Enough with

the Social Media BS.

Give me the realz.

ocial Fresh Conference // 24 August 2009

SOCIAL MEDIA IS NOT FREE.
1. It takes people.
2. It takes technology.
3. It takes time.
 We have… rocks.

… all of which are limited resources.

 These resources
=
100%
of your budget

E-Marketing Each resource

Head Count
Advertising has a specific cost
Inbound Call Center I.T.
Each resource
Marketing
Sales Dept. yields specific results
Public Relations Accounting
 These resources
generate
100%
of your business

E-Marketing Losing even 1%

Head Count
Advertising of your budget’s efficiency
Inbound Call Center I.T. could seriously ruin
Marketing your day.
Sales Dept.
Public Relations Accounting
 Okay fine. But if
I’m going to take a chance
on this social media thing,
it had better make good busines
sense! Why should I allocate
resources to it?
 Reason #1:
It will result in a cost reduction.
Maybe in customer service?
Reason #2:
You mentioned something about
It will generate more revenue.
business intelligence and
I want more transactions,
market research?
more net new customers,
more customer loyalty,
etc.
 Now go figure out what
Program you have to cut
to fund this Social Media thing
Remember that our bonuses
are on the line.
 Understand that a new
Social Media program’s
funding doesn’t appear
out of thin air.:

Which buckets do we empty

o fill this new one?
SAY HELLO TO:
Business Justification

R.O.I.
ROI
RETURN . ON .
INVESTMENT.
 THE R.O.I. EQUATION

Investment Expectation of return

 THE R.O.I. EQUATION

(GAIN FROM INVESTMENT - COST OF INVESTMENT

ROI =
COST OF INVESTMENT
 Truth about R.O.I.

ROI is a business metric,

not a media metric.

ROI is 100% media-agnostic.

nly measuring digital or social won’t get you anywher

 Reason #1: Reason #2:
COST REDUCTION REVENUE GENERATION

Remember what Mr. Bossman said…

 I shrank my PR budget by 20%
and my outbound call budget by
40%.
Now I can afford a team of
social media
Rock stars. Can I get a hellz
yeah? Okay, hotshot,
You have your Social Media
doohickey.
Now I’d better see some real
results!
Or else…
 Woohoo!
I have a job!!!
 Dudes, we are I call dibs on the
ON THIS!!! Corporate blog.
Let’s start engagin’!!!
Cool.

ACCOUNTING

One Month Later…

 What about our
Twitternets?

Oh my! Look at all the new

visitors to our website!
and all of our FaceBook
friends!
Hot Damn, we even have
comments on the blog!
 This rocks!
I never had it so
good!!!
Cool.

ACCOUNTING

Three Months Later…

 Yeah but…
What about
the P&L?

Monitoring to base…
Monitoring to base…
Our Google Analytics are
through
the roof! Even our social
mentions
are wicked good!
We have liftoff!
Measuring media
really rocks my
world.
 Nope.

Anything?
Nada.

ACCOUNTING

Six Months Later…

What kind of mood is
The old man in today?

Not good.
He doesn’t care how many
visitors
the website gets, or how
many
eyeballs we estimate we’ve
reached unless it means
we’re selling
more stuff.
 But why? I’m sorry, son.
Our website is getting If your Social Media
mad hits, Jack! program
And we have 3,000 followers is generating revenue, we
on Twitter now! aren’t
seeing it. We need to
allocate
resources where we can
It’s justmake money.
business.
 Darn it.
This media measurement
stuff isn’t working.
We need to start
tying this stuff to actual
Business performance.

Where to start?
Let’s see…
At the beginning?
Things happen in sequence.
Non-financial impact is not ROI (yet).
 Types of non-financial impact

Website VisitorsImpressionsCustomer complaints

Click-throughs Positive press

YouTube views
Retweets Coupons distributed
Visitors to a brick & mortar store
Positive WOM
Delivered emails
Negative press
Negative WOM Employment applications
Blog comments
FaceBook friends
Social mention
Twitter followers
Non-financial impact = potential.
ROI = actualized potential.
 Reason #1: Reason #2:
COST REDUCTION REVENUE GENERATION

Remember what Mr. Bossman said…

 I need proof that
what we’re doing
is actually working.

Start with proof of concept.

Step 1: Establish a baseline

8% YoY Growth
Baselines illustrate deltas (changes)

Is something happening here?

Step 2: Create Activity Timelines
Step 2: Create Activity Timelines
Step 2: Create Activity Timelines
Step 3: Look at Sales Revenue
Step 3: Also look at # of transactions
Step 3: Also measure net new customers
 Transaction data should be specific

F.R.Y.
FREQUENCY, REACH, YIELD
How often customers transact. (transactions per month)
How many customers you are reaching. (net new customers)
How much they spend. ($ per transaction)
 The latest numbers indicate
that our YoY sales $ are up 60%.
Our individual transactions have
doubled,
as have our transacting
customers.
Something’s working!

Groovy!
Let’s figure out what.
Step 4: Measure transactional precursors
Step 4: Measure transactional precursors
Step 4: Measure transactional precursors
 We overlaid all of our timelines
and noticed that since our social
media
activities began, our website
visits are up,
our social mentions are also up,
and
everyone seems to love us.
So is there a
discernable pattern
in this?
Step 5: Overlay all timelines

activities

social data

web data

transactions

loyalty metrics

etc.
Step 6: Look for patterns

Uncertain Impact Impact

Impact
Impact

No Impact

Before After
Step 7: Prove relationships
How was this
group
Touched by SM?

Before After
How long
will all
this It’s all a process
analysis of elimination, really.
take? Isolating patterns,
quantifying deltas,
proving ad-hocs…

Then all
we have to do is
figure out what the cost
savings and revenue gains
are, and plug them
into the equation.
 THE R.O.I. EQUATION

(GAIN FROM INVESTMENT - COST OF INVESTMENT

ROI =
COST OF INVESTMENT
 THE R.O.I. EQUATION

Investment Expectation of return

 Oh wow.
This R.O.I. thing
wasn’t at all about
measuring media,
impressions and
eyeballs!
All things
remaining
the
same…

We may Hot ACCOUNTING

have damn!
proof of
concept.

First things first: Prove that Social

Media works
 So it turns out that our
Social Media program is
impacting
every aspect of our business
except
traffic in our brick and mortar
stores.
Can you get on that? Yeah. We
need
to find out why we aren’t having
an effect there. Kthxbye.
Then use what you know to make it
work better.
 More store traffic.
Roger that.

Dudes, we are I’ll start crafting some

ON THIS!!! wicked blog posts.
Let’s start engagin’!!!
 Finally, someone with some
real metrics for me to sink my
teeth into!
Good job, Sparky! You done
gewd!
 So I guess Social Media
is going to stick around a little
while
longer after all, isn’t it?

Yessir.
Looks like our budget
is safe for now.
Drinks for
Everybody!
 Olivier Blanchard
Principal, BrandBuilder
Marketing
864.630.7398

www.thebrandbuildermarketin
g.com
@thebrandbuilder (on Twitter)
www.smroi.net
 Slideography
Slide # Source

3, 9, 10, 11, 18-31, UFO (TV series)

37, 38, 48, 52, 56, http://ufoseries.com/
59-65

4 http://www.minnpost.com/stories/2008/06/18/2282/this_doesnt_compute_as_mo

Kim Jong Il puppet, from “Team America”

6 http://blogs.rockymountainnews.com/bridget/kimjongil.jpg