ROI in Social Media

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