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iROI in Social MediaSocial Media
SocialSocial M diMedia
isisnotnot freefree
Normal distribution of technology adoption
Early adoption
Half the money I spendHalf the money I spendd ti i i t don advertising is wasted;
the trouble is I don’t knowwhich half!John Wanamaker
Three reasons why there’s no ROI on Social Media
First too many metrics; andFirst, too many metrics; and
ROI is based in project finance; so
What is the value of aWhat is the value of a …
Source: Forbes Magazine, August 2012
The ROI Calculation
ROI=(G-C)/C
G Gain from InvestmentG = Gain from Investment
C = Cost of Investment
BonobosBonobos exclusiveexclusive
Twitter onlyTwitter only sale createdsale created
ROI ofROI of 1200%1200%
Source: Bonobos/Twitter 2011
ROI is fluid
ROIROI
YouTube channel drove 700%drove 700%
increase in salesincrease in sales
Customer community
400% i t i NPS400% improvement in NPS
$4m reduction in service costsservice costs
The Social Media ROI Calculation
ROI=((G+E)-C)/C
G Tangible Gain from InvestmentG = Tangible Gain from Investment
E = Estimated Intangible Gains
C = Cost of Investment
Econometric modelling
Econometric models how the variance orfluctuations seen in any given output ared t h i t i i t i bldue to changes in certain input variables.
If we do X what happens to Y?
Econometric modelling of media performance
Identify and quantify impact factors such as media, priceand promotional reach, as well as less controllablefactors, such as market conditions and competitor activity.
Determine an optimal media strategy to achieve a fixedDetermine an optimal media strategy to achieve a fixedtarget (i.e. volume or value) or maximum returns for afixed budgetfixed budget.
Identify baseline sales that would naturally occur withoutmedia spend then calculate the business’ true incrementalreturn on media investment.
Source: www.quantium.com.au/econometric-modelling
Appropriate use of Econometric Modelling
Mass MediaTVCOut of Home
DigitalSearch marketingBanner advertising
Direct MarketingDirect mailTelemarketing
Sponsorshipg
Social mediag
eDM
Econometric ModellingTest/Control Measurement
Econometric Modelling
EconometricsO li i t ffli lOnline impact on offline sales
Test/ControlA t h CTR dAccurate reach, CTR and
referral ratesSource: www.profit-tech.com
Social Media Return on Investment
Investment
Action
AttractionAttraction
Engagement Key input factorsg g
Referral
y p
Return Key outcome
Adapted from: Social Media is Dead, Long Live Social Media ROI, Stefanos Karagos, March 2011
Social Media Return on Investment
Investment $25,000 invested in social media
Action
Attraction
LinkedIn Company Page and Group launched
5 500 l j i G 49% th tAttraction
Engagement
5,500 people join Group, 49% growth rate
1.57% engagement rateg g
Referral
1.57% engagement rate
37 referrals to website
Return $150,000 in consultancy services attained
Adapted from: Social Media is Dead, Long Live Social Media ROI, Stefanos Karagos, March 2011
Social Media Return on Investment
Investment
Action
AttractionAttraction
Engagementg g
Referral
Return
Adapted from: Social Media is Dead, Long Live Social Media ROI, Stefanos Karagos, March 2011
If you don’tIf you don’tknow where you’reknow where you regoing you mightgoing, you mightnot get therenot get there.Yogi Berra
Social Media strategy
Relative page size
95% of pages have more than 10 fans
65% of pages have more than 100 fans65% of pages have more than 100 fans
23% of pages have more than 1,000 fans
4% of pages have more than 10,000 fans
0.76% of pages have more than 100,000 fans
0.047% of pages have more than 1 million fans0.047% of pages have more than 1 million fans
Source: Facebook, global data
Engagement benchmark
Engagement rate benchmarkTop 32 Pages in 10 countries 0.06%
By fan baseUp to 10,000 0.96%Up to 20,000 0.29%Up to 50,000 0.21%Up to 100,000 0.19%Up to 200,000 0.16%Up to 500 000 0 13%Up to 500,000 0.13%Up to 1 million 0.11%Over 1 million 0.09%
Source: Michael Leander
Calculating engagement rate
((L+C+S)/W)/T
T = Total fans on a given dayT = Total fans on a given day
L = Likes on a given day
C = Comments on a given day
S = Shares on a given dayS = Shares on a given day
W = Admin Wall Posts on a given day
Earned media on Facebook
Buying concentration Buying concentrationAll buyers Facebook Fan Base
Source: Ehrenburg-Bass
DefineDefineSt tStrategy
E t bli hEstablish your baseline
and benchmarks
SetSetR li tiRealisticObjectivesObjectives
MeasureMeasurewhatwhat mattersmatters