Social Media ROI: Necessary...Not Evil

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Social Media ROI: Necessary...Not Evil

  1. 1. Social Media ROI:Necessary…Not Evil<br />CLT SMBC<br />April 22, 2010<br />Eric Boggs and Adam Covati<br />http://argylesocial.com<br />
  2. 2. Argyle helps marketers and small businesses link social media marketing efforts to business outcomes.<br />http://argylesocial.com<br />@argylesocial<br />
  3. 3. Public Beta Coming Soon<br />
  4. 4. Agenda:<br />Social Media<br />ROI<br />Necessary…<br />…Not Evil <br />
  5. 5. Social Media<br />
  6. 6. Social media marketing spend will grow from $716M in 2009 to $3.1B in 2014.<br />Source: Forrester’s Interactive Advertising Models, July 2009<br />
  7. 7. Nearly 1/5 of marketing dollars will go to social in five years.<br />Source: “The CMO Survey” from Duke University’s Fuqua School of Business and the American Marketing Association (AMA), Feb 2010<br />
  8. 8. Argyle Survey Quick Hits<br />http://survey.argylesocial.com<br />80+ responses<br />All industries, companies, sizes<br />Well over 60% rank their measurement capabilities and overall efforts as 5 or less on a scale of 10.<br />Web analytics were the most “mission critical” tools.<br />57% have SMM budgets.<br />Source: Argyle Social survey, April 2010<br />
  9. 9. How much time do you invest in SMM each month?<br />Source: Argyle Social survey, April 2010<br />
  10. 10. How much do you spend on SMM tools each month?<br />Source: Argyle Social survey, April 2010<br />
  11. 11. ROI<br />Return On Investment<br />
  12. 12. ROI is the ratio of money gained or lost relative to the initial investment.<br />
  13. 13. Vf – Vi<br />--------<br />Vi<br />ROI = <br />
  14. 14. You bought 10 $15 SMB CLT tickets in advance.<br />You sold 9 of them at the door for $20.<br />180 – 150<br />--------<br />150<br />ROI = <br />Investment value = $150<br />Final value = $180 <br />ROI = 20% <br />
  15. 15. But what about time value of money?<br />If the interest rate is 10% annually, would you rather have $100 today (that you can’t use to buy SMB CLT tickets) or $110 one year from today?<br />You wouldn’t care. $100 X 1.1 = $110.<br />What if you could spend/invest the money?<br />Of course you’d take the $100 today – you can end the year with $120 by exploiting SMB CLT ticket spread.<br />Time = money<br />
  16. 16. Let’s get mathematical!<br />You hired a SM consultant to develop a SM strategy in hopes of generating SMB CLT ticket sales. <br />The consultant charges a $400 fee. ($400 total)<br />Your earn $50 in y1, $250 y2, $500 y3. ($800 total)<br />What is your ROI?<br />
  17. 17. 800 – 400<br />--------<br />400<br />800 – 532<br />--------<br />532<br />ROI = <br />ROI = <br />= 100% - you doubled your money! <br />= ~50% - not as good, but not bad! <br />But what about time value of money? It took you 3 years and $400 to earn $800!<br />At 10% annual interest, that $400 could have been $532.<br />Using the same ROI math:<br />But what about the timing of the cash flows?<br />
  18. 18. The cash flows:<br />Year 0: -$400<br />Year 1: $50<br />Year 2: $250<br />Year 3: $500<br />Using Excel’s IRR function – return is only ~15%.<br />Why? Because the cash flows are back-loaded. At 10% annual interest, $500 three years from now is only worth $378 today. <br />
  19. 19. If we rearrange the cash flows:<br />Year 0: -$400<br />Year 1: $300<br />Year 2: $250<br />Year 3: $50<br />Using Excel’s IRR function – return is 30%.<br />More of the cash comes up front as opposes to three years down the road.<br />
  20. 20. “What gets measured gets managed.”<br />- Peter Drucker<br />
  21. 21. Necessary<br />
  22. 22. New channel. New challenges.<br />PPC<br />Email<br />Social<br />✔<br />✔<br />?<br />
  23. 23. Email : Social :: Rinse : Repeat<br />Email Marketing ca 2003:<br />Desktop apps<br />Little management<br />Little coordination<br />Little measurement<br />No data integration<br />Incidental campaigns<br />Few specialists<br />No clear solutions<br />SM Marketing right now:<br />All of that…plus:<br />Incredible momentum<br />Analytics ecosystem<br />Data-driven marketing<br />Something to prove<br />
  24. 24. “Links are the currency of the web. That's the reason that Google is the king of the web…right now.”<br />- Fred Wilson<br />Emphasis mine.<br />
  25. 25. “Twitter and Facebook don’t drive traffic to your site. The content you posted on Twitter and Facebook drives traffic.”<br />- Adam Covati<br />
  26. 26. Not Evil<br />
  27. 27. 5 (Not Evil) Steps<br /> Define desired outcomes.<br /> Understand your inputs.<br /> Find tools that manage data flow.<br /> Manage your team.<br /> Do the math.<br />
  28. 28. 1. Define desired outcomes.<br />Outcomes:<br />Revenue<br />Customers<br />Leads<br />Members<br />Etc.<br />Not Outcomes:<br />Followers/Fans/Reach<br />Clicks/Views<br />Sentiment/Buzz<br />Comments<br />Etc.<br />The outcome needs to be reflected as a meaningful number (or set of numbers) that you can (easily) track over time.<br />Cost/Lead – Cost/Customer – Earnings/Lead – Etc.<br />
  29. 29. 2. Understand inputs.<br />Vf – Vi<br />--------<br />Vi<br />ROI = <br />People – salaries, contractors, creative, interns, your time <br />Tools – posting, managing, monitoring<br />Spend – ads, apps, games, etc.<br />Overhead – cost accounting decisions<br />Opportunity Cost – How else could I use these resources?<br />
  30. 30. 3. Find tools, manage data flow.<br />
  31. 31.
  32. 32. Social Media Marketing Goals<br />Value Push<br />Conversations<br />Sentiment/PR<br />
  33. 33. Social Media Marketing Tools<br />Conversations<br />Sentiment/PR<br />Value Push<br />CoTweet<br />HootSuite<br />TweetDeck<br />bit.ly<br />Argyle<br />awe.sm<br />Radian6<br />ViralHeat<br />Google Alerts<br />Web Analytics & CRM<br />
  34. 34. 4. Manage the team.<br />
  35. 35. 5. Do the math…repeatedly.<br />Vf – Vi<br />--------<br />Vi<br />ROI = <br />But don’t forget about time value of money and opportunity cost!<br />
  36. 36. Eric Boggs, Founder & CEO<br />Adam Covati, Founder & CTO<br />http://www.argylesocial.com<br />eric@argylesocial.com<br />919.360.0238<br />

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