The True Value of Social Media

The True Value of Social Media How social media is forcing us to redefine our marketing KPIs

1. We create too many dead-end experiences. 2. We don’t know how to evaluate things that aren’t dead-end experiences. The Problem (with marketing)

http://www.youtube.com/watch?v=ERGrSQoY5fs http://www.youtube.com/watch?v=D3qltEtl7H8&feature=related It’s well documented. http://www.youtube.com/watch?v=gwaX40EnUdM

Culprit The microsite Engaging, fun, but not very shareable

Culprit The web/mobile application Engaging, helpful, but not very shareable

Culprit The online game Engaging, addictive, but not very shareable

Culprit The online video Engaging, entertaining, but not very shareable Unless it goes viral...which is a 1-in-a-million chance you can’t plan for.

Dead end digital Microsites Applications Games Videos Engaging digital actions are important. But what’s more important is that we enable consumers to effortlessly share, adapt and evolve our messages AND measure the influence it creates.

Return on Investment Dead-end digital is similar to most advertising, and we measure it Digital Digital Sale accordingly, judging its performance Action Interaction based on the sales it directly motivates. But what about advocacy? What about the ripple effect? Aren’t most purchases influenced by personal recommendations anyway? Return on Interaction We’re missing half the picture

A Different Approach DIGITAL MEDIA MEDIA THAT’S SOCIAL Objectives: Objectives: Reach Advocacy Awareness Loyalty Coverage Trust Engagement Influence Measures: Measures: # of visitors Sentiment # of page views Comments Time on site Feedback Conversions Mentions Organic Reach Adapted from http://www.slideshare.net/LumensionSecurity/the-greatest- question-since-the-meaning-of-life-what-is-the-roi-of-social-media

Return on Investment Digital Digital More Sale WOM Reco Action Interaction Sales Return on Interaction + Return on Influence A more realistic way to assess value

Quantify the true impact of digital and social actions by moving beyond immediate impact to include return on influence. Our Goal http://www.businessweek.com/magazine/content/09_22/b4133032573293.htm

Cool idea…but how do you do that?

Visited this brand’s Downloaded a phone application website or microsite from this specific brand Posted a video online (e.g., Facebook, YouTube) about this brand Watched commercials or videos made by this brand on YouTube Read a blog sponsored Customized or designed a by this brand product for this specific brand Played a web or browser game sponsored by this brand Posted a Tweet or RT about this specific brand We studied 22 Made a charitable donation directed through this brand’s site Posted pictures online (e.g., Flickr, Picasa, Facebook) that focused on this specific brand Participated in an augmented reality experience sponsored by this brand Wrote about this brand in a personal blog digital actions and their Became a fan of this brand on Facebook Sent a customized message sponsored by this brand to a family member or friend effect on consumers. Joined a Facebook group focused on this specific brand Posted a Facebook status referencing this specific brand Followed this brand on Twitter Offered product ideas to this Voted on a product decision by this brand in an open forum (e.g., brand (e.g., flavor, design, name) mystarbucksideas.com) Provided feedback on this Posted reviews about this brand Joined an online panel or research survey for this specific brand brand’s website

1. 1 2 3 4 Engage Visited this brands’ Contribute Participate 13. Become a fan of this Create 16. Posted a Facebook status 8. Posted reviews about this website or microsite brand on Facebook referencing this specific brand brand 2. Watched commercials or 14. Joined a Facebook 17. Sent a customized message 9. Provided feedback on this videos made by this brand group focused on sponsored by this brand to a brand’s website on Youtube this specific brand family member or friend 10. Voted on a product 3. Downloaded a phone 15. Followed this brand 18. Wrote about this brand in a decision by this brand application from this on Twitter personal blog (e.g. flavor, design, name) specific brand 11. Joined a panel or research 19. Posted pictures online (e.g. 4. Read a blog sponsored by survey for this specific Flickr, Picasa, Facebook) that this brand brand focused on this specific brand 5. Played a web or browser 12. Offered product ideas to 20. Posted a Tweet or RT about game sponsored by this this brand in an open this specific brand brand forum (e.g. 21. Customized or designed a 6. Made a charitable mystarbuckideas.com) product for this specific brand donation directed through this brand’s site Organized 22. Posted a video online (e.g. Facebook, Youtube) about 7. Participated in an augmented reality experience sponsored by into 4 this brand this brand categories

RECRUIT CUSTOMERS GROUP BY ACTIONS SURVEY ONLINE COMPARE GROUPS n=408 ENGAGE n=281 15 min. survey CONTRIBUTE BRAND X ENGAGE PARTICIPATE n=282 ADVOCACY PARTICIPATE CONVERSATIONS NEW CUSTOMERS BRAND SPEND CONTROL n=284 ... CREATE CONTRIBUTE CREATE n=1,945 n=865 Recent customers of 52 brands CONTROL 20+ years old | HHI $35k+ Control group representative of Survey included questions on how Compared groups to each other M/F Split | Social Media Accounts brands found in test groups much they talked, recommendations, and made conclusions based on brand spend, etc. significant differences

Brands whose customers we studied. *Brands determined by a pre-study of social media actions among consumers.

% Who Talked Percent of those who initiated conversations about the brand. Control Engage Contribute Participate Create 26% 47% 55% 53% 64% 1.8 x control 2.1 x control 2 x control 2.5 x control Assuming a set of 100 Assuming a set of 100 Assuming a set of 100 consumers, 80 more consumers, 60 more consumers, 170 more people talking than the people talking than the people talking than the Engage set. Engage set. Engage set. Source: Digital Actions and Their Effect on Advocacy, 22squared and Consumer Insights Inc., 2010.

Via Social Via Instant Message Other Digital % who talked Face to Face Media Via Email or Texting Means Control Where 26% 94% 2% 8% 3% 1% people Engage talked 47% 82% 9% 15% 5% 0% Participate and Create are the only digital actions that Contribute generate conversation both online and offline. Proof that social media has influence 55% 71% 10% 27% 11% 3% beyond the digital space. Participate 53% 75% 43% 22% 28% 9% Create Source: Digital Actions and Their Effect on Advocacy, 22squared and Consumer Insights Inc., 2010. 64% 55% 48% 41% 19% 3% Presentation by:

How much they talked. The number of conversations per 100 consumers. Control Engage Contribute Participate Create 42 conversations out 110 conversations 123 conversations 260 conversations 270 conversations of 100 consumers out of 100 consumers out of 100 consumers out of 100 consumers out of 100 consumers Source: Digital Actions and Their Effect on Advocacy, 22squared and Consumer Insights Inc., 2010.

Social media actions generated nearly 2.5 times more conversations per 100 consumers than the lower involvement engage group. Control Engage Contribute Participate Create 42 conversations out 110 conversations 123 conversations 260 conversations 270 conversations of 100 consumers out of 100 consumers out of 100 consumers out of 100 consumers out of 100 consumers Source: Digital Actions and Their Effect on Advocacy, 22squared and Consumer Insights Inc., 2010.

How they influenced purchases Percent who spurred a purchase % who talked % who spurred a purchase Control Engage Contribute Participate Create 11%... 20%... 26%... 32%... 35%... influenced a transaction influenced a transaction influenced a transaction influenced a transaction influenced a transaction 26% talked 47% talked 55% talked 53% talked 64% talked Source: Digital Actions and Their Effect on Advocacy, 22squared and Consumer Insights Inc., 2010.

Influenced Purchases The number of purchases influenced per 100 consumers. Social actions yield about 4x as many influenced purchases as dead-end digital engagements. 83 95 Purchases Purchases Influenced Influenced 22 32 5 Purchases Purchases Purchases Influenced Influenced Influenced Control Engage Contribute Participate Create 42 conversations out 110 conversations out 123 conversations 260 conversations 270 conversations of 100 consumers of 100 consumers out of 100 consumers out of 100 consumers out of 100 consumers Source: Digital Actions and Their Effect on Advocacy, 22squared and Consumer Insights Inc., 2010.

And, they spend more too... Median “Spend Index” by groups: Socially involved customers spend more and drive higher spend levels among the people they influence. 247 126 100 Control Group Engage + Contribute Participate + Create Presentation by: Median dollar value associated with customer groups. Self-reported customer includes Source: Digital Actions and Their Effect on Advocacy, 22squared and Consumer Insights Inc., 2010. dollars spent, anticipated spend, and referred dollars through recommendations.

So what’d we learn?

1 Take a broader view of value We have to try to understand the impact of social media beyond the initial interaction and through the reverberating influence it has on consumers. We can’t only apply traditional digital metrics to social interactions. Digital Digital More Sale WOM Reco Action Interaction Sales Return on Interaction + Return on Influence Return on Investment

2 Social media actions pay It pays to leave the comfort of your own website or microsite and live in the consumer’s world of social media. Can you screw it up? Sure. But some simple principles, like being honest and interesting and adding value to people’s lives, can go a long way in the social space. in more places Gets more people talking more times for more sparking more purchases money

3 Move from dead end digital to social We’re not saying that brands should stop being helpful or entertaining. That they should stop making cool apps or killer videos. We’re just saying that you should do it in the social space and let people mess with it. The more you get them participating and creating, the more you’ll get in return. DO MORE OF THIS... “I follow them on Twitter and ask for “Purchased a coffee, was able to ask “I participated in their design the next “I posted pictures of my many pairs of advice on certain products. The agents about different varieties and got what I donut competition, as well as enjoying Nikes.” are usually very helpful and informative.” wanted!” their delicious coffee on a regular basis.” “I sent an email about an ice cream “I ordered personalized M&M's for a “I occasionally drink Mountain Dew and I “I wrote to Starbucks encouraging them to add more giveaway on Facebook.” Valentine's Day gift. I also posted this on voted in a contest to determine a new Gluten Free products to their offerings and to complain my Facebook status and copied the URL flavor.” when the GF orange cake was removed from their addy and sent out to a few friends.” product offerings.” Source: Digital Actions and Their Effect on Advocacy, 22squared and Consumer Insights Inc., 2010.

2 Quick Notes: This is changing: These are good: http://www.slideshare.net/ LumensionSecurity/the- greatest-question-since-the- meaning-of-life-what-is-the- roi-of-social-media http://www.slideshare.net/ yongfook/social-media-roi As social media increasingly becomes the backbone of our digital experience, consumers will migrate to being more active participants and creators of content. This could already be obsolete.

For more on building advocacy, visit: http://www.22squared.com/whoweare/agency-model http://www.slideshare.net/brandonmurphy/the-friendship-model

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The True Value of Social Media

by Brandon Murphy on May 24, 2010

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