VS • Customer Insights
HOW DO WE QUANTIFY A RETURN ON THE QUALITATIVE?

14. SM IS A MEANS TO AN END
{
“We often approach social media like it‟s
the destination rather than the vehicle”
- Hal Thomas
}
A „like‟ or a „follower‟ can be compared to a
business card handed out at an event.
It represents potential, but needs to be acted
on.

15. APPROACHING
SOCIALMEDIA
ROI

16. BEFORE
YOU
START
TAKE
A
SNAPSHOT

17. THE SNAPSHOT (BENCHMARK
• Before you start the clock it is a good idea to
benchmark where you‟re at...
• Make a note of the numbers (number of Facebook
fans, Twitter followers, referrals from social media
sites, plus existing website traffic).
• Make a note of the less obvious benchmarks (such
as SEO rankings and referrals, customer
satisfaction scores and other business data).
• Make a note of ROI benchmarks. How much are you
paying to acquire customers via other marketing
channels? How vast is that advertising budget, and
how is it being split up? And what proportion is
being directed into channels that you cannot
accurately measure?

18. UNDERSTAND
THE VALUE
OF YOUR
CAMPAIGN

19. TYPES OF
SM ROI
MEASUREMENT
QUANTITATIVE
• Sales, unique visits, page
views, followers, demographics, age, bounce
rate, length of visit, etc…
QUALITATIVE
• Metrics that have an emotional component to them.
For example, if 75% of the people who mention
your product online call it “cheap” and only 25%
call it “inexpensive,” that‟s a qualitative metric that
has an impact on your business.

20. ESTIMATING SOCIAL MEDIA RETURN
HARD NUMBERS ARE NOT ALWAYS AVAILABLE
HOW DO WE MEASURE RETURN?
THREE STEPS:
1.Define your social media goal.
2. Based on the goal, define your social media return.
3. Finally, define how you will tie hard
Rands to the social media return.

21. SOCIAL MEDIA ROI ON SALES
THREE STEPS:
1. Define the Goal: We want to increase sales.
2. Define the Sales that can be attributed to the
Social Media campaign (Social Media Return)
3. What is the Rand value of those sales?

22. ATTRIBUTING SALES
• ANALYTICS
• CAMPAIGN ONLY COUPON CODES
• FORECASTED VS. ACTUAL SALES FOR THE
PERIOD

23. SOCIAL MEDIA ROI ON CONSUMER INSIGHTS
THREE STEPS:
1. Define the goal: Generate a high number of high-quality
consumer insights from the social media campaign.
2. Define the social media return as the value of these
consumer insights
3. Tie in hard Rands to the return by comparing what it
would cost to generate the same quantity and quality of
consumer insights using a focus group.

24. HOW DO WE ATTACH A RAND VALUE TO
CONSUMER INSIGHTS
WE COMPARE…
We use consumer insights equivalency.
Traditional Focus group cost: R5000
No. consumer insights generated: 20
Ave Cost per consumer insight: R250
Count all consumer insights determined to be of equal or higher quality
as the consumer insights from a focus group.
Social media ROI =
(consumer insights x R250 – cost of SM campaign)
cost of SM campaign
= ROI %

25. HOW DO WE ATTACH A RAND VALUE TO
CUSTOMER SUPPORT CALLS
WE COMPARE AGAIN…
1. DEFINE THE GOAL
2. DEFINE THE SM RETURN
3. TIE IN A HARD RAND VALUE
ALL SUPPORT CENTRES KNOW THE COST OF A SUPPORT CALL
Social media ROI =
(Support calls x Ave cost p/call – cost of SM campaign)
cost of SM campaign
= ROI %

26. HOW DO WE ATTACH A RAND VALUE TO
CUSTOMER SUPPORT CALLS WITHOUT A
HARD RAND VALUE
• Forecast the number of calls without social media with
historical data.
• Over the period, the number of prevented support calls
is the difference between forecasted and actual support
calls. This is the social media return.

27. CUSTOMER
LIFETIME
VALUE

28. EXPLANATION AND CALCULATION
• Customer Lifetime Value (CLV) is the amount of
revenue a customer will bring to a company over the
course of their lifetime with the brand.
• Eg. If you are an Internet Service Provider (ISP), and
you know that the average customer stays with you
for 3 years and spends R300 p/month. The CLV is
R300 x 12 x 3 = R10 800.

29. THE USE OF CLV
• How much are you willing to spend to acquire that
customer?
• 10% of CLV?
• If CLV is R10 800 then the company is willing to
spend R1080 to acquire a customer.
• So with a budget of R500 000, 463 customers should
be acquired, bringing in roughly R10,000 000 over
the next 3 years.

30. APPLICATION AND CALCULATION
• The companies current marketing budget is
R3,000 000 p/annum.
• From current print and online advertising 2 500 new
customers are acquired each year.
• So for every R1200 spent, the company gets 1 x new
customer.
• Let‟s allocate 10% of the annual marketing budget to
social media (R300,000)
• To allocate budget to Social Media (away from
traditional media), 250+ new customers need to be
generated from social media.

31. CALCULATIONS
TRADITIONAL SOCIAL MEDIA
ROI = SM return – investment % ROI = SM return – investment %
investment investment
Budget = R3,000 000 Budget = R300 000
Value of a Customer = R10 800 Value of a Customer = R10 800
CLV Spend = 11% CLV Spend = 10%
Customer acquisition cost = R1 200 Customer acquisition cost= R1 080
Customers acquired = 2500 Customers acquired = 277.77
ROI = 27,000 000 – 3,000 000 % ROI = 3,000 000 – 300 000 %
3,000 000 300 000
ROI = 800% ROI = 900%

32. CASE STUDY: DENTISTRY PRACTICE
• Raise awareness of a recently launched practice.
Source: Techcrunch - 2010/07/17

33. CASE STUDY: DENTISTRY PRACTICE
• TOOLS: Facebook, Youtube, Twitter, Groupon
• PROBLEM: A new practice in a building that houses
hundreds of other dentists that have more
established practices.
• SOLUTION: 70 facebook fans (@ publication on
Techcrunch, July 2010), posting Yelp reviews on the
page, posting educational dentistry clips on
Youtube, a Groupon deal for patient exam and x-ray
that attracted 320 new patients!

34. CASE STUDY:
DENTISTRY
PRACTICE
Facebook as
AT NOV 2011
LANDING PAGE

35. CASE STUDY:
DENTISTRY
PRACTICE
Facebook as
AT NOV 2011
REVIEWS PAGE

36. CASE STUDY: LOCNVILLE

37. CASE STUDY: LOCNVILLE

38. SOCIAL AND SEARCH
• Both Google and Bing have confirmed that their search
results are positively affected by social signals, such as
tweets, Facebook Like and +1‟s
• Google is king because it‟s algorithm measured which
websites were “voting” for others by linking to them.
• Enter social media, and search engines have taken what
people are saying about brands and companies to heart.
If people share your content, it‟s probably pretty good.

39. THE LANDING PAGE
• A/B Split Testing
• Call to Action

40. GREAT TOOLS
GOOGLE ANALYTICS
• ITS FREE, IT IS A MUST FOR ANY WEBSITE/SOCIAL
MEDIA CAMPAIGN
HOOTSUITE
• BASIC REPORTS FOR FREE; $5.99 FOR A PRO
SUBSCRIPTION.
• ACCESS TO (INSERT TABLE)
SOCIAL MENTION
• http://www.socialmention.com/

41. TAKE AWAYS
CONCEPTS
Social Media Return
Social Media ROI
Customer Lifetime Value
Benchmarking
PROCESSES
Continuous Improvement (Kaizen)
Compare Compare Compare
(A/B Split Testing, for landing pages)

42. THANK YOU
www.marketsonline.co.za
luke@marketsonline.co.za
+27 83 301 1408