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2008 SOCIAL MARKETING ROI REPORT
      AND BENCHMARK GUIDE



     Prepared in January 2009 by
Table of Contents

 3    Executive Summary
 5    Background
 7    Purpose of this Study
 7    Study Methodology & Scope
 9    Findings - Overall ROI Results
12    Findings – Consumer Satisfaction
14	   Findings	–	Brand	Affinity	and	Loyalty
16    Findings – Advocacy and Word of Mouth
17    Results Summary
18    Implications & Concluding Thoughts
20    Appendices
       a. Footnotes/References
       b. Survey Questions
PAGE 3 OF 24




      Executive Summary
      Powered creates social marketing programs that help brands connect and build
      relationships with their customers through managed online communities. Unlike other
      marketing programs, online communities allow businesses to engage with customers
      through a combination of expert content and online community interactions. Throughout
      the Customer Lifecycle - from Awareness to Advocacy – clients achieve measureable
      results with real-time data and insights. Powered’s managed online communities
      provide the benefits of social networking with engagement marketing, which result in a
      high conversion to product purchase, greater affinity for the brand and key insights into
      consumer behaviors.

      Since 1999 Next Century Media (NCM) Global has been focused on measuring the
      advertising effectiveness of non-traditional advertising approaches. NCM conducted
      its first study of Powered social marketing programs in 2006 and found that Powered
      communities delivered an average of $55 for every $1 invested by the brand.

      In this year’s study – using the same methodology – Powered
      communities delivered an average of $60 for every $1 invested,
      a 10% increase.

      The dollar return was calculated by aggregating the self-reported dollars spent by
      consumers on the sponsor’s brand since engaging with the Powered community.


                   YEAR OVER YEAR ROI COMPARISON OF ALL ADVERTISERS
      65
                                                      63


                                                                                    60
      60
ROI
                       55
      55



      50
                      2006                          2007                          2008

      From 2006 to 2008, the ROI of Powered social marketing sites has increased by 10%.
      These ROIs have consistently outperformed the Direct Marketing Association and
      Marketing Management Analytics ROI estimates for all of direct marketing1 and
      non-CPG mass media advertising2 for the past 3 years NCM has conducted this study.


                 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
PAGE 4 OF 24



In addition to the ROI results, some of the most significant findings attributed to
Powered’s online communities for 2008 include:

▪ Purchase Intent: Two-thirds of the respondents stated they were more likely to
  purchase to sponsoring brands products and/or services as a direct result of the
  learning experience offered in the community.

▪ Brand Affinity: Two-thirds of respondents indicated an improved brand perception
  of the sponsoring brand.

▪ Brand Loyalty: 63% of respondents stated that they had a more positive opinion of
  the sponsoring brand.

These findings come at a time when the marketing industry stands at a crossroads,
questioning all of its existing approaches, and seeking solid footing with which to go
forward. The rapidly-evolving future is changing everything we used to know about
media and about consumers.

The broader implication of these findings when viewed in the context of all of the studies3
conducted by NCM since 1999 is that marketing approaches which give something of
value to consumers without asking anything in return, appear to form a very promising
class of persuasive communications. These types of programs could provide part of the
solution marketers are seeking with which to navigate into the future. NCM has referred
to this class of communications as “True Sponsorship”.




           2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
PAGE 5 OF 24




Background
Powered provides a solution that enables brands to apply the principles of social
networking and engagement marketing to the consumer purchase process. In the
Powered approach, the brand offers consumers a site that combines managed online
communities with education oriented experiences related to a brand’s products. The site
is an extension of the core brand site. Or, the site may also be sponsored by a brand on
a publisher’s site. The consumer is offered – for free - a variety of text based and rich
media education-oriented content experiences, and has the option to ask questions of
experts and peers, gain knowledge through the opinions of others, and engage with
the brand for periods of minutes to hours – with interactions typically stretching
over a period of weeks. The brand’s products may be used as an instructional part
of the experience - e.g. their camera is used to instruct consumers on more effective
digital photography techniques. This is akin to product placement but differs from
most instances of the latter in that the product appearance has an essential function
within the content/consumer experience itself. In any case this form of marketing
communications must be regarded as “soft sell.” NCM has found in recent years that “soft
sell” approaches to persuasive marketing communications have a much higher average
efficacy as compared with traditional advertising. We hypothesize that this is related to a
number of factors:

1. Consumers have become increasingly skeptical of advertising, stemming back at least
   to the 1957 publication of Vance Packard’s book The Hidden Persuaders if not starting
   even earlier than that.

2. The amount of advertising has been increasing. For example, in television, there
   had been one sponsor per program in 1957. Whereas today the consumer sees 28
   commercials per viewing hour. It has been estimated the average consumer sees
   thousands of messages per day in media and public spaces. The reality is lower than
   that, but nevertheless an imposing number.4 The volume of messages has increased
   the degree to which consumers actively screen anything perceived as advertising.

3. The consumer’s distrust of advertising today is part of a larger cynicism and doubt of
   all large organizations including corporations and governments. The term “conspiracy
   theory” has become prevalent.

4. When an advertiser steps away from the expectations raised by the environment just
   described, NCM hypothesizes that there is a heightened likelihood the advertiser will
   be cognitively “let in” and also creates a positive surprise effect5. When something
   does not look like typical advertising it is able to get through the perceptual filter.




           2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
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NCM became interested in Powered as a result of NCM’s studies of True Sponsorship.
True Sponsorship is defined as a form of marketing communication involving content
brought to the consumer by the advertiser and the absence of ads in their traditional
form. In a series of over 30 studies to date6, NCM has found a consistent pattern of
exceptionally high advertising effectiveness for True Sponsorship, hence NCM’s interest
in Powered. NCM’s hypothesis is that Powered would also exhibit a high level of
effectiveness.

Because many of Powered’s clients are involved with considered purchase products,
where self-reported purchase data are highly accurate and accepted as such, NCM
proposed a series of annual studies in which the actual ROI of Powered programs would
be measured by use of consumer self-reported data.

NCM conducted its first study7 of Powered Return on Investment for its clients in 2006,
covering Powered programs for clients which ran in 2005. This is a report on Powered
social marketing programs which ran in 2008. This report contains results not only in
terms of ROI but also supplementary findings regarding consumer satisfaction, intention
to reuse the brand/Powered offering, probability of recommending the brand to others,
and other ancillary measures.




          2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
PAGE 7 OF 24




Purpose of this Study
The purpose of this study is twofold:

1. To apprise Powered’s clients of their return on investments in Powered’s social
   marketing programs.

2. To continue investigations of non-traditional advertising approaches so as to equip
   the marketing community with the best information from which to create the most
   effective marketing programs in the immediate future.



Study Methodology & Scope
In 2007, nearly a million people opted-in to Powered’s managed online community sites.
These sites aggregately received over 12 million visits in 2007. Therefore the opt-ins
represent a little over 8% of visits. The surveys used were administered to coincide with
the conclusion of the experience, generally 6-8 weeks into the experience. Of those who
opted in, 11.2% - or nearly 112,183 people - completed the survey.

Two important questions asked in these surveys were “Did you make a purchase
as a direct result of taking this course?” and “If you purchased product(s), what
was the approximate dollar amount of your purchase?” In 2007, the Powered client
segments included in the study were personal computer manufacturers, financial
services companies, retailers, publishers, office products and consumer electronics
manufacturers. The sites related to how to get the best use out of specific products (e.g.
one of the categories in the study was digital photography.) Each survey provided an
appropriate scale of dollar ranges for filling in the multiple choice question regarding
amount spent. For example, “Less than $100”, “$100-$499”, etc.

Per standard marketing research practice, in tabulating the results of these questions the
midpoint price within each range was assumed, so that for “Less than $100” the assumed
average price was $50, and so on. The top scale point was always “Greater than” a certain
price, e.g. “Greater than $2500”, and here the NCM tabulation assumption was that the
average price was 20% above that parameter, e.g. 20% higher than $2500 i.e. $3000.
This assumption is consistent with industry practice in the tabulation of such questions.

Since these surveys were completed 6-8 weeks into the experience, some purchases
would have been made after the surveys were collected, and these purchase effects
are therefore not reflected. The ensuing ROI estimates are therefore deflated relative
to probable reality. This is backed up by the survey data: the group already making a
purchase was 26.3% of respondents. The group answering “yes” to the question “Do you


           2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
PAGE 8 OF 24



plan to purchase (from the sponsor) in the next 12 months” was 27.0% of respondents.
The latter group was not included in the ROI calculation. If they had been included the
ROI estimates for social marketing would be 2X times higher than shown below.

For the most part, the categories in the study are a considered purchase made relatively
infrequently. The consumer generally remembers the price paid with high accuracy for
some time thereafter. If on average the purchase was made halfway into the 6-8 week
period, then the data were collected on average less than a month after the purchase was
made. We would expect that the great majority of consumers checked the right box in
terms of amount spent.

The findings for survey respondents were projected to total enrollments using the ratio of
survey respondents to enrollees for the particular course. Since 11.2% of enrollees were
survey respondents, the average projection factor was the ratio of 100 to 11.2 or 8.93.
This varied slightly by individual course. ROI is defined in this analysis as incremental
short term sales revenues divided by investment through Powered.




           2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
PAGE 9 OF 24




      Findings – Overall ROI Results
      Powered social marketing sites yielded a 60:1 ROI, which is a
      10% increase from the first year’s 55:1 ROI benchmark.

      The Direct Marketing Associations 2005 Economic Impact Study states “For 2005, an
      investment of $1 in DM ad expenditures will return, on average, $11.49 in incremental
      revenue across all industries.” This is close to one sixth of the ROI of Powered social
      marketing sites.

                       60:1
      60

      50                                               ROI COMPARISON BY
                                                       MARKETING PROGRAM
      40
ROI
      30

      20
                                                     11:1
      10
                                                                                   2:1

              Powered Social                 Direct Marketing              Media Advertising
             Marketing Programs                  Programs                     Programs


      A more telling comparison relates to “non-direct response” advertising. Erwin Ephron
      and Gerry Pollak published the most extensive analysis of media advertising ROI, based
      on marketing mix modeling conducted by Marketing Management Analytics, the leading
      supplier in the field. Forty-five brands were covered, of which 25 were packaged goods
      brands. These 45 brands represent aggregate annual media advertising spend of $777
      million. The average ROI across the 45 brands is 1.93:1.

      Probably the most relevant comparison is to non-CPG and here
      the ROI of Powered social marketing sites is close to 30X that of
      non-CPG paid media advertising (non direct response).

      Category       # Brands      Media Dollars       Incremental Sales Dollars         ROI
      Non-CPG        20            $547,341,687        $1,226,041,600                    2.24:1
      CPG            25            $229,367,528        $270,654,200                      1.18 :1
                     45            $776,709,215        $1,496,695,800                    1.93:1




                 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
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      ROI Comparison by Brand and Program Longevity
      In all findings below, NCM has masked the identity of Powered’s clients to protect
      proprietary information. The ROI achieved by each brand varied primarily due to two
      factors: the length of time the brand has their managed online community running and
      the commitment by the brand to reach out to consumers to drive traffic to their site.


      140     133.3
                                                 ROI COMPARISON BY BRAND
      120
      100
      80
ROI
      60
      40
      20                    13.9              12.1              8.56
                                                                                4.24           2.73          2.31
               A                B              C                 D               E              F             G
                                                   POWERED’S CLIENTS


      Long-Term Programs are branded online communities that were included in all three
      ROI studies conducted by NCM from 2006-2008. These programs represent the longest
      running communities across all brands. The results would indicate that the longer an
      online community is sustained, the higher the ROI achieved.



                        ROI PROGRAM COMPARISON BY PROGRAM LONGEVITY

      120                                                                 113

      100

       80
ROI                                                                                                          66
                                                           63                                  60
       60          55


       40                           37


       20

                         2006                                   2007                                  2008
                                         All Advertisers               Long-term Advertisers




                2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
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Purchase Intent Positively Influenced
In addition to these social marketing programs driving a compelling ROI and purchase
conversion rates, purchase intent is positively influenced. Two-thirds of survey
respondents stated they were more likely to purchase the sponsoring brands products
and/or services as a direct result of the learning experience offered in the community.



HOW DID THIS EXPERIENCE AFFECT YOUR LIKELIHOOD TO PURCHASE?
Likelihood                                             Respondents
More Likely to Purchase                                15,644                65.72%
Neither More or Less                                   6,749                 28.35%
Not Sure                                               894                   3.76%
Less Likely to Purchase                                516                   2.17%
                                                       23,803                100%




           2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
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Findings – Consumer Satisfaction
In the Powered approach, the brand offers consumers a site that combines managed
online communities with education oriented experiences related to a brand’s products.
The consumer is offered – for free - a variety of text based and rich media education-
oriented content experiences, and has the option to ask questions of experts and peers,
gain knowledge through the opinions of others, and engage with the brand for periods of
minutes to hours – with interactions typically stretching over a period of weeks.

Survey respondents that participated in these online communities were highly satisfied
with the content experience on the site. In the past 3 studies, satisfaction scores among
survey respondents consistently averaged over 90% extremely and somewhat satisfied,
indicating that True Sponsorship as represented in the Powered approach is a highly
effective form of marketing communication.

94% were Extremely or Somewhat Satisfied with the Overall
Content.
HOW SATISFIED WERE YOU WITH THE OVERALL CONTENT?
Level of Satisfaction                                  Respondents
Extremely	Satisfied                                    70,161                69.87%
Somewhat	Satisfied                                     23,773                23.67%
Neither                                                3,675                 3.66%
Somewhat	Dissatisfied                                  1,659                 1.65%
Extremely	Dissatisfied                                 831                   0.83%
Not Sure                                               320                   0.32%
                                                       100,420               100%

93% were Extremely or Somewhat Satisfied with the Educational
Content.
HOW SATISFIED WERE YOU WITH THE EDUCATIONAL CONTENT?
Level of Satisfaction                                  Respondents
Extremely	Satisfied                                    5,612                 61.05%
Somewhat	Satisfied                                     2,981                 32.43%
Neither                                                388                   4.22%
Somewhat	Dissatisfied                                  145                   1.58%
Extremely	Dissatisfied                                 34                    0.37%
Not Sure                                               33                    0.36%
                                                       9,193                 100%

           2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
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92% Rate the Content as Excellent, Very Good, or Good.

HOW WOULD YOU RATE THE OVERALL CONTENT?
Rating                                             Respondents
Excellent                                          1,003             34.74%
Very Good                                          1,137             39.38%
Good                                               526               18.22%
Fair                                               125               4.33%
Poor                                               32                1.11%
Don’t Know                                         64                2.22%
                                                   2,887             100%




            2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
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Findings	–	Brand	Affinity	and	Loyalty	
Positively	Influenced
Two-thirds of the survey respondents indicated that the Powered online community
experience had improved their impression of the sponsoring brand. Nearly as high a
percentage, 63%, responded that they had a more positive opinion of the sponsoring
brand.


I HAVE A MORE FAVORABLE IMPRESSION OF THE BRAND.
Level of Agreement                                  Respondents
Strongy Agree                                       41                   25.62%
Agree                                               65                   40.63%
Neither Agree or Disagree                           41                   25.62%
Disagree                                            6                    3.75%
Strongly Disagree                                   0                    0.00%
Not Sure                                            7                    4.38%
                                                    160                  100%



HOW DID THIS EXPERIENCE AFFECT YOUR OPINION OF THE BRAND?
Change of Opinion                                   Respondents
More Positive View                                  41                   25.62%
Had No Effect                                       65                   40.63%
Not Sure                                            41                   25.62%
Less Positive View                                  6                    3.75%
                                                    160                  100%




           2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
PAGE 15 OF 24



Powered’s social marketing programs not only yield high satisfaction and brand affinity
scores, these sites help build brand loyalty by driving repeat visits and community
participation. Close to 95% of survey respondents would visit the site they attended
again and 96% would participate in another Powered online community.


WILL YOU PARTICIPATE IN THE LEARNING EXPERIENCE AGAIN?
 Likelihood                                            Respondents
 Definitely	Would                                      51,367               78.51%
 Probably Would                                        11,407               17.43%
 Might or Might Not                                    2,062                3.15%
 Probably Would Not                                    350                  0.53%
 Definitely	Would	Not                                  192                  0.29%
 Don’t Know                                            53                   0.08%
                                                       65,431               100%




HOW LIKELY ARE YOU TO VISIT AGAIN?
Likelihood                                             Respondents
Definitely	Will	Visit                                  2,463                83.78%
Probably Will Visit                                    316                  10.75%
Might or Might Not                                     82                   2.79%
Probably Will Not Visit                                40                   1.36%
Definitely	Will	Not	Visit                              39                   1.33%
                                                       65,431               100%




          2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
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Findings – Advocacy and Word
of Mouth
As stated previously, the ROI achieved by each brand in this study varied primarily due
to two factors, one of which is the commitment by the brand to reach out to consumers
to drive traffic to their site. One KPI for online communities is organic growth, e.g.
community member growth through word of mouth recommendations. With the
Powered approach, over 92% of survey respondents indicated they would recommend the
site to a friend, while close to 85% would recommend the sponsoring brand to friends.


WOULD YOU RECOMMEND THIS EXPERIENCE TO A FRIEND?
Likelihood                                            Respondents
Definitely	Would                                      47,299               69.16%
Probably Would                                        15,680               22.93%
Might or Might Not                                    3,542                5.18%
Probably Would Not                                    1,201                1.76%
Definitely	Would	Not                                  585                  0.86%
Don’t Know                                            81                   0.12%
                                                      68,388               100%




WOULD YOU RECOMMEND THE BRAND TO A FRIEND?
Likelihood                                            Respondents
Definitely	Would                                      8,369                55.07%
Probably Would                                        4,535                29.84%
Might or Might Not                                    1,847                12.15%
Probably Would Not                                    313                  2.06%
Definitely	Would	Not                                  126                  0.83%
Don’t Know                                            7                    0.05%
                                                      15,197               100%




          2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
PAGE 17 OF 24




Results Summary
▪ Powered social marketing sites yielded a 60:1 ROI, which is a 10% increase from the
  first year’s 55:1 ROI benchmark.

▪ Consistently for 3 years the ROI of Powered social marketing programs (60:1) has
  significantly outperformed the Direct Marketing Association (11:1) and Marketing
  Management Analytics (2:1) ROI estimates for all of direct marketing8 and non-CPG
  mass media advertising.9

▪ Nearly one million people opted-in to Powered’s managed online community sites,
  which aggregately received over 12 million visits in 2007.

▪ The average opt-in rate for a Powered online community is a little over 8% of total site
  visits.

▪ Of those consumers who opted in, 11.2% - or nearly 112,183 people - completed the
  survey.

▪ Two-thirds of survey respondents stated they were more likely to purchase the
  sponsoring brands products and/or services as a direct result of the learning experience
  offered in the community.

▪ Two-thirds of survey respondents indicated that the Powered online community
  experience had improved their impression of the sponsoring brand.

▪ Nearly 63% of survey respondents stated they had a more positive opinion of the
  sponsoring brand as a result of the experience.

▪ Close to 95% of survey respondents would visit the site they attended again and 96%
  would participate in another Powered online community.

▪ Over 92% of survey respondents that participated in a Powered online community
  would recommend the site to a friend, while close to 85% would recommend the
  sponsoring brand to friends.

▪ For the past 3 years, satisfaction scores among survey respondents consistently
  averaged over 90% extremely and somewhat satisfied.
      ▪ 94% were extremely or somewhat satisfied with the overall content.
      ▪ 93% were extremely or somewhat satisfied with the educational content.
      ▪ 92% rated the content as excellent, very good, or good.



           2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
PAGE 18 OF 24




Implications & Concluding Thoughts
Powered appears to be a reliable investment for marketers based on the 22 programs
studied in the last three years. The ROI returns from Powered’s social marketing
programs are virtually always above industry norms. Marketers are advised to study
their target consumers and to learn what kinds of social marketing and web experiences
they would likely value the most, and to test those experiences. Using the Internet and
use of Powered are very likely the most efficient and effective way of doing so, given that
Powered has created a process and has gained valuable know-how in the practice.

Social marketing as a relatively new non-traditional form of persuasive marketing
communications is widely misunderstood. Most advertising and marketing executives
assume that the term relates mainly to content generated by consumers. In fact,
according to Forrester13, content generated by a person’s favorite brand has more effect
upon that person than content generated by other consumers. This is a significant
finding because in the history of word of mouth measurement14, before the existence of
social marketing there was never an instance where consumers were more influenced by
communications from brands than from disinterested parties i.e. friends and relatives.

Beyond social marketing, marketers ought to carefully investigate and test every
practical means of befriending consumers by new and established forms of marketing
communications which do not involve straight advertising. This includes True
Sponsorship in all its forms i.e. entertainment programs as well as educational ones,
in all media; cause marketing; service advertising (e.g. helping the consumer to know
which products to buy and how to use them); sponsored games; sponsored processes
supporting consumer generated media; and new forms which no one has thought of yet.

This area is fertile ground for the imaginations of the agencies. Instead of beginning to
disappear - as oft opined in the trade press – they could be entering the most promising
period they have ever faced.

The Advertising Research Foundation (ARF) in 2008 published a study of experiential
marketing – a form of offline social media commonly known as trade events. Many of
the learnings from this study also apply to Powered and to all of the other forms of non-
traditional marketing which involve soft sell approaches to befriending consumers.

The following quote from the study shows the high degree of alignment between ARF’s
derived best practices for event marketing with Powered’s approach of a managed online
community model in the web social media space:




           2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
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The importance of motivating positive, non-threatening interpersonal
experiences at the event cannot be underestimated – informing vs. hard
selling; educating rather than telling; helping rather than aggressively
pushing decisions, etc.: “Threat” leads us to be wary, constrained, inhibited, and
defensive, which tends to make us hold back so as not to increase the danger or make
a fool of ourselves. Such a state of mind interferes with risk taking, trust, and smooth
cognitive functioning.12

As this report is being prepared, the industry trades are running stories about major
companies such as Kraft and Unilever who are said to be considering selling off up to
half of their brands because they are no longer growing. These are brands that could be
acquired by other companies for sums in the billions of dollars. From a macroeconomic
point of view, simply transferring those brands to new ownership does not result in any
economic improvement. Instead, what if the present owners of these brands tested new
means of re-positioning those brands in the minds of consumers? The very nature of
brands is that they really exist in the minds of consumers. Changing the way consumers
view a brand may be far less costly than previously imagined, and far more lucrative.
Instead of just testing interruptive ads in new media, and the like, we as an industry
ought to be doing more testing, in all media new and old, of the soft sell.




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Appendices
A – References

1
  Direct Marketing Association (DMA) 2005 Economic Impact Study, Peter A. Johnson,
PH.D., pjohnson@the-dma.org.
2
   MMA: “Finding The Other Half” by Erwin Ephron and Gerry Pollak, Ephron On Media
website archive.
3
   Harvey, Gray, and Despain, “Measuring the Effectiveness of True Sponsorship”,
Advertising Research Foundation Journal of Advertising Research, Vol. 46, No. 4,
December 2006.
4
   Assuming an average Cost Per Thousand impressions across all media of $10.00, the
U.S. advertising volume of $285,106,000,000 (Advertising Age compilation of Robert
J. Coen McCann-Erickson and TNS CMR 2006 data, June 25, 2007) implies a total of
28.51 trillion impressions per annum in the U.S. Relating this to the total U.S. population
of 301,967,681 (source: World News Network) one derives a daily estimate of 259
impressions per person, much lower than the often quoted statistics which range from
2000 per day to 6000 per day, but still hefty.
5
   Surprise is possibly a more important psychological phenomenon than one might
suppose. When information falling upon the senses deviates from the expected model
in one’s brain, a characteristic brain wave known as the P300 wave is detected. NCM
in other work relating to behavioral targeting has uncovered potential evidence that
surprise may be an important factor in advertising effectiveness; the eye camera records
more noticing of ads found in websites where one would not expect to see an ad for that
product type. The Advertising Research Foundation’s former Chief Research Officer Joe
Plummer has identified as probable drivers of advertising engagement: surprise, utility,
and emotional bonding.
6
   Harvey et al, ibid.
7
   “Consumer Education Produces High ROI”, report, Next Century Media, May 5, 2006.
8
   DMA, ibid.
9
   MMA, ibid.
10
    MMA, ibid.
11
    DMA, ibid.
12
    “Experiential Marketing: A Master of Engagement: Research on How Engaging Events
Pay”, Raymond Pettit, PhD, William Cook, PhD, Dan Belmont, Inna Sokolyanskaya, ARF
Event Engagement Consortium Study Findings, January, 2008
13
    “Brand Matters to Socially Connected Consumers: Brand Content Trumps Peers in
Influence”, Lisa Bradner, report, Forrester, November 17, 2008
14
    Day, George S., “Attitude Change and the Relative Influence of Media and Word-Of-
Mouth Sources.” In Jagdish N. Sheth (ed.), Models of Buyer Behavior: Conceptual,
Quantitative, and Empirical. New York: Harper & Row, 1974




           2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
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B – Survey Questions

1. How would you rate the overall content?
  A. Excellent
  B. Very Good
  C. Good
  D. Fair
  E. Poor
  F. Don’t know

2. How satisfied were you with the content overall?
  A. Extremely satisfied
  B. Somewhat satisfied
  C. Neither satisfied nor dissatisfied
  D. Somewhat dissatisfied
  E. Extremely dissatisfied
  F. Not sure

3. How satisfied were you with the educational content?
  A. Extremely satisfied
  B. Somewhat satisfied
  C. Neither satisfied nor dissatisfied
  D. Somewhat dissatisfied
  E. Extremely dissatisfied
  F. Not sure

4. Based on this experience, how likely are you to visit in the future?
  A. Definitely will visit
  B. Probably will visit
  C. Might or might not visit
  D. Probably will not visit
  E. Definitely would not visit
  F. Not sure

5. Would you participate in the experience again?
  A. Definitely would
  B. Probably would
  C. Might or might not
  D. Probably would not
  E. Definitely would not
  F. Don’t know




         2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
PAGE 22 OF 24



6. I have a more favorable impression of the brand.
  A. Strongly agree
  B. Agree
  C. Neither agree nor disagree
  D. Disagree
  E. Strongly disagree
  F. I don’t know

7. How did this experience affect your opinion of the brand as a company?
  A. Gave me a more positive view of the brand
  B. Gave me a less positive view of the brand
  C. Had no effect
  D. Not sure

8. Would you recommend this experience to a family member, friend or co-
worker?
  A. Definitely would recommend
  B. Probably would recommend
  C. Might or might not recommend
  D. Probably would not recommend
  E. Definitely would not recommend
  F. Don’t know

9. Based on this experience; would you recommend the brand to a family
member, friend or co-worker?
  A. Definitely would recommend
  B. Probably would recommend
  C. Might or might not recommend
  D. Probably would not recommend
  E. Definitely would not recommend
  F. Don’t know

10. How did this experience affect your likelihood to buy products/use
services from the brand?
  A. I am more likely to purchase
  B. I am less likely to purchase
  C. I am neither more nor less likely to purchase
  D. Not sure




         2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
PAGE 23 OF 24




11. What products, if any, did you purchase as a result of this experience?
(Please select all that apply.)
  A. Not applicable, I did not purchase a from the brand as a result of this experience
  B. Product A
  C. Product B
  D. Product C
  E. Product D
  F. Product E
  G. Product F
  H. Product G
  K. Other

12. What was the approximate total dollar amount of the product(s) you
purchased, above?
  A. Not applicable, I did not purchase a product as a result
  B. Less than $100
  C. $100 to $249
  D. $250 to $499
  E. $500 to $999
  F. $1,000 to $1,999
  G. $2,000 or more

13. Where did you purchase the product(s)?
  A. Not applicable, I did not purchase a product as a result
  B. Online at brand’s web site
  C. Online elsewhere
  D. At a brand retail store
  E. At another retail store
  F. Through brand’s 1-800 number
  G. Over the phone via another 1-800 number
  H. Other

14. What is the main reason you did not purchase a product as a result of
this experience?
  A. Not applicable, I purchased a product
  B. I already had what I needed
  C. I don’t have the budget for any new product(s) at this time
  D. I did not see any product that I wanted to purchase
  E. I bought another brand
  F. I do not plan to buy anything now, but I plan to buy a product in the future
  G. Other
  H. Not sure


           2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
206 E. Ninth Street, 14th Floor, Austin, TX 78701
    512-682-3200 / Toll Free 866-682-3200

Business Development: bizdev@powered.com
  General Info: information@powered.com
      Press Inquiries: pr@powered.com

             www.powered.com

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2008 Powered Roi Report Final

  • 1. 2008 SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE Prepared in January 2009 by
  • 2. Table of Contents 3 Executive Summary 5 Background 7 Purpose of this Study 7 Study Methodology & Scope 9 Findings - Overall ROI Results 12 Findings – Consumer Satisfaction 14 Findings – Brand Affinity and Loyalty 16 Findings – Advocacy and Word of Mouth 17 Results Summary 18 Implications & Concluding Thoughts 20 Appendices a. Footnotes/References b. Survey Questions
  • 3. PAGE 3 OF 24 Executive Summary Powered creates social marketing programs that help brands connect and build relationships with their customers through managed online communities. Unlike other marketing programs, online communities allow businesses to engage with customers through a combination of expert content and online community interactions. Throughout the Customer Lifecycle - from Awareness to Advocacy – clients achieve measureable results with real-time data and insights. Powered’s managed online communities provide the benefits of social networking with engagement marketing, which result in a high conversion to product purchase, greater affinity for the brand and key insights into consumer behaviors. Since 1999 Next Century Media (NCM) Global has been focused on measuring the advertising effectiveness of non-traditional advertising approaches. NCM conducted its first study of Powered social marketing programs in 2006 and found that Powered communities delivered an average of $55 for every $1 invested by the brand. In this year’s study – using the same methodology – Powered communities delivered an average of $60 for every $1 invested, a 10% increase. The dollar return was calculated by aggregating the self-reported dollars spent by consumers on the sponsor’s brand since engaging with the Powered community. YEAR OVER YEAR ROI COMPARISON OF ALL ADVERTISERS 65 63 60 60 ROI 55 55 50 2006 2007 2008 From 2006 to 2008, the ROI of Powered social marketing sites has increased by 10%. These ROIs have consistently outperformed the Direct Marketing Association and Marketing Management Analytics ROI estimates for all of direct marketing1 and non-CPG mass media advertising2 for the past 3 years NCM has conducted this study. 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
  • 4. PAGE 4 OF 24 In addition to the ROI results, some of the most significant findings attributed to Powered’s online communities for 2008 include: ▪ Purchase Intent: Two-thirds of the respondents stated they were more likely to purchase to sponsoring brands products and/or services as a direct result of the learning experience offered in the community. ▪ Brand Affinity: Two-thirds of respondents indicated an improved brand perception of the sponsoring brand. ▪ Brand Loyalty: 63% of respondents stated that they had a more positive opinion of the sponsoring brand. These findings come at a time when the marketing industry stands at a crossroads, questioning all of its existing approaches, and seeking solid footing with which to go forward. The rapidly-evolving future is changing everything we used to know about media and about consumers. The broader implication of these findings when viewed in the context of all of the studies3 conducted by NCM since 1999 is that marketing approaches which give something of value to consumers without asking anything in return, appear to form a very promising class of persuasive communications. These types of programs could provide part of the solution marketers are seeking with which to navigate into the future. NCM has referred to this class of communications as “True Sponsorship”. 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
  • 5. PAGE 5 OF 24 Background Powered provides a solution that enables brands to apply the principles of social networking and engagement marketing to the consumer purchase process. In the Powered approach, the brand offers consumers a site that combines managed online communities with education oriented experiences related to a brand’s products. The site is an extension of the core brand site. Or, the site may also be sponsored by a brand on a publisher’s site. The consumer is offered – for free - a variety of text based and rich media education-oriented content experiences, and has the option to ask questions of experts and peers, gain knowledge through the opinions of others, and engage with the brand for periods of minutes to hours – with interactions typically stretching over a period of weeks. The brand’s products may be used as an instructional part of the experience - e.g. their camera is used to instruct consumers on more effective digital photography techniques. This is akin to product placement but differs from most instances of the latter in that the product appearance has an essential function within the content/consumer experience itself. In any case this form of marketing communications must be regarded as “soft sell.” NCM has found in recent years that “soft sell” approaches to persuasive marketing communications have a much higher average efficacy as compared with traditional advertising. We hypothesize that this is related to a number of factors: 1. Consumers have become increasingly skeptical of advertising, stemming back at least to the 1957 publication of Vance Packard’s book The Hidden Persuaders if not starting even earlier than that. 2. The amount of advertising has been increasing. For example, in television, there had been one sponsor per program in 1957. Whereas today the consumer sees 28 commercials per viewing hour. It has been estimated the average consumer sees thousands of messages per day in media and public spaces. The reality is lower than that, but nevertheless an imposing number.4 The volume of messages has increased the degree to which consumers actively screen anything perceived as advertising. 3. The consumer’s distrust of advertising today is part of a larger cynicism and doubt of all large organizations including corporations and governments. The term “conspiracy theory” has become prevalent. 4. When an advertiser steps away from the expectations raised by the environment just described, NCM hypothesizes that there is a heightened likelihood the advertiser will be cognitively “let in” and also creates a positive surprise effect5. When something does not look like typical advertising it is able to get through the perceptual filter. 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
  • 6. PAGE 6 OF 24 NCM became interested in Powered as a result of NCM’s studies of True Sponsorship. True Sponsorship is defined as a form of marketing communication involving content brought to the consumer by the advertiser and the absence of ads in their traditional form. In a series of over 30 studies to date6, NCM has found a consistent pattern of exceptionally high advertising effectiveness for True Sponsorship, hence NCM’s interest in Powered. NCM’s hypothesis is that Powered would also exhibit a high level of effectiveness. Because many of Powered’s clients are involved with considered purchase products, where self-reported purchase data are highly accurate and accepted as such, NCM proposed a series of annual studies in which the actual ROI of Powered programs would be measured by use of consumer self-reported data. NCM conducted its first study7 of Powered Return on Investment for its clients in 2006, covering Powered programs for clients which ran in 2005. This is a report on Powered social marketing programs which ran in 2008. This report contains results not only in terms of ROI but also supplementary findings regarding consumer satisfaction, intention to reuse the brand/Powered offering, probability of recommending the brand to others, and other ancillary measures. 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
  • 7. PAGE 7 OF 24 Purpose of this Study The purpose of this study is twofold: 1. To apprise Powered’s clients of their return on investments in Powered’s social marketing programs. 2. To continue investigations of non-traditional advertising approaches so as to equip the marketing community with the best information from which to create the most effective marketing programs in the immediate future. Study Methodology & Scope In 2007, nearly a million people opted-in to Powered’s managed online community sites. These sites aggregately received over 12 million visits in 2007. Therefore the opt-ins represent a little over 8% of visits. The surveys used were administered to coincide with the conclusion of the experience, generally 6-8 weeks into the experience. Of those who opted in, 11.2% - or nearly 112,183 people - completed the survey. Two important questions asked in these surveys were “Did you make a purchase as a direct result of taking this course?” and “If you purchased product(s), what was the approximate dollar amount of your purchase?” In 2007, the Powered client segments included in the study were personal computer manufacturers, financial services companies, retailers, publishers, office products and consumer electronics manufacturers. The sites related to how to get the best use out of specific products (e.g. one of the categories in the study was digital photography.) Each survey provided an appropriate scale of dollar ranges for filling in the multiple choice question regarding amount spent. For example, “Less than $100”, “$100-$499”, etc. Per standard marketing research practice, in tabulating the results of these questions the midpoint price within each range was assumed, so that for “Less than $100” the assumed average price was $50, and so on. The top scale point was always “Greater than” a certain price, e.g. “Greater than $2500”, and here the NCM tabulation assumption was that the average price was 20% above that parameter, e.g. 20% higher than $2500 i.e. $3000. This assumption is consistent with industry practice in the tabulation of such questions. Since these surveys were completed 6-8 weeks into the experience, some purchases would have been made after the surveys were collected, and these purchase effects are therefore not reflected. The ensuing ROI estimates are therefore deflated relative to probable reality. This is backed up by the survey data: the group already making a purchase was 26.3% of respondents. The group answering “yes” to the question “Do you 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
  • 8. PAGE 8 OF 24 plan to purchase (from the sponsor) in the next 12 months” was 27.0% of respondents. The latter group was not included in the ROI calculation. If they had been included the ROI estimates for social marketing would be 2X times higher than shown below. For the most part, the categories in the study are a considered purchase made relatively infrequently. The consumer generally remembers the price paid with high accuracy for some time thereafter. If on average the purchase was made halfway into the 6-8 week period, then the data were collected on average less than a month after the purchase was made. We would expect that the great majority of consumers checked the right box in terms of amount spent. The findings for survey respondents were projected to total enrollments using the ratio of survey respondents to enrollees for the particular course. Since 11.2% of enrollees were survey respondents, the average projection factor was the ratio of 100 to 11.2 or 8.93. This varied slightly by individual course. ROI is defined in this analysis as incremental short term sales revenues divided by investment through Powered. 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
  • 9. PAGE 9 OF 24 Findings – Overall ROI Results Powered social marketing sites yielded a 60:1 ROI, which is a 10% increase from the first year’s 55:1 ROI benchmark. The Direct Marketing Associations 2005 Economic Impact Study states “For 2005, an investment of $1 in DM ad expenditures will return, on average, $11.49 in incremental revenue across all industries.” This is close to one sixth of the ROI of Powered social marketing sites. 60:1 60 50 ROI COMPARISON BY MARKETING PROGRAM 40 ROI 30 20 11:1 10 2:1 Powered Social Direct Marketing Media Advertising Marketing Programs Programs Programs A more telling comparison relates to “non-direct response” advertising. Erwin Ephron and Gerry Pollak published the most extensive analysis of media advertising ROI, based on marketing mix modeling conducted by Marketing Management Analytics, the leading supplier in the field. Forty-five brands were covered, of which 25 were packaged goods brands. These 45 brands represent aggregate annual media advertising spend of $777 million. The average ROI across the 45 brands is 1.93:1. Probably the most relevant comparison is to non-CPG and here the ROI of Powered social marketing sites is close to 30X that of non-CPG paid media advertising (non direct response). Category # Brands Media Dollars Incremental Sales Dollars ROI Non-CPG 20 $547,341,687 $1,226,041,600 2.24:1 CPG 25 $229,367,528 $270,654,200 1.18 :1 45 $776,709,215 $1,496,695,800 1.93:1 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
  • 10. PAGE 10 OF 24 ROI Comparison by Brand and Program Longevity In all findings below, NCM has masked the identity of Powered’s clients to protect proprietary information. The ROI achieved by each brand varied primarily due to two factors: the length of time the brand has their managed online community running and the commitment by the brand to reach out to consumers to drive traffic to their site. 140 133.3 ROI COMPARISON BY BRAND 120 100 80 ROI 60 40 20 13.9 12.1 8.56 4.24 2.73 2.31 A B C D E F G POWERED’S CLIENTS Long-Term Programs are branded online communities that were included in all three ROI studies conducted by NCM from 2006-2008. These programs represent the longest running communities across all brands. The results would indicate that the longer an online community is sustained, the higher the ROI achieved. ROI PROGRAM COMPARISON BY PROGRAM LONGEVITY 120 113 100 80 ROI 66 63 60 60 55 40 37 20 2006 2007 2008 All Advertisers Long-term Advertisers 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
  • 11. PAGE 11 OF 24 Purchase Intent Positively Influenced In addition to these social marketing programs driving a compelling ROI and purchase conversion rates, purchase intent is positively influenced. Two-thirds of survey respondents stated they were more likely to purchase the sponsoring brands products and/or services as a direct result of the learning experience offered in the community. HOW DID THIS EXPERIENCE AFFECT YOUR LIKELIHOOD TO PURCHASE? Likelihood Respondents More Likely to Purchase 15,644 65.72% Neither More or Less 6,749 28.35% Not Sure 894 3.76% Less Likely to Purchase 516 2.17% 23,803 100% 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
  • 12. PAGE 12 OF 24 Findings – Consumer Satisfaction In the Powered approach, the brand offers consumers a site that combines managed online communities with education oriented experiences related to a brand’s products. The consumer is offered – for free - a variety of text based and rich media education- oriented content experiences, and has the option to ask questions of experts and peers, gain knowledge through the opinions of others, and engage with the brand for periods of minutes to hours – with interactions typically stretching over a period of weeks. Survey respondents that participated in these online communities were highly satisfied with the content experience on the site. In the past 3 studies, satisfaction scores among survey respondents consistently averaged over 90% extremely and somewhat satisfied, indicating that True Sponsorship as represented in the Powered approach is a highly effective form of marketing communication. 94% were Extremely or Somewhat Satisfied with the Overall Content. HOW SATISFIED WERE YOU WITH THE OVERALL CONTENT? Level of Satisfaction Respondents Extremely Satisfied 70,161 69.87% Somewhat Satisfied 23,773 23.67% Neither 3,675 3.66% Somewhat Dissatisfied 1,659 1.65% Extremely Dissatisfied 831 0.83% Not Sure 320 0.32% 100,420 100% 93% were Extremely or Somewhat Satisfied with the Educational Content. HOW SATISFIED WERE YOU WITH THE EDUCATIONAL CONTENT? Level of Satisfaction Respondents Extremely Satisfied 5,612 61.05% Somewhat Satisfied 2,981 32.43% Neither 388 4.22% Somewhat Dissatisfied 145 1.58% Extremely Dissatisfied 34 0.37% Not Sure 33 0.36% 9,193 100% 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
  • 13. PAGE 13 OF 24 92% Rate the Content as Excellent, Very Good, or Good. HOW WOULD YOU RATE THE OVERALL CONTENT? Rating Respondents Excellent 1,003 34.74% Very Good 1,137 39.38% Good 526 18.22% Fair 125 4.33% Poor 32 1.11% Don’t Know 64 2.22% 2,887 100% 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
  • 14. PAGE 14 OF 24 Findings – Brand Affinity and Loyalty Positively Influenced Two-thirds of the survey respondents indicated that the Powered online community experience had improved their impression of the sponsoring brand. Nearly as high a percentage, 63%, responded that they had a more positive opinion of the sponsoring brand. I HAVE A MORE FAVORABLE IMPRESSION OF THE BRAND. Level of Agreement Respondents Strongy Agree 41 25.62% Agree 65 40.63% Neither Agree or Disagree 41 25.62% Disagree 6 3.75% Strongly Disagree 0 0.00% Not Sure 7 4.38% 160 100% HOW DID THIS EXPERIENCE AFFECT YOUR OPINION OF THE BRAND? Change of Opinion Respondents More Positive View 41 25.62% Had No Effect 65 40.63% Not Sure 41 25.62% Less Positive View 6 3.75% 160 100% 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
  • 15. PAGE 15 OF 24 Powered’s social marketing programs not only yield high satisfaction and brand affinity scores, these sites help build brand loyalty by driving repeat visits and community participation. Close to 95% of survey respondents would visit the site they attended again and 96% would participate in another Powered online community. WILL YOU PARTICIPATE IN THE LEARNING EXPERIENCE AGAIN? Likelihood Respondents Definitely Would 51,367 78.51% Probably Would 11,407 17.43% Might or Might Not 2,062 3.15% Probably Would Not 350 0.53% Definitely Would Not 192 0.29% Don’t Know 53 0.08% 65,431 100% HOW LIKELY ARE YOU TO VISIT AGAIN? Likelihood Respondents Definitely Will Visit 2,463 83.78% Probably Will Visit 316 10.75% Might or Might Not 82 2.79% Probably Will Not Visit 40 1.36% Definitely Will Not Visit 39 1.33% 65,431 100% 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
  • 16. PAGE 16 OF 24 Findings – Advocacy and Word of Mouth As stated previously, the ROI achieved by each brand in this study varied primarily due to two factors, one of which is the commitment by the brand to reach out to consumers to drive traffic to their site. One KPI for online communities is organic growth, e.g. community member growth through word of mouth recommendations. With the Powered approach, over 92% of survey respondents indicated they would recommend the site to a friend, while close to 85% would recommend the sponsoring brand to friends. WOULD YOU RECOMMEND THIS EXPERIENCE TO A FRIEND? Likelihood Respondents Definitely Would 47,299 69.16% Probably Would 15,680 22.93% Might or Might Not 3,542 5.18% Probably Would Not 1,201 1.76% Definitely Would Not 585 0.86% Don’t Know 81 0.12% 68,388 100% WOULD YOU RECOMMEND THE BRAND TO A FRIEND? Likelihood Respondents Definitely Would 8,369 55.07% Probably Would 4,535 29.84% Might or Might Not 1,847 12.15% Probably Would Not 313 2.06% Definitely Would Not 126 0.83% Don’t Know 7 0.05% 15,197 100% 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
  • 17. PAGE 17 OF 24 Results Summary ▪ Powered social marketing sites yielded a 60:1 ROI, which is a 10% increase from the first year’s 55:1 ROI benchmark. ▪ Consistently for 3 years the ROI of Powered social marketing programs (60:1) has significantly outperformed the Direct Marketing Association (11:1) and Marketing Management Analytics (2:1) ROI estimates for all of direct marketing8 and non-CPG mass media advertising.9 ▪ Nearly one million people opted-in to Powered’s managed online community sites, which aggregately received over 12 million visits in 2007. ▪ The average opt-in rate for a Powered online community is a little over 8% of total site visits. ▪ Of those consumers who opted in, 11.2% - or nearly 112,183 people - completed the survey. ▪ Two-thirds of survey respondents stated they were more likely to purchase the sponsoring brands products and/or services as a direct result of the learning experience offered in the community. ▪ Two-thirds of survey respondents indicated that the Powered online community experience had improved their impression of the sponsoring brand. ▪ Nearly 63% of survey respondents stated they had a more positive opinion of the sponsoring brand as a result of the experience. ▪ Close to 95% of survey respondents would visit the site they attended again and 96% would participate in another Powered online community. ▪ Over 92% of survey respondents that participated in a Powered online community would recommend the site to a friend, while close to 85% would recommend the sponsoring brand to friends. ▪ For the past 3 years, satisfaction scores among survey respondents consistently averaged over 90% extremely and somewhat satisfied. ▪ 94% were extremely or somewhat satisfied with the overall content. ▪ 93% were extremely or somewhat satisfied with the educational content. ▪ 92% rated the content as excellent, very good, or good. 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
  • 18. PAGE 18 OF 24 Implications & Concluding Thoughts Powered appears to be a reliable investment for marketers based on the 22 programs studied in the last three years. The ROI returns from Powered’s social marketing programs are virtually always above industry norms. Marketers are advised to study their target consumers and to learn what kinds of social marketing and web experiences they would likely value the most, and to test those experiences. Using the Internet and use of Powered are very likely the most efficient and effective way of doing so, given that Powered has created a process and has gained valuable know-how in the practice. Social marketing as a relatively new non-traditional form of persuasive marketing communications is widely misunderstood. Most advertising and marketing executives assume that the term relates mainly to content generated by consumers. In fact, according to Forrester13, content generated by a person’s favorite brand has more effect upon that person than content generated by other consumers. This is a significant finding because in the history of word of mouth measurement14, before the existence of social marketing there was never an instance where consumers were more influenced by communications from brands than from disinterested parties i.e. friends and relatives. Beyond social marketing, marketers ought to carefully investigate and test every practical means of befriending consumers by new and established forms of marketing communications which do not involve straight advertising. This includes True Sponsorship in all its forms i.e. entertainment programs as well as educational ones, in all media; cause marketing; service advertising (e.g. helping the consumer to know which products to buy and how to use them); sponsored games; sponsored processes supporting consumer generated media; and new forms which no one has thought of yet. This area is fertile ground for the imaginations of the agencies. Instead of beginning to disappear - as oft opined in the trade press – they could be entering the most promising period they have ever faced. The Advertising Research Foundation (ARF) in 2008 published a study of experiential marketing – a form of offline social media commonly known as trade events. Many of the learnings from this study also apply to Powered and to all of the other forms of non- traditional marketing which involve soft sell approaches to befriending consumers. The following quote from the study shows the high degree of alignment between ARF’s derived best practices for event marketing with Powered’s approach of a managed online community model in the web social media space: 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
  • 19. PAGE 19 OF 24 The importance of motivating positive, non-threatening interpersonal experiences at the event cannot be underestimated – informing vs. hard selling; educating rather than telling; helping rather than aggressively pushing decisions, etc.: “Threat” leads us to be wary, constrained, inhibited, and defensive, which tends to make us hold back so as not to increase the danger or make a fool of ourselves. Such a state of mind interferes with risk taking, trust, and smooth cognitive functioning.12 As this report is being prepared, the industry trades are running stories about major companies such as Kraft and Unilever who are said to be considering selling off up to half of their brands because they are no longer growing. These are brands that could be acquired by other companies for sums in the billions of dollars. From a macroeconomic point of view, simply transferring those brands to new ownership does not result in any economic improvement. Instead, what if the present owners of these brands tested new means of re-positioning those brands in the minds of consumers? The very nature of brands is that they really exist in the minds of consumers. Changing the way consumers view a brand may be far less costly than previously imagined, and far more lucrative. Instead of just testing interruptive ads in new media, and the like, we as an industry ought to be doing more testing, in all media new and old, of the soft sell. 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
  • 20. PAGE 20 OF 24 Appendices A – References 1 Direct Marketing Association (DMA) 2005 Economic Impact Study, Peter A. Johnson, PH.D., pjohnson@the-dma.org. 2 MMA: “Finding The Other Half” by Erwin Ephron and Gerry Pollak, Ephron On Media website archive. 3 Harvey, Gray, and Despain, “Measuring the Effectiveness of True Sponsorship”, Advertising Research Foundation Journal of Advertising Research, Vol. 46, No. 4, December 2006. 4 Assuming an average Cost Per Thousand impressions across all media of $10.00, the U.S. advertising volume of $285,106,000,000 (Advertising Age compilation of Robert J. Coen McCann-Erickson and TNS CMR 2006 data, June 25, 2007) implies a total of 28.51 trillion impressions per annum in the U.S. Relating this to the total U.S. population of 301,967,681 (source: World News Network) one derives a daily estimate of 259 impressions per person, much lower than the often quoted statistics which range from 2000 per day to 6000 per day, but still hefty. 5 Surprise is possibly a more important psychological phenomenon than one might suppose. When information falling upon the senses deviates from the expected model in one’s brain, a characteristic brain wave known as the P300 wave is detected. NCM in other work relating to behavioral targeting has uncovered potential evidence that surprise may be an important factor in advertising effectiveness; the eye camera records more noticing of ads found in websites where one would not expect to see an ad for that product type. The Advertising Research Foundation’s former Chief Research Officer Joe Plummer has identified as probable drivers of advertising engagement: surprise, utility, and emotional bonding. 6 Harvey et al, ibid. 7 “Consumer Education Produces High ROI”, report, Next Century Media, May 5, 2006. 8 DMA, ibid. 9 MMA, ibid. 10 MMA, ibid. 11 DMA, ibid. 12 “Experiential Marketing: A Master of Engagement: Research on How Engaging Events Pay”, Raymond Pettit, PhD, William Cook, PhD, Dan Belmont, Inna Sokolyanskaya, ARF Event Engagement Consortium Study Findings, January, 2008 13 “Brand Matters to Socially Connected Consumers: Brand Content Trumps Peers in Influence”, Lisa Bradner, report, Forrester, November 17, 2008 14 Day, George S., “Attitude Change and the Relative Influence of Media and Word-Of- Mouth Sources.” In Jagdish N. Sheth (ed.), Models of Buyer Behavior: Conceptual, Quantitative, and Empirical. New York: Harper & Row, 1974 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
  • 21. PAGE 21 OF 24 B – Survey Questions 1. How would you rate the overall content? A. Excellent B. Very Good C. Good D. Fair E. Poor F. Don’t know 2. How satisfied were you with the content overall? A. Extremely satisfied B. Somewhat satisfied C. Neither satisfied nor dissatisfied D. Somewhat dissatisfied E. Extremely dissatisfied F. Not sure 3. How satisfied were you with the educational content? A. Extremely satisfied B. Somewhat satisfied C. Neither satisfied nor dissatisfied D. Somewhat dissatisfied E. Extremely dissatisfied F. Not sure 4. Based on this experience, how likely are you to visit in the future? A. Definitely will visit B. Probably will visit C. Might or might not visit D. Probably will not visit E. Definitely would not visit F. Not sure 5. Would you participate in the experience again? A. Definitely would B. Probably would C. Might or might not D. Probably would not E. Definitely would not F. Don’t know 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
  • 22. PAGE 22 OF 24 6. I have a more favorable impression of the brand. A. Strongly agree B. Agree C. Neither agree nor disagree D. Disagree E. Strongly disagree F. I don’t know 7. How did this experience affect your opinion of the brand as a company? A. Gave me a more positive view of the brand B. Gave me a less positive view of the brand C. Had no effect D. Not sure 8. Would you recommend this experience to a family member, friend or co- worker? A. Definitely would recommend B. Probably would recommend C. Might or might not recommend D. Probably would not recommend E. Definitely would not recommend F. Don’t know 9. Based on this experience; would you recommend the brand to a family member, friend or co-worker? A. Definitely would recommend B. Probably would recommend C. Might or might not recommend D. Probably would not recommend E. Definitely would not recommend F. Don’t know 10. How did this experience affect your likelihood to buy products/use services from the brand? A. I am more likely to purchase B. I am less likely to purchase C. I am neither more nor less likely to purchase D. Not sure 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
  • 23. PAGE 23 OF 24 11. What products, if any, did you purchase as a result of this experience? (Please select all that apply.) A. Not applicable, I did not purchase a from the brand as a result of this experience B. Product A C. Product B D. Product C E. Product D F. Product E G. Product F H. Product G K. Other 12. What was the approximate total dollar amount of the product(s) you purchased, above? A. Not applicable, I did not purchase a product as a result B. Less than $100 C. $100 to $249 D. $250 to $499 E. $500 to $999 F. $1,000 to $1,999 G. $2,000 or more 13. Where did you purchase the product(s)? A. Not applicable, I did not purchase a product as a result B. Online at brand’s web site C. Online elsewhere D. At a brand retail store E. At another retail store F. Through brand’s 1-800 number G. Over the phone via another 1-800 number H. Other 14. What is the main reason you did not purchase a product as a result of this experience? A. Not applicable, I purchased a product B. I already had what I needed C. I don’t have the budget for any new product(s) at this time D. I did not see any product that I wanted to purchase E. I bought another brand F. I do not plan to buy anything now, but I plan to buy a product in the future G. Other H. Not sure 2008 POWERED SOCIAL MARKETING ROI REPORT AND BENCHMARK GUIDE
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