Enough with<br />the Social Media
BS.<br />Give me the realz.<br />Social Fresh Conference // 24 August 2009<br />

SOCIAL MEDIA IS NOT FREE.<br
/>

1. It takes people.<br />

2. It takes technology.<br />

3. It takes time.<br />

We have… rocks.<br />… all
of which are limited resources.<br />

These resources<br />=<br />100%<br />of
your budget<br />E-Marketing<br />Each resource<br />has a specific cost<br />Head Count<br />Advertising<br />I.T.<br />Inbound Call Center<br />Each resource<br />yields specific results<br />Marketing<br />Sales Dept.<br />Accounting<br />Public Relations<br />

These resources<br />generate<br />100%<br />of
your business<br />E-Marketing<br />Losing even 1% <br />of your budget’s efficiency <br />could seriously ruin <br />your day.<br />Head Count<br />Advertising<br />I.T.<br />Inbound Call Center<br />Marketing<br />Sales Dept.<br />Accounting<br />Public Relations<br />

Okay fine. But if<br />
I’m going to take a chance<br />on this social media thing,<br />it had better make good business<br />sense! Why should I allocate<br />resources to it?<br />

Reason #1:<br />It will result
in a cost reduction.<br />Maybe in customer service?<br />You mentioned something about<br />business intelligence and<br />market research?<br />Reason #2:<br />It will generate more revenue.<br />I want more transactions, <br />more net new customers,<br />more customer loyalty,<br />etc.<br />

Now go figure out what<br
/>Program you have to cut<br />to fund this Social Media thing.<br />Remember that our bonuses<br />are on the line.<br />

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 />

SAY HELLO TO:<br />Business Justification<br
/>R.O.I.<br />

R.O.I.<br />RETURN<br />ON<br />INVESTMENT<br />

THE R.O.I. EQUATION<br />Investment<br />Expectation
of return<br />

THE R.O.I. EQUATION<br />(GAIN FROM
INVESTMENT - COST OF INVESTMENT)<br />ROI =<br />COST OF INVESTMENT<br />

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 />

Reason #1:<br />COST REDUCTION<br />Reason
#2:<br />REVENUE GENERATION<br />Remember what Mr. Bossman said…<br />

I shrank my PR budget
by 20%<br />and my outbound call budget by 40%.<br />Now I can afford a team of social media<br />Rock stars. Can I get a hellz yeah?<br />Okay, hotshot,<br />You have your Social Media doohickey.<br />Now I’d better see some real results!<br />Or else… <br />

Woohoo!<br />I have a job!!!<br
/>

Dudes, we are <br />ON
THIS!!!<br />Let’s start engagin’!!!<br />I call dibs on the<br />Corporate blog.<br />

Cool.<br />ACCOUNTING<br />One Month Later…<br
/>

What about our<br />Twitternets?<br />Oh
my! Look at all the new<br />visitors to our website!<br />and all of our FaceBook friends!<br />Hot Damn, we even have <br />comments on the blog!<br />

This rocks!<br />I never had
it so<br />good!!!<br />

Cool.<br />ACCOUNTING<br />Three Months Later…<br
/>

Yeah but…<br />What about<br />the
P&L?<br />Monitoring to base…<br />Monitoring to base…<br />Our Google Analytics are through<br />the roof! Even our social mentions<br />are wicked good!<br />We have liftoff!<br />

Measuring media<br />really rocks my<br
/>world. <br />

Nope.<br />Anything?<br />Nada.<br />ACCOUNTING<br />Six
Months Later…<br />

What kind of mood is
<br />The old man in today?<br />Not good.<br />He doesn’t care how many visitors<br />the website gets, or how many<br />eyeballs we estimate we’ve reached unless it means we’re selling<br />more stuff.<br />

But why?<br />Our website is
getting <br />mad hits, Jack!<br />And we have 3,000 followers<br />on Twitter now!<br />I’m sorry, son.<br />If your Social Media program<br />is generating revenue, we aren’t<br />seeing it. We need to allocate <br />resources where we can<br />make money.<br />It’s just business.<br />

Darn it.<br />This media measurement<br
/>stuff isn’t working.<br />We need to start<br />tying this stuff to actual<br />Business performance.<br />Where to start?<br />Let’s see…<br />At the beginning?<br />

Things happen in sequence.<br />

Non-financial impact is not ROI
(yet).<br />

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 />

Non-financial impact = potential.<br />

ROI = actualized potential.<br />

Reason #1:<br />COST REDUCTION<br />Reason
#2:<br />REVENUE GENERATION<br />Remember what Mr. Bossman said…<br />

I need proof that<br />what
we’re doing<br />is actually working.<br />Start with proof of concept.<br />

Step 1: Establish a baseline<br
/>8% YoY Growth<br />

Baselines illustrate deltas (changes)<br />Is
something happening here?<br />

Step 2: Create Activity Timelines<br
/>

Step 2: Create Activity Timelines<br
/>

Step 2: Create Activity Timelines<br
/>

Step 3: Look at Sales
Revenue<br />

Step 3: Also look at
# of transactions<br />

Step 3: Also measure net
new customers<br />

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 />

The latest numbers indicate<br />that
our YoY sales $ are up 60%.<br />Our individual transactions have doubled,<br />as have our transacting customers.<br />Something’s working! <br />Groovy!<br />Let’s figure out what.<br />

Step 4: Measure transactional precursors<br
/>

Step 4: Measure transactional precursors<br
/>

Step 4: Measure transactional precursors<br
/>

We overlaid all of our
timelines<br />and noticed that since our social media<br />activities began, our website visits are up,<br />our social mentions are also up, and<br />everyone seems to love us. <br />So is there a<br /> discernable pattern<br />in this?<br />

Step 5: Overlay all timelines<br
/>activities<br />social data<br />web data<br />transactions<br />loyalty metrics<br />etc.<br />

Step 6: Look for patterns<br
/>Impact<br />Uncertain Impact<br />Impact<br />Impact<br />No Impact<br />Before<br />After<br />

Step 7: Prove relationships<br />How
was this group<br />Touched by SM?<br />Before<br />After<br />

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 />

THE R.O.I. EQUATION<br />(GAIN FROM
INVESTMENT - COST OF INVESTMENT)<br />ROI =<br />COST OF INVESTMENT<br />

THE R.O.I. EQUATION<br />Investment<br />Expectation
of return<br />

Oh wow.<br />This R.O.I. thing<br
/>wasn’t at all about<br />measuring media,<br />impressions and<br />eyeballs!<br />

All things remaining the same…<br
/>We may have <br />proof of<br />concept.<br />Hot damn!<br />ACCOUNTING<br />First things first: Prove that Social Media works<br />

So it turns out that
our <br />Social Media program is impacting<br />every aspect of our business except<br />traffic in our brick and mortar stores.<br />Can you get on that? Yeah. We need<br />to find out why we aren’t having<br />an effect there. Kthxbye. <br />Then use what you know to make it work better.<br />

More store traffic.<br />Roger that.<br
/>Dudes, we are <br />ON THIS!!!<br />Let’s start engagin’!!!<br />I’ll start crafting some<br />wicked blog posts.<br />

Finally, someone with some<br />real
metrics for me to sink my teeth into!<br />Good job, Sparky! You done gewd!<br />

So I guess Social Media<br
/>is going to stick around a little while<br />longer after all, isn’t it?<br />Yessir.<br />Looks like our budget<br />is safe for now.<br />

Drinks for <br />Everybody!<br />

Olivier Blanchard<br />Principal, BrandBuilder Marketing<br
/>864.630.7398<br />www.thebrandbuildermarketing.com<br />@thebrandbuilder(on Twitter)<br />www.smroi.net<br />

Slideography<br />Slide # Source<br />3,
9, 10, 11, 18-31, <br />37, 38, 48, 52, 56,<br />59-65<br />4<br />6<br />UFO (TV series) <br />http://ufoseries.com/<br />http://www.minnpost.com/stories/2008/06/18/2282/this_doesnt_compute_as_more_women_enter_scientific_fields_their_numbers_in_computer_science_are_declining<br />Kim Jong Il puppet, from “Team America”<br />http://blogs.rockymountainnews.com/bridget/kimjongil.jpg<br />