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ROI, magic bullets and social business


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Despite its attractive promise, the social media industry is struggling to secure the budgets it thinks it deserves. Building upon recognised planning principles, this presentation highlights where these arguments are being won and lost and the future of social media in business.

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ROI, magic bullets and social business

  1. 1. mutsmuts
  2. 2. on2wheelz
  3. 3. tipiro
  4. 4. Usage by Companies is Growing and the Increase in Spend Reflects That Forecast: US Social Media Spend, 2011 to 2016 $5,000 Social media mgmt technology $4,000 Social Media Spend Agency fees for (US$ millions) $3,000 Social media $2,000 $1,000 Integrated campaigns on social networks $0 2011 2012 2013 2014 2015 2016 Social mgmt technology $272 $389 $530 $678 $828 $970 Agency fees for SM $535 $786 $952 $1,124 $1,314 $1,523 Integrated campaigns on social networks $684 $945 $1,278 $1,652 $2,076 $2,503 $1,590 $2,119 $2,760 $3,453 $4,217 $4,995US Interactive Marketing Forecast 2011-2016, Forrester, 2011:
  5. 5. Companies Using Social Media are Seeing a Higher Increase in Both Revenue and Profit* Experienced revenue increase in the past year Experienced profit increase in the past year Firms NOT using Firms using social Firms NOT using Firms using social social networks to networks to acquire social networks to networks to acquire acquire new business new business acquire new business new business Global Average 42% 52% Global Average 48% 53% India 56% 63% China 79% 69% China 64% 62% India 64% 69% Germany 53% 56% Belgium 61% 65% Canada 36% 55% Germany 64% 65% Netherlands 33% 50% Canada 45% 63% Australia 60% 49% Netherlands 40% 61% US 32% 43% Australia 50% 57% UK 25% 40% France 48% 50% South Africa 36% 38% US 39% 50% France 32% 31% UK 31% 48% Japan 21% 30% South Africa 56% 46% Mexico 31% 22% Japan 21% 36% Mexico 40% 36% Spain 18% 19% Spain 32% 33% A higher proportion of businesses are successfully using social media to acquire new business. They are experiencing rising profits (+5%) and increasing revenues (+6%), compared to their counterparts who do not use social networks. The important take-away from this data is that overall revenue /profits are higher, but not that social directly drives revenue.A Social Recovery, Regus, 2011:
  6. 6. A Multitude of Challenges Still Persist around Getting Enterprise Social Media Right Business Area Measurement Human Resources Proving success Organisational and the need for Support appropriate resources are the Technology most pervasive challenges OtherForrester: “The State Of Social Media Marketing In Europe, 2011”:
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  8. 8. For the UK Social Users, Less than a Quarter Want to Interact with Brands in that Channel • For most, social media is a conversation with friends and family • Conducting conversations with brands is still an underdeveloped activity 8.28 million people in the UK actively want to interact with brands onlineIBM Institute for Business Value Analytics, CRM Study 2011:
  9. 9. A Misalignment Between What Social Consumers Want and What Firms Think They Want Is Big For the consumers who want to interact with brands using social media (23%), a disparity exists between what the consumers want and what companies are providing1. Consumers’ Ranking Business’ Ranking The reasons why consumers interact Perception Why businesses think consumers with companies via social media Gap follow them via social media (61%) Discount Learn about new products (73%) (53%) Reviews and product rankings General Information (71%) Companies are (53%) General Information Submit opinion on current products (69%) creating social media (52%) Exclusive information Exclusive information (68%) environments that (51%) Learn about new products Reviews and product rankings (67%) provide content on new (49%) Submit opinion on current products Feel connected to brand (64%) products that are only (37%) Customer service Customer service (63%) mildly engaging t o the (34%) Event participation Submit ideas for new products/services (63%) customer (73% business vs. 49% (33%) Feel connected to brand Be part of a community (61%) Consumer). (30%) Submit ideas for new products/services Event participation (61%) (22%) Be part of a community Discount (60%)1. IBM Institute for Business Value Analytics, CRM Study 20112. From Social Media to Social CRM, IBM Institute for Business Value, 2011
  10. 10. Facebook User Growth Now Dependent of Emerging Markets, US Peaked and DecliningGlobal Web Index, Web Trends February 2012:
  11. 11. For the 8.28M People In the UK Who Interact with Brands on Social Media, Most Interact with Media from the Advertising and Marketing Industry Advertising and Marketing companies are ideally suited for creating content and communities in social media given their ability to create clever videos and ads.January 2011; Global Web Index:
  12. 12. Most Consumers Do So to Receive Discounts • Aligning consumer expectation and drivers with the CVP of the community strategy is imperative • This helps the business reach the engagement KPIs it set for the communitiesChadwick Martin Bailey, 10 Quick Facts You Should Know About Consumer Behavior on Facebook, 2011 -
  13. 13. “In a survey of nearly 200 senior marketing managers, 77 per cent responded that they found the "return on investment" metric very useful” “For a single-period review just divide the return (net profit) by theresources that were committed (investment): Return on investment (%) = Net profit ($) / Investment ($) * 100 %” + “Net profit is equal to the gross profit minus overheads.” = “Can I sell my product / service more cheaply through other channels?”
  14. 14. Social networking still provides less than half the reach of TV, Radio and Print •Gap between reach of social networking and broadcast media is significant. In addition: •70% of consumers aged 25-34 agree that they rarely pay attention to adverts on social networking sites1. *Ofcom, December 2010: Media Activities with the Highest Daily Reach:
  15. 15. B Tal
  16. 16. Companies Find it Challenging to Measure and Interpret Social Media Activity 33% of companies state that customer behaviour on social networks is difficult or very difficult to measure or interpret 2 26% stated that a top challenge was the ability to understand influence of a campaign beyond acquisition3 Half of companies stated that they will be investing in more robust social media marketing management in 201231 - Brands Make The Pivot to Pursue The Social Consumer, Pivot, 2011: *2 - Bringing 20:20 Foresight to Marketing, Forbes, 2012: - The State of Social Media Marketing, Awareness Social Marketing, 2012:
  17. 17. Despite These Challenges, Investment is Significant and Marketers Will Continue to Increase Adoption Base:132 European interactive marketing professionals who use social media01.09.11 (Diagrams): Forrester Report: The State Of Social Media Marketing In Europe, 2011
  18. 18. Bullet #1: Engagement = Trust = ValueTherefore ROI can become Realisation of Influence
  19. 19. Value of Trust• Permission to communicate• Willingness of consumer to give ‘one more chance’• Increased message penetration• Increased amplification / recommendation from public• Increased wallet spend• Lower cost per acquisition• Reduced churn in customers and employees
  20. 20. Bullet #2: Social Business = More Profitable BusinessTherefore investment can be associated with costssaved and sales across the business
  21. 21. To Meet the Demand, Companies Need to Refine their Relationship Management Cycle Traditional CRM Cycle Social CRM Cycle Social CRM helps brands Traditional CRM does not build relationships and provide the engagement and engage with today’s social interaction today’s social customer using a wide variety customer requires of platforms and channels. *Econsultancy, Traditional CRM vs Social CRM, 2012,
  22. 22. Bullet #3: Long-term Success Requires Social DataData management is next ‘watershed’ frontier forbusinesses
  23. 23. Social Media is Fuelling “Big Data” Paradigm2011, Gartner Hype Cycle 2011:
  24. 24. Mainstream Adoption of ‘Big Data’ Maps To Emerging Social Media ROI Timeframe2012, Social Media Examiner: Social Media Marketing Report: