The Business Value of Social Media

Prepared by Joey Barker

copyright © 2011, AutoZone, Inc., all rights reserved

Where Are We in Social?

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FacebookLaunch:

P1 in FY12

Objectives:

1.Drive traffic to stores & website

2.Increase in-store & online retail sales

3.Maximize customer lifetime value through social engagement (Unique Content + Response Time)

Likes = 384,446

Reach

1,507,730 impressions/wk

Engagement Rate = 13.5%

•Best Week - 51,916 People Talking

•35,899 check-ins

•134,815 Avg Link Clicks per Week

@AutoZone Twitter

Launch: •P7 W2 in FY12

Objectives:

1.Drive traffic to stores & website

2.Increase in-store & online sales

3.Maximize customer lifetime value; Engage with Info-tainment

Followers = 10,936Reach = 342,707 impressions/wk.

Engagement (per week)•191 Retweets•256 Mentions (@ or #)•4,538 Direct Link Clicks

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YouTube ChannelLaunch:

•P9 in FY12

Objectives:

1.Drive traffic to website & other social networks

2.Educate auto DIYers with trustworthy advice

3.Maximize customer lifetime value; build deeper relationships than other methods allow

Views = 1,200,632

Subscribers = 4,280

Engagement

1.1,499 video likes2.1,637 favorites added3.348 video comments4.152 shares to social networks

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What is the Value to our Business?

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Coupon Redemptions – FY12

Annual Coupon Sales = $1.6MM+

Where…

Average redemption rate is 0.16%, with $83 avg. basket

Most individual avg. baskets are +15-30% higher than forecast

Percentage of incremental sales from coupons NOT yet determined

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FY12 Actual (projected)****

Fan Base 385,000 500,000 500,000 1,000,000 1,000,000Redemption Rate 0.16% 0.16% 0.81% 0.55% 0.81%Average Basket 83$ 83$ 97$ 90$ 97$ # of Deals (weekly) 44 52 52 52 52

Annual Sales 1,600,000$ 3,452,800$ 20,428,200$ 25,740,000$ 40,856,400$ Annual Profits*** 690,000$ 1,450,176$ 8,579,844$ 10,810,800$ 17,159,688$

*** Profit is net of the discount given and assumes 51.6% average profit margin for remaing items in the basket.**** Started coupons P3 with 100k fan base, which grew to 385k during F12

Coupon Redemptions – FY12• Avg redemption rate for offers to date is 0.16%, with $83 avg. basket

– Most individual avg. baskets are +15-30% higher than forecast

• Threshold offers have highest redemption rates– Average of 0.42%, with $97 average basket– Threshold offers with 4-week offer period avg. 0.85% redemption rate– Avg. baskets are +73% more than purchase requirement ($87 basket for $10 off $50)

• % OFF high usage product offers (e.g., batteries, wipers, lights, brakes) have 2nd highest redemption rates

– Avg. 0.29%, ranging from 0.23% to 0.35%– Mostly featured 30% OFF deals

• Redemption rate of other off-shelf & hard part deals less than .05-.1%– Discounts are likely not enough to drive traffic vs. other circular & in-store offers

• Threshold offers with 4-week redemption periods have 2 to 3x Higher Redemption Rate than similar deals with 1 or 2-week periods

– Rates for other offers did not increase significantly when expanded to 4 week periods

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Lead Generation – FB Sweeps

Est. Value of Social Email Sign-Ups = $1,020,000

•Each Sweeps in FY12 generated a minimum of 30k unique emails

– Most recent sweeps generated 50k+ in unique emails

•AZ Rewards values an opt-in unique email at $5 average worth

•Five (5) Sweepstakes total, estimated 150k opt-ins sales leads

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Additional Rewards Value

1. Web traffic to the Rewards site from the Facebook app

– 2,169 monthly clicks to site

2. In-store Rewards card sign-ups from weekly Facebook posts

– See post comments

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Earned Media Value of Social Impressions

(Weekly Total Reach ÷ 1,000) * CPM * 52 weeks = Annual Media Value

•Annual Media Value = $173,804 – Where CPM = $1.95

• Given by AutoZone Media Team, per MPG baseline recommendation

•Annual Media Value = $202,771– Where CPM = $2.10

• Recommended CPM given by Facebook ads team

•Weekly Total Reach = 1,856,878• Total number of unique people that see any social content related to

AutoZone

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Media Value – Engagement(Facebook Only)• When calculating media value of social impressions, one

thing to consider is Return on Facebook Engagement

– 2012 Fast Company study estimates “Engaged user” as more than 2x the given CPM earned media value of “Like” (Source)

– While impressions still mean value, a more recent alternative – and possibly more accurate addition for social traffic – interactions often >1

• ROE = Consumption * CPC = $984,985– CPC = [ CPM / (CTR * 1000) ]– Where…

• $0.23 CPC, $1.95 average CPM, 0.139% CTR

• Consumption = Annual total # of likes, mentions, clicks

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Search Rankings of SocialGiven the size of social networks, a high search ranking helps prevents competitors from ranking in any search for “AutoZone” or related keyword that we pursue, thus pushing them down in rankings and increasing our company’s web traffic.

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Web Traffic Referrals

• YTD Traffic Referrals to AutoZone.com

– 356,836 Clicks from Facebook

– 55,691 Clicks from Twitter

• Earned Traffic Value = $61,879

– Where Cost-per-Click is $0.15, per display ad pricing from AutoZone media team & MPG

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Search Mentions across Digital Channels

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PR & Crisis ManagementPositive mentions in the social sphere now outweigh negative by more than 2.5 to 1 for AutoZone, promoting overall positive brand reputation.

This is effectively maintained by rapid response to customer inquiries on Twitter and Facebook, as well as proactive management of which comments merit response.

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Customer Service

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Low-Cost Market Research

• In addition to demographics, we can also see…

1. How we reached a user

2. Where they came from

3. Where they went on our Page

4. How often the page was visited by each user (on Average)

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Social Media Value

Estimated Business Value = $3,666,864

• Does NOT include…– Search engine rankings

– Value of market research findings

– Public Relations value in crisis control

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