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SMiB09 Olivier Alain Blanchard

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Financial vs. Non Financial Measurement
Oliver Blanchard (Brandbuilder Marketing) - Outlining the differences between financial measurement (R.O.I.) and non-financial measurement, then explaining why understanding that distinction is important to organizations.

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SMiB09 Olivier Alain Blanchard

  1. 1. Social Media R.O.I.<br />olivier alainblanchard<br />@thebrandbuilder<br />SMiB Conference<br />London, UK<br />23 October 2009<br />#SMiB<br />
  2. 2. “Social Media R.O.I.<br />is overrated.”<br />“Social Media is about sharing things we are passionate about.”<br />
  3. 3. Translation:<br />“We have no @#$*& clue<br />What R.O.I. actually is.”<br />
  4. 4. R.O.I.<br />RETURN<br />ON<br />INVESTMENT<br />
  5. 5. THE R.O.I. EQUATION<br />Investment<br />Expectation of return<br />
  6. 6. THE R.O.I. EQUATION<br />(GAIN FROM INVESTMENT - COST OF INVESTMENT)<br />ROI =<br />COST OF INVESTMENT<br />
  7. 7. Truth about R.O.I.<br />ROI is a business metric,<br /> not a media metric.<br />ROI is 100% media-agnostic.<br />Only measuring digital or social won’t get you anywhere.<br />
  8. 8. Why is this important?<br />
  9. 9. These resources<br />=<br />100%<br />of your budget<br />These resources<br />generate<br />100%<br />of your business<br />E-Marketing<br />Head Count<br />Advertising<br />I.T.<br />Inbound Call Center<br />Marketing<br />Sales Dept.<br />Accounting<br />Public Relations<br />
  10. 10. Understand that a new<br />Social Media program’s<br />funding doesn’t appear<br />out of thin air.:<br />Which buckets do we empty<br />to fill this new one?<br />
  11. 11. R.O.I.<br />Business Justification<br />
  12. 12. How much is this<br />going to cost me?<br />What will this do for us?<br />Mr. Bossman has simple questions.<br />
  13. 13. “Social Media R.O.I.<br />is overrated.”<br />(Not knowing what you’re talking about has exactly zero value.)<br />
  14. 14. SOCIAL MEDIA IS NOT FREE.<br />
  15. 15. 1. It takes skilled people.<br />
  16. 16. 2. It takes technology.<br />
  17. 17. 3. It takes time and effort.<br />
  18. 18. We have… rocks.<br />… all of which are limited resources.<br />
  19. 19. Reason #1:<br />COST REDUCTION<br />Reason #2:<br />REVENUE GENERATION<br />
  20. 20. Return On Influence?<br />Return On Interest?<br />Return On Intuition?<br />Return on Inovation?<br />Return On Imitation?<br />Return on Incompetence?<br />Return On Idiocy?<br />Return on Incompetence?<br />(Not knowing what you’re talking about has exactly zero value.)<br />
  21. 21. Stop the nonsense.<br />Just Stop it.<br />
  22. 22. Financial vs. Non-financial Impact<br />Non-Financial<br /> Financial <br />
  23. 23. Types of non-financial impact<br />Customer complaints<br />Website Visitors<br />Impressions<br />Positive press<br />Click-throughs<br />YouTube views<br />Retweets<br />Coupons distributed<br />Visitors to a brick & mortar store<br />Positive WOM<br />Delivered emails<br />Negative press<br />Negative WOM<br />Employment applications<br />Blog comments<br />FaceBook friends<br />Social mention<br />Twitter followers<br />
  24. 24. Things happen in sequence.<br />
  25. 25. Non-financial impact is not ROI (yet).<br />Too many agencies only measure here.<br />
  26. 26. Non-financial impact = potential.<br />
  27. 27. ROI = actualized potential.<br />
  28. 28. Reason #1:<br />COST REDUCTION<br />Reason #2:<br />REVENUE GENERATION<br />Mr. Bossman doesn’t care about web traffic. <br />
  29. 29. Measuring transactional precursors<br />
  30. 30. Non-Financial Impact as transactional precursors<br />
  31. 31. Measuring transactional precursors<br />
  32. 32. Meauring Sales Revenue<br />
  33. 33. If you can, also look at # of transactions<br />
  34. 34. Also measure net new customers<br />NNC is a measure of effective reach,<br />not just media reach.<br />
  35. 35. Transaction data should be specific<br />F.R.Y.<br />FREQUENCY, REACH, YIELD<br />How often customers transact. (transactions per month)<br />How many customers you are reaching. (net new customers)<br />How much they spend. ($ per transaction)<br />
  36. 36. Overlay your data as a timeline<br />activities<br />social data<br />web data<br />transactions<br />loyalty metrics<br />etc.<br />
  37. 37. Look for patterns<br />Impact<br />Uncertain Impact<br />Impact<br />Impact<br />No Impact<br />Before<br />After<br />
  38. 38. Prove & disprove relationships<br />How was this group<br />Touched by SM?<br />Before<br />After<br />
  39. 39. Prove & disprove relationships<br />How are these elements<br />Connected to each other?<br />Before<br />After<br />
  40. 40. Prove & disprove relationships<br />Is one of these elements<br />A financial metric?<br />Before<br />After<br />
  41. 41. Prove & disprove relationships<br />How do the non-financial and the financial elements connected?<br />Before<br />After<br />
  42. 42. How long<br />will all this<br />analysis take?<br />It’s all a process<br />of elimination, really.<br />Isolating patterns, <br />quantifying deltas,<br />proving ad-hocs…<br />Then all<br />we have to do is<br />figure out what the cost <br />savings and revenue gains<br />are, and plug them <br />into the equation.<br />
  43. 43. Oh wow.<br />This R.O.I. thing<br />wasn’t at all about<br />measuring media,<br />impressions and<br />eyeballs!<br />
  44. 44. Finally, someone with some<br />real metrics for me to sink my teeth into!<br />Good job, Sparky! You done gewd!<br />
  45. 45. Drinks for <br />Everybody!<br />
  46. 46. Ask away.<br />www.SMROI.net<br />Olivier Blanchard<br />864.630.7398<br />www.thebrandbuildermarketing.com<br />@thebrandbuilder(on Twitter)<br />

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