Enough withthe Social Media BS.

Give me the realz.

Social Fresh Conference // 24 August 2009

SOCIAL MEDIA IS NOT FREE.

1. It takes people.

2. It takes technology.

3. It takes time.

… all of which are limited resources.

We have… rocks.

These resources=

100%of your budget

Head CountAdvertising

E-Marketing

Inbound Call Center

Each resourcehas a specific cost

Sales Dept.Public Relations

MarketingI.T.

Accounting

Each resourceyields specific results

These resourcesgenerate

100%of your business

Head CountAdvertising

E-Marketing

Inbound Call Center

Sales Dept.Public Relations

MarketingI.T.

Accounting

Losing even 1% of your budget’s efficiency

could seriously ruin your day.

Okay fine. But if I’m going to take a chanceon this social media thing,

it had better make good businesssense! Why should I allocate

resources to it?

Reason #1:It will result in a cost reduction.

Maybe in customer service?You mentioned something about

business intelligence andmarket research?

Reason #2:It will generate more revenue.

I want more transactions, more net new customers,

more customer loyalty,etc.

Now go figure out whatProgram you have to cut

to fund this Social Media thing.Remember that our bonuses

are on the line.

Which buckets do we emptyto fill this new one?

Understand that a newSocial Media program’sfunding doesn’t appear

out of thin air.:

Business Justification

SAY HELLO TO:

R.O.I.

R.O.I.RETURN ON INVESTMENT

THE R.O.I. EQUATION

Investment Expectation of return

ROI =COST OF INVESTMENT

(GAIN FROM INVESTMENT - COST OF INVESTMENT)

THE R.O.I. EQUATION

Truth about R.O.I.

ROI is a business metric, not a media metric.

ROI is 100% media-agnostic.

Only measuring digital or social won’t get you anywhere.

Reason #1:COST REDUCTION

Reason #2:REVENUE GENERATION

Remember what Mr. Bossman said…

Okay, hotshot,You have your Social Media doohickey.Now I’d better see some real results!

Or else…

I shrank my PR budget by 20%and my outbound call budget by 40%.

Now I can afford a team of social mediaRock stars. Can I get a hellz yeah?

Woohoo!I have a job!!!

Dudes, we are ON THIS!!!

Let’s start engagin’!!!

I call dibs on theCorporate blog.

One Month Later…

ACCOUNTING

Cool.

Oh my! Look at all the newvisitors to our website!

and all of our FaceBook friends!Hot Damn, we even have

comments on the blog!

What about ourTwitternets?

This rocks!I never had it so

good!!!

Three Months Later…

ACCOUNTING

Cool.

Monitoring to base…Monitoring to base…

Our Google Analytics are throughthe roof! Even our social mentions

are wicked good!We have liftoff!

Yeah but…What about

the P&L?

Measuring mediareally rocks my

world.

Six Months Later…

ACCOUNTING

Anything?

Nope.

Nada.

What kind of mood is The old man in today?

Not good.He doesn’t care how many visitors

the website gets, or how manyeyeballs we estimate we’ve reached

unless it means we’re sellingmore stuff.

But why?Our website is getting

mad hits, Jack!And we have 3,000 followers

on Twitter now!

I’m sorry, son.If your Social Media program

is generating revenue, we aren’tseeing it. We need to allocate

resources where we canmake money.

It’s just business.

Darn it.This media measurement

stuff isn’t working.We need to start

tying this stuff to actualBusiness 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 Visitors

Click-throughs

Visitors to a brick & mortar store

Positive press

Positive WOMNegative press

Negative WOM

Customer complaints

Employment applications

Retweets

FaceBook friendsBlog comments

Social mention

YouTube views

Twitter followers

Impressions

Delivered emails

Coupons distributed

Non-financial impact = potential.

ROI = actualized potential.

Reason #1:COST REDUCTION

Reason #2:REVENUE GENERATION

Remember what Mr. Bossman said…

I need proof thatwhat 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 indicatethat 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 timelinesand 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

transactions

social data

web data

loyalty metrics

etc.

Step 6: Look for patterns

Before After

Impact

ImpactImpact

No Impact

Uncertain Impact

Step 7: Prove relationships

Before After

How was this groupTouched by SM?

How longwill all this

analysis take? It’s all a processof elimination, really.

Isolating patterns, quantifying deltas,proving ad-hocs…

Then allwe have to do is

figure out what the cost savings and revenue gains

are, and plug them into the equation.

ROI =COST OF INVESTMENT

(GAIN FROM INVESTMENT - COST OF INVESTMENT)

THE R.O.I. EQUATION

THE R.O.I. EQUATION

Investment Expectation of return

Oh wow.This R.O.I. thing

wasn’t at all aboutmeasuring media,impressions and

eyeballs!

First things first: Prove that Social Media works

ACCOUNTING

All things remaining the

same…

We may have proof ofconcept.

Hot damn!

So it turns out that our Social Media program is impactingevery 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 havingan effect there. Kthxbye.

Then use what you know to make it work better.

Dudes, we are ON THIS!!!

Let’s start engagin’!!!

I’ll start crafting somewicked blog posts.

More store traffic.Roger that.

Finally, someone with somereal metrics for me to sink my teeth into!

Good job, Sparky! You done gewd!

So I guess Social Mediais 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 Marketing864.630.7398

www.thebrandbuildermarketing.com@thebrandbuilder (on Twitter)

www.smroi.net

Slideography

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3, 9, 10, 11, 18-31, 37, 38, 48, 52, 56,59-65

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UFO (TV series) http://ufoseries.com/

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

Kim Jong Il puppet, from “Team America”http://blogs.rockymountainnews.com/bridget/kimjongil.jpg