Social ROI report


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The Social Media ROI Cookbook:
Six Ingredients Top Brands Use to Measure
the Revenue Impact of Social Media

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Social ROI report

  1. 1. The Social Media ROICookbook:Six Ingredients Top Brands Use to Measurethe Revenue Impact of Social MediaJuly 24, 2012By Susan EtlingerWith Jeremiah Owyang and Andrew JonesIncludes input from 66 ecosystem contributors
  2. 2. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 1Executive SummaryToday, customers move constantly between the online and offline worlds, using a range of devices— such as smartphones and tablets — that didn’t exist a few short years ago. Thousands ofapplications and dozens of social media platforms collect and transmit an unprecedented amount ofstructured and unstructured data1, and API changes are a fact of life. The volatility of social data andthe pace of change mean that tried-and-true measurement methods are no longer enough. Socialdata is different. The old rules don’t apply.Although many organizations have established formalized social media programs2, the vast majority— 75% — still lack a holistic measurement strategy3. Web analytics; social media monitoring;social platforms; and tool, application, and ecommerce providers have rushed to fill the gaps, whileanalysts at brands and agencies have borrowed accepted methodologies from adjacent disciplinesto address the unique challenges and pitfalls of social data.As social media matures, new approaches to social media measurement will emerge to provide businesses with agreater level of insight, but the days of certainty (if ever they existed) are behind us. As George E. P. Box4, a notedstatistician, famously said, “Essentially, all models are wrong, but some are useful.”In our research for this report, Altimeter Group identified six primary top-down and bottom-up approaches anddeveloped three case studies that illustrate how organizations measure the impact of social media on revenue. Butwhile these six ingredients are consistent, the emphasis each company places on them depends on the nature oftheir business. There is no “one-size-fits-all” approach. The following pages aim to identify and describe — based onbusiness, product, media, and customer type — the most effective “recipes” for measuring the revenue impact of socialmedia that we have seen adopted to date.MethodologyAltimeter Group conducted both qualitative and quantitative analyses, using a combination of online survey,interviews, and briefings, on the ways large organizations measure the revenue impact of social media.Specifically, we conducted:Interviews with 38 vendors of social media technology, whose products offer some ability tomeasure the revenue impact of social mediaInterviews with 15 brands that are currently measuring the revenue impact of social media programsInterviews with three agenciesInterviews with four domain expertsQuantitative study of 71 brand and agency-side professionals on measurement experiencesand practices
  3. 3. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 2Table of ContentsBusiness Pain: Organizations Struggle to Quantify Revenue Impact of Social Media .............................................3Problem: Industry in Transition Leaves Organizations Flying Blind ..................................................................................................3Beyond Revenue: Improving Insight ..................................................................................................................................................7The Six Ingredients to Measuring the Revenue Impact of Social Media .........................................................................8Top-Down Approaches ............................................................................................................................................................................... 10Bottom-Up Approaches ............................................................................................................................................................................. 11Case Studies .................................................................................................................................................................................................. 13Determining the Right Measurement Mix ..................................................................................................................................... 16The Future of Social Media Measurement ................................................................................................................................... 21Conclusion ................................................................................................................................................................................................... 23Ecosystem Input ....................................................................................................................................................................................... 24About Us ....................................................................................................................................................................................................... 26
  4. 4. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 3Business Pain: Organizations Struggle to Quantify Revenue Impact ofSocial MediaProblem: Industry in Transition Leaves Organizations Flying BlindSocial media is no longer optional for business; it’s a fact of life. Today more than 80% of the world’s onlinepopulation uses social media, according to a recent report by comScore5. But social media poses a new series ofinterpretive challenges for organizations, which can make it difficult to assess its impact on the bottom line. AltimeterGroup’s research identified the following primary barriers to measuring the revenue impact of social data:A. Social Media Is Proliferating.Although social media is still very new, Altimeter Group found in the research for our January 2012 report, “A Strategyfor Social Media Proliferation,” that companies average 178 corporate-owned social media accounts. This raisesserious questions:Do companies know what value they are receiving from these social media properties?Do they know what resources they are expending to build and support them?Do they have accurate inventory of these properties?According to the State of Social report by eConsultancy, the answer to each is a resounding “No.” In its report,eConsultancy stated that 41% of more than 1,000 companies and agencies surveyed had “no return of investmentfigure for any of the money they had spent on social channels as of October 2011.”6B. Multiple Challenges Hinder Insight.Fifty-six percent of brands and agencies that Altimeter Group surveyed reported “the inability to tie social media tobusiness outcomes” as the primary challenge to quantifying the revenue impact of social media. But other, moregranular challenges (“lack of analytics expertise and/or resources,” “poor tools,” “unreliable data,” “inconsistentanalytical approaches”) closely followed, suggesting that measurement of social media poses as much of a challengeto organizations and processes as it does to technology.
  5. 5. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 4In addition to the 35% of survey respondents who noted “inconsistent analytical approaches” as a barrier to insight,several organizations we interviewed highlighted the educational requirements of social data. For example, RobertRoss, Vice President, Interactive & New Media of the American Cancer Society, commented, “We’ve found we haveto help people understand the nature of the data and how to use it and apply it. That’s a delivery challenge.”C. Social Data is New and Different.As outlined in the “Executive Summary,” the complexities of social data make it substantially different from what enterpriseshave seen before. Following are the most commonly cited challenges of measuring the impact of social media:Exists in online, offline, and across multiple screens, fragmenting data capture. Avinash Kaushikof Google7has written extensively about the measurement challenges of the world we live in; specifically,the chasm between online and offline and the proliferation of screens through which we interact. This is asignificant difference from the early days of the web, before smartphone and tablet devices began to growin popularity.Is volatile, making measurement a moving target. Even in the heyday of traditional media, the numberof media outlets was relatively stable in comparison to the volatility of today’s social web. For example,from January 1, 2012 to June 5, 2012, Facebook announced the completion of 14 API changes8, whilethe Pew Research “Twitter Use 2012” report found that “the proportion of online adults who say they useTwitter on a “typical day” has doubled since May 2011 and has quadrupled since late 2010.”9Figure 1: Brands See Multiple Barriers to Tying Social Media to Revenue“Which of the following have been challenges? (Check up to three)”Base: 71 respondents responsible for social media measurement in their organization0%10%20%30%40%50%60%Inability to tiesocial media tobusiness outcomesLack ofanalytics expertiseand/or resourcesPoor tools InconsistentanalyticalapproachesUnreliable data56% 39% 38% 35% 30%Source: “The Social Media ROI Cookbook: Six Ingredients Top Brands Use to Measure the Revenue Impact of Social Media,”Altimeter Group (July 24, 2012)
  6. 6. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 5Organizations don’t “own” social media the way they do their websites or other ownedproperties. Unlike embedded web analytics on their own website, organizations do not have the abilityto tag and track properties on third-party platforms (such as others’ blogs, Facebook pages, or onlinecommunities), so they have little direct insight into customer behavior on those properties.Different apps and platforms give rise to different metrics, making a holistic view challenging.As the old saying goes, “The trouble with standards is that there are so many to choose from.” Facebookmetrics differ from Twitter, which differ from Tumblr, communities, and YouTube. To make matters morecomplicated, new behaviors and features yield new metrics (such as “pins” in Pinterest), and APIs of thesethird party sites are constantly being updated.Because social media is still immature, it is tempting to think of it in terms of known quantities such as traditional/digital media, marketing, advertising, or ecommerce. But unlike those disciplines, social media is driven from theoutside in, and it happens whether or not we plan for it. As a result, the way we measure social media must adapt tosuit the unique characteristics of the social web. The old rules do not apply.D. Organizations Lack Confidence in Measuring Revenue Impact.Altimeter’s research shows that only 30% of organizations claim to be “very effective” or “extremely effective” atconnecting social media to revenue generation.Says Ken Burbary, Chief Digital Officer at Campbell Ewald, “I feel like we’re all data chemists at this point, trying toput a bunch of stuff into our beakers to see if it works.” Although social media has proliferated during the past fewyears, there is a significant gap in the ability to articulate its value.“On scale of 1-5, how effective is your organization at connecting social media to revenue generation?”Base: 71 respondents responsible for social media measurement in their organizationFigure 2: Few Are Extremely Effective At Connecting Social Media to Revenue0%5%10%15%20%25%30%35%1(Not at all effective)2 3 4 5(Extremely effective)17% 24% 30% 16% 14%Source: “The Social Media ROI Cookbook: Six Ingredients Top Brands Use to Measure the Revenue Impact of Social Media,”Altimeter Group (July 24, 2012)
  7. 7. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 6E. Organizations Are Adapting Slowly.Although social media activity has grown dramatically within the past few years, measurement organizations generallyremain small. Sixty-three percent of brands Altimeter Group surveyed reported that they have one or two peopletasked with social media measurement, while nearly 75% reported fewer than five people in the function.Because of the variation in company size, structure, and strategy, these numbers may not necessarily imply thatsocial media measurement is under-resourced. Most organizations Altimeter Group interviewed have taken a cautiousapproach to resource allocation and process improvement as they learn more about the impact of social media onthe business. Says Todd Forsythe, VP Global Marketing, EMC, “We started by saying, ‘Let’s build the organizationalcapabilities, dip our toes in the water.’ Now we’re increasingly becoming more programmatic.”Others brands reported that organizational silos hinder information-sharing, particularly in light of the “inconsistentanalytical approaches” reported in Figure 1.Base: 71 respondents responsible for social media measurement in their organization3-56-1011-20More than 201-2013%6%3%4%11%63%“How many employees are dedicatedto social media measurement withinyour organization?”Figure 3: Social Media Measurement Organizations Still Very SmallSource: “The Social Media ROI Cookbook: Six Ingredients Top Brands Use to Measure the Revenue Impact of Social Media,”Altimeter Group (July 24, 2012)
  8. 8. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 7Beyond Revenue: Improving InsightOrganizations understand that revenue generation is only one benefit of social media and that its main business valueis to deepen relationships with customers and community. While only one of the brands interviewed for this reportadmitted to embarking on a true ROI analysis for social media (analyzing the investment in, as well as return on, socialmedia), all reported that they are making a concerted effort to measure the revenue impact of social media, albeit invarious ways. Survey respondents reported overwhelmingly that the primary business impact of social media was notrevenue generation, but “insight that helped us meet customer experience goals.”The next most-reported benefit was decision-making; 51% of respondents stated that social media measurement“enabled us to make better informed decisions based on social data.” Ali Ardalan, Media and Analytics Strategist atIntel, believes that social media has become a critical input to business decisions and to business cases. Ardalansays, “Why do you do an ROI analysis? To justify why you should do this project vs. another. Why you need morefunding. You need to know the result; are you wasting money? Could you have done the same thing with 20% ofthe budget?”Wes Nichols, Co-Founder and CEO, MarketShare, agrees: “What we’re finding is that businesses will only move bigmoney once they understand what’s truly working. To do that they need a comprehensive view of their marketingperformance, not just the tactical channels.”Companies that fail to quantify the hard and soft benefits of their social media programs and activities risk flying blindinto a storm. Those that start now to formulate a measurement strategy, as the companies in the following pageshave done, will be best positioned to succeed in this brave new customer-centric world.Base: 69 respondents responsible for social media measurement in their organizationFigure 4: The Primary Business Value of Social Media: Customer Insight“What have been the primary positive impacts of social media measurement within your organization?(Check up to three)”Customer/community insightDecision-making Investment Financial impacts Organizationaldevelopment0%10%20%30%40%50%60%70%80%90%84% 51% 35% 32% 26%Source: “The Social Media ROI Cookbook: Six Ingredients Top Brands Use to Measure the Revenue Impact of Social Media,”Altimeter Group (July 24, 2012)
  9. 9. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 8The Six Ingredients to Measuring the Revenue Impact of Social MediaWhile we identified no “perfect” solution to measuring the revenue impact of social media, several best practices haveemerged that are bridging the gaps between what is possible today and what may be possible in the future. AltimeterGroup identified six primary ways that organizations currently measure the revenue impact of social media, whichshould be used as a guideline to determine the most effective measurement mix for your business. The following arebrief descriptions; more detailed descriptions follow.AnecdoteSpecific examples where social media was known to influence a sale or sales.CorrelationComparing two data sets (for example, number of likes vs. revenue) to determine whetherthere may be a relationship. Note that most correlations are quite simple, although companiessuch as MarketShare are working on far more advanced social econometric models.Multivariate TestingComparing one group exposed to social media content with another that was exposedto different or no content.Figure 5: Six Ways of Measuring Revenue Impact of Social MediaLinks and TaggingLinks refer to short links, such as,, or custom links embedded into content.Tags (and cookies) refer to a piece of code that is embedded into links or URLs for thepurpose of conversion attribution.IntegratedIntegrated refers to apps or Software-as-a-Service (SaaS) offerings with integrated analytics,such as those offered by Buddy Media, Wildfire, or Facebook apps for Timeline.Direct CommerceAddition of an ecommerce storefront to a social platform such as Facebook; frequentlyreferred to as “fcommerce.”1. Anecdote“2. Correlation3. TestingABC5. Integrated4. Links and Tagging6. Direct CommerceSource: “The Social Media ROI Cookbook: Six Ingredients Top Brands Use to Measure the RevenueImpact of Social Media,” Altimeter Group (July 24, 2012)
  10. 10. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 9The chart below reflects both the immaturity of social media measurement and the resourcefulness of brands tryingto understand its impact on their business in a holistic way. Top-down approaches are as widely used as bottom-upapproaches; anecdote and correlation tied at 44% as the most popular ways to measure the revenue impact of socialmedia, while links were a close second with 42%.What is important to take away from this data is that, while top-down approaches provide business context andbottom-up approaches provide granularity, they are most valuable when viewed in context of each other. The casestudies that follow illustrate how three very different organizations orchestrate these methods to provide insights thathelp drive decision-making.Base: 71 respondents responsible for social media measurement in their organization0%5%10%15%20%25%30%35%40%44%45%50%Figure 6: Brands Blend Top-Down and Bottom-Up Measurement Approaches44% 42% 37% 32% 17% 16%Source: “The Social Media ROI Cookbook: Six Ingredients Top Brands Use to Measure the Revenue Impact of Social Media,”Altimeter Group (July 24, 2012)“In which ways does your organization measure the revenue impact of social media?”
  11. 11. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 10Top-Down ApproachesFigure 7: Top-Down Revenue Measurement ApproachesType Definition and Usage Considerations Sample Vendors1. Anecdote Examples of relationshipbetween social mediaand sales; informationis often shared verbally,sometimes enteredmanually into CRM.Seen in large, often B2Bcompanies with highconsideration and longsales cyclesLightweight and practicalfor some companiesManualCannot scaleNo ability to share broadlyYou can use anecdotesfrom any and all socialmedia service or productvendors. This maytake verbal or writtenform, depending onthe company. See theSAP case study for anexample.2. Correlation Correlation refers to theability to compare onedata set with another toidentify patterns. It canbe as simple as chartoverlays comparinglikes and sales to highlycomplex econometricmodels that take intoaccount external data,such as gas prices,interest rates, joblessclaims, etc.Properly applied,provides insight into therelationship betweensocial strategies/tacticsand business outcomesWell accepted by theindustryRequires trained analystswho can control forvariables and interpretdata to minimizeirrelevancies anddistortionManual (therefore notscalable)Whatever tool you areusing — web analytics,email service provider —usually imported into anExcel spreadsheet. Toolssuch as MarketShareand Compass Labsperform more advancedcorrelations. Expect thisto become more commonas tools mature.3. Testing (A/B,Multivariate)In statistics, multivariatetesting or multi-variabletesting is a technique fortesting hypotheses oncomplex multi-variablesystems, especiallyused in testing marketperceptions.10Used by digital marketersto compare performanceof tactics acrossdifferent populations;examples could includenews headlines, socialcontent of any sort(video, image, text). Alsoused by multichannelorganizations with bothonline and brick-and-mortar presence.Properly applied,provides insight into therelationship betweensocial strategies/tacticsand business outcomesWell accepted by digitalmarketingRequires trained analystswho can control forvariables and interpretdata to minimizeirrelevancies anddistortionManual (therefore notscalable)You can compare theperformance of any socialcontent to any othersocial content, eitherwithin the tool itself orfrom tool to tool. Notethat source data maycome from a variety oftools, such as listeningand monitoring, socialmedia management,or any other tool with asocial data output. Someorganizations downloaddata into an Excelspreadsheet.11
  12. 12. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 11Bottom-Up ApproachesFigure 8: Bottom-Up Revenue Measurement ApproachesType Definition and Usage Considerations Sample Vendors4. Linking andTaggingUsing a piece of code(a short link, ROI tag, orcookie) to identify thesource of a conversion orsaleAt the simpler end: shortlinks; at the sophisticatedend, ROI tags, such asthose available as part ofweb analytics solutionsBroadly applicable to anyonline property in whichan item or service is solddirectly to a customer(direct B2C) or a piece ofsocial content culminatesin a desired action,such as a contest entry,white paper download,application submission, orother desired conversionaction/leadIndustry standard forconversion attributionEnables tracking fromclick to conversionFacilitates (measurable)social spreadingOnly work on ownedonline propertiesDon’t (always) workacross screensDon’t account formacroeconomic orbusiness factors (price ofgas, earnings, etc.)Only works for single-browser sessions. Linksmay break easily or maynot be passed throughVendors below use links,tags, and/or cookies toidentify the source ofsocial content. Whilerevenue attribution isa shared feature, theyrepresent a range ofservices, from webanalytics and digitalmarketing optimization tosocial analytics and socialecommerce.Adobe OmnitureArgyle SocialAwareness Inc.BadgevilleBazaarvoiceBuddy Media (acquired TargetExpionIBM CoremetricsInterpreterMeltwater BuzzOfferpopPower Reviews (acquiredby Bazaarvoice)RevinateShopIgniterVitrueWebTrendsWildfire Interactive
  13. 13. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 12Type Definition and Usage Considerations Sample Vendors5. Integrated Analytics integrated into asocial media app, widget,SaaS solution, or serviceinstalled on a socialplatformBroadly applicable toany online property butrequires developmentof an application orpurchase/use of a tool/service, such as thoselisted under “SampleVendors”Highly measurable (if theconversion occurs withinthe app)Requires development orpurchaseManaging complexity(multiple apps withdifferent analytics)Metrics may be siloed orinconsistent with othermetricsArgyle SocialAwareness, Inc.Buddy MediaExact TargetFacebook (Apps forTimeline)LithiumMomentfeedMoontoastOfferpopProprietary ToolsShopkickWebtrendsWildfire Interactive6. DirectCommerceAddition of ecommercestorefront to a socialplatform (typicallyFacebook, “fcommerce”)Broadly applicable to anyonline propertyHighly measurableLimited if you don’t trackfull engagement8th BridgeMoontoastOfferpopShopIgniterSpiceworks
  14. 14. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 13Case StudiesCase Study: SAPBusiness: Direct and indirect sale, mixed online and offlineConservative culture but with support for test-and-learn approachesProduct: Very high consideration, very long sales-cycle product/serviceMedia: Mixed paid, owned, and earnedCustomer: Business customerThe power of anecdote: Social media frees SAP sales team to focus on lower-funnel activities, improvingproductivity and close rate.Given SAP’s size and highly metrics-driven culture, one would expect that the company would insist only onquantitative metrics to evaluate the success of its social media initiatives. But SAP values both qualitativeand quantitative measures. While it does track more granular metrics (such as numbers of white paperdownloads or webinar sign-ups) for lead generation purposes, the company also values qualitative measuresthat contribute to institutional knowledge. Todd Wilms, Senior Director/Evangelist, Communities and SocialMedia, reports strong support for social media within SAP: “We have been extremely fortunate from a cultureperspective,” he says.At SAP, one of the goals for programs groups and SAP-branded channels is to drive leads. Wilms says thatsocial media has changed the point at which many sales professionals begin to engage with prospects,because it helps prospects to “self-qualify” by engaging with others in SAP communities early in theirdecision process.As a high-consideration, business-to-business product with a long sales cycle (months to years), SAP is ableto track many of the factors that contributed to a single sale. The company has a well-developed customercommunity (which generates its own far more granular and empirical metrics) with which prospectivecustomers can freely engage. Prospects self-report that they were able to answer their questions and educatethemselves through a variety of SAP social channels before engaging directly with the SAP sales team.As a result, says Wilms, “Our sales people can now get involved later in the sales process; they don’t have to jumpinto the pipeline as early, which has enabled them to have deeper conversations with fewer clients. Then, when theydo engage, they want someone to walk them through that last step of fine-tuning SAP into their organization.”
  15. 15. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 14Case Study: EMCBusiness: Direct and indirect sale, mixed online and offlineCulture supports test-and-learn approachesProduct: Medium/high considerationMedium/long sales-cycle product/serviceMedia: Mixed paid, owned, and earnedCustomer: Business customerUsing a mix of quantitative and qualitative methods to prove cause and effect at EMCEMC is taking a holistic approach to measurement, but with quantitative measures at the core. Says KeithPaul, Chief Listener at EMC, “We’re trying to figure out the revenue impact of social. We’re building anintegration and media lab to align everything: social, advertising, search, and marketing sciences.” At the mosttactical level, this means working with marketing teams to develop consistent usage of Omniture codes short links. At a strategic level, it means a shared approach to understanding the impact of social mediaon revenue, as well as on other business goals.Paul has already seen benefits to evangelizing tagging throughout the organization. Recently — using AdobeOmniture codes and links — he was able to prove that social media was responsible for generating30% of the viewership for simulcast of a major product launch. Says Paul, “Web analytics is becoming morestrategic again.”At the same time, the company has set its sights on a more ambitious goal: building an ecosystem with usecases and tools that can eventually be used in concert with other enterprise data. Says Todd Forsythe, VicePresident, Global Marketing, “What we’re hoping we can do is connect linking and listening to action in astreamlined way and track — on a real-time basis — the impact of social on business.”In the longer term, this will mean more integration of “Big Data,” specifically, advanced correlations of customerbehavioral data, leads, transactions, and service experiences. While EMC is still in the process of makingmeasurement more programmatic and scalable, the end game, say Paul and Forsythe, is for social data tobecome fully integrated into enterprise data and business strategy. Says Forsythe, “We always have taken theapproach of ‘Plant a thousand seeds, and let the flowers bloom.’”
  16. 16. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 15Case Study: EventbriteBusiness: Mostly online; serviceMetrics-driven, adaptive cultureProduct: Short sales cycleLow(er) consideration serviceMedia: Paid, earned, ownedCustomer: Mixed B2B/B2CHighly social consumer and business customerIntegrating social media into the product provides clarity for Eventbrite.Eventbrite is a company in which social media — in this case, Facebook — is deeply integrated into theproduct itself, making it highly measurable.This wasn’t always the case. “When it was first built, Eventbrite was focused on SEO optimization to drivetraffic,” says Vice President of Marketing Tamara Mendelsohn. “Then in about 2008, we saw that Facebookhad popped up as a top referrer of traffic. Two things were happening: first, event organizers were creatingevents and including links back to Eventbrite to buy tickets. Second, attendees, once they discovered theevent, were sharing the link either pre- or post-purchase. Those two behaviors pushed more traffic.”Eventbrite reached out to Facebook, which opened up the event API to them. It then incorporated sharingfeatures into the product itself. Within a few months, Facebook was the top traffic referrer, which it remainstoday. Recently, says Mendelsohn, Facebook’s mobile site (m.Facebook) began to show up in the top 10referrers as well. While the product is integrated with Facebook, Eventbrite still must use some of the simplertechniques, such URL tracking, to measure business outcomes. While purchases may originate in Facebook,the transactions themselves occur on Eventbrite.The online nature of the business, and the integration with Facebook, means that the company is able toproduce clear, quantitative metrics that demonstrate the relationship between social media and revenue. Forexample, Mendelsohn says, “We can see how many shares and clicks occur and how many of the clicksconvert. And that’s how we derive a dollar amount. Our main financial metric is gross ticket sales. Our topsocial metrics are total dollars driven by sharing divided by total shares, and total visits driven by sharingdivided by total shares.”But transactions don’t tell the complete picture. Says Mendelsohn, “The transaction is the most sacred part of thefunnel, but we’re optimizing all parts of the funnel. For example, if you look at total attendee sharing, 60% of sharingoccurs after the purchase. One in 100 people who look at an event page before purchase share it, while 1 in 10share it after purchase. And a post-purchase share drives 20% more ticket sales than a pre-purchase share.”Ultimately, says Mendelsohn, the question is how to increase the number of shares, especially post-purchase.“If 10% of customers are sharing after purchase,” she says, “how do we make that 20%?” While Mendelsohnis philosophically against incenting people to share — for fear of promoting spammy behavior toward friends— there is still a lot of room for optimization and growth as Eventbrite looks for effective and authentic ways tooptimize the relationship between social and sales.
  17. 17. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 16Determining the Right Measurement MixThere is no universal recipe for measuring the revenue impact of social media. While social media measurement isstill nascent and organizations are still experimenting with approaches, we found that the most advanced companiesconsider the following four factors to determine the appropriate measurement mix:Business: the nature and structure of the businessProduct: the nature and type of products or services offeredMedia: type of media being usedCustomer: the nature and type of customer(s)As social media matures, we will see deeper integration and industry benchmarking that will provide more guidancefor organizations of different sizes and types. For now, however, best practice measurement approaches use theabove decision criteria.The following pages provide guidance on how to determine the measurement mix that is most appropriate foryour organization.Figure 9: Decision Matrix – Assessing the Measurement Mix That’s Right for You1. Identify BusinessType4. IdentifyCustomer Profile3. Factor In YourMedia MiX2. Assess ProductType
  18. 18. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 17First, Identify Your Business Type.The way your company goes to market largely drives what is possible when it comes to revenue measurement.If your business is … The most appropriate primarymetrics are …Best PracticesExclusively online(e.g., Zappos, Eventbrite)Links and tags measure revenueimpact at all stages of thepurchase path.Awareness: views, impressionsConsideration: engagement(re-tweets, likes, shares)Conversion (downloads,purchases, registration,transaction)Integrated: Apps and servicesoffer integrated metrics that youcan use to better understandimpact of specific content,channels, or campaigns.Build in measurement at thebeginning of every significantcampaign or program.Clearly define goals and metricsat all stages of the path topurchase.Map volume metrics (views,shares, retweets, likes, fans, etc.)with the appropriate stage of thepurchase path to ensure yourmetrics have business context.Review analytics provided withapps and services you areconsidering. The analytics shouldbe a critical purchase criterion.If you are using multiple appsand services, correlate metrics tobetter understand relationships.Multichannel(mixed online/offline)Correlations will help youunderstand relationships betweenonline and offline activities.Where practical, use mobile appsto bridge the online and offlineexperience and collect data onin-store/offline behaviors.If you are using QR codes andbarcode scanning, correlatetheir analytics with other onlinesources.If you are using multiple appsand services as many companiesdo, correlate metrics amongsimilar apps to better understandrelationships.
  19. 19. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 18Second, Assess Your Service or Product Type.The key criteria that drive revenue measurement strategy based upon service and product type are sales cycleand whether the product/service is a high- or low- consideration item. The longer the path to purchase, the lessreliable clickstream data becomes, because there is generally so much elapsed time and so many variables betweenawareness (the reveal of a new car, for example) and purchase (going to the dealer and buying it).Google Analytics has a good way of looking at this challenge from a measurement standpoint. It has divided conversionattribution into two types in their “Social Reports” products. They refer to referrals that lead to conversions immediatelyas “Last Interaction Social Conversions,” compared to what they call “Assisted Social Conversions,” in which a “referralfrom a social source doesn’t immediately generate a conversion, but the visitor returns later and converts.”12If your product/service is … You should … Best PracticesA lower-consideration item (eventtickets, pet food) or has a shortsales cycleUse links and tags to measurerevenue impact at all stages ofthe purchase path.Awareness: views, impressionsConsideration: engagement(re-tweets, likes, shares)Conversion (downloads,purchases, registration,transaction)Integrated: Apps and servicesoffer integrated metrics that youcan use to better understandcause and effect.Build in measurement at thebeginning of every significantcampaign or program.Clearly define goals and metricsbased on path to purchase.Map volume metrics (views,shares, retweets, likes, fans, etc.)with the appropriate stage of thepurchase path to ensure yourmetrics have business context.Review analytics provided withapps and services you areconsidering. The analytics shouldbe a critical purchase criterion.If you are using multiple appsand services, correlate metrics tobetter understand relationships.Longer sales cycles and higher-consideration items (cars, realestate)Experiment with correlation, asthese items are frequently soldthrough channels.Use linking and tagging for callsto action such as white paperdownloads, webinar registrations,dealer/agent referrals.Don’t disregard anecdote as atool to connect the online andoffline worlds, especially if you areable to log customer verbatims ina CRM system. While this is notscalable, it may yield insight whenyou aggregate the data.
  20. 20. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 19Third, Factor In Your Media Mix.The type of medium (Paid, Owned, Earned13) also influences your measurement method, as you can only tag onlineproperties that you control.If the media you are using is … You should … Best PracticesPaid Use links and tags to measurerevenue impact at all stages ofthe online purchase path.Print can be linked and taggedvia bar or QR codes, whilebroadcast media generallycannot, and must rely onconventional metrics (or usecorrelation, as UFC has done).A/B testing will show you whichmedia perform better than others.Build in measurement at thebeginning of every significantcampaign or program.Clearly define goals and metricsbased on path to purchase.Map volume metrics (views,shares, retweets, likes, fans, etc.)with the appropriate stage of thepurchase path to ensure yourmetrics have business context.Start now to build connectionsbetween the digital and socialanalytics teams.Earned Because earned media cannotbe tagged, you must usecorrelations and trend analysis tounderstand patterns.Map volume metrics (views,shares, retweets, likes, fans, etc.)with the appropriate stage of thepurchase path to ensure yourmetrics have business context.Owned Owned media (as available viavideo, blog posts, social posts,microsites) can be linked andtagged, although only across thesame browser.“Jumping” between screens(phone, tablet, desktop/laptop)breaks these connections, whichrequires the use of other top-down methods of measurement.See “Paid,” above.
  21. 21. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 20Finally, and Most Importantly, Consider Your Customer Profile.Ultimately, the customer or consumer profile will influence what measurement is possible.If your customer is … You should … Best PracticesA business customer Look at forums, blogs, andcommunities to see wherecustomers congregate and whatyou can test and learn fromtheir interests, questions, andbehaviors.Factor in known social mediabehaviors (Socialmetrics), as wellas behavioral and demographicdata, to help determine how bestto engage.Test lightweight links and tags inforum replies (as consistent withthe behavior of the community)to better understand interest andconsideration.A consumer The decision to use directecommerce (a storefront)should be driven by the typeof relationship you have withyour customer base. That said,the deeper the integration ofsocial and commerce, the moregranular the analytics.Correlate behaviors at differentstages of the funnel as Eventbritehas done, so you can betterunderstand pre-purchase andpost-purchase sharing andconversion.Highly social Correlating shares with saleswill provide insight into howand whether the online socialexperience drives sales.Integrating apps and serviceson your Facebook brand pagesyields deep analytics. The keyis to translate volume metrics toinsights and actions (i.e., peoplewho do X tend to do Y).A/B testing social posts againstthe same content elsewhere(Facebook, YouTube, yourwebsite) will provide insight intohow and where people consumeyour content and where they go(and what they do) from there.Be mindful of the balancebetween authentic and spammybehavior before incentingcustomers to share.Look at referrers in your webanalytics to find new and trendingsources of traffic (Pinterest,Tumblr, others).Finally, remember that no one set of measures can tell you everything; they all come with trade-offs. But looking atyour granular bottom-up data in context of broader trend data will deliver a more representative view of the revenueimpact of social media than either can in isolation.
  22. 22. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 21The Future of Social Media MeasurementThe ways organizations used to measure web behavior in the past are no longer suited to today’s realities. Thefragmentation of the customer journey (across screens, apps and, platforms) combined with heterogeneous datastreams make it near-impossible for organizations to trace “digital breadcrumbs” from a transaction to its source.14The challenges, as Avinash Kaushik has articulated them15, are straightforward: connecting the customer from onlineto offline and connecting the customer across multiple screens. To this I would add another challenge: the need tointegrate social, enterprise, and external data for a holistic view of behavior and trends. Following are some of thetrends we should expect to see emerge in the next few years.Mobile technologies will bridge the online and offline worlds.Mobile Smartphone and Tablet Apps. While still relatively nascent, smartphone applications such as Shopkick andCheckpoints, which use mobile and geolocation technology to deliver insight on in-store behavior, illustrate thepossibilities of mobile technologies to connect the dots between online and offline interactions.Scanning and Visual Search. Whether it is QR codes, Microsoft TAG, bar codes, or eventually Google Goggles,technologies will continue to emerge that add metadata to offline experiences and enable organizations to view thecustomer experience more holistically. While we are now in a period of feverish development, eventually we will startto see standards emerge in this area. In the meantime, however, the challenge for business will be to select vendorsthat provide the most reliable and stable features and integrations and manage the new data streams these devicescreate without creating undue complexity.Emerging technologies will connect the customer across multiple screens.Matching and Authentication. One of the greatest challenges for brands is the proliferation of browsers and screens,from tablet devices to smartphones, laptops, desktops, and television. In fact, a recent study conducted by Boston’sInnerscope Research found that “digital natives” switch screen 27 times per hour.16Many web analytics vendors aim to connect the social customer using attribution algorithms, while FacebookConnect, Klout, and apps like Empire Avenue attempt to encourage users to self-authenticate so that brandscan “know” them across social channels and platforms. Identity brokers, such as such as Gigya and Janrain andtechnology startups such as Fliptop are uniquely focused on this issue, offering solutions that aim to authenticate andconnect customer identity across the social web.The ability to authenticate identity across the social web also offers an intriguing promise — the ability to connecttransactions to social and interest graphs to better understand social influence on the path to purchase.Data will be the true predictor of influence.As authentication and attribution capabilities improve, the question of who influences whom will become muchclearer. Actual influence (seeing which customers, and customer types, tend to influence other customers to buy)will overtake potential influence (algorithms that predict influence based on fans, followers, and frequency of socialactivity) as a critical business metric. As a result, influence vendors will need to integrate with other transactional datasources to validate their predictions. The winners will be those who use machine learning based on actual businessoutcomes to refine their algorithms.
  23. 23. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 22Companies will integrate social, enterprise, and external data for a holistic view.Social media should not be a data silo; it must be tied to business strategy. The challenge is to normalize social datato the extent possible and integrate it with other enterprise data (such as business intelligence, CRM, and marketresearch) and external sources (such as industry and economic data) to build sophisticated econometric models thatcan be used for modeling, scenario planning, and decision support.We are already seeing movement in this area via industry consolidation (Salesforce’s acquisitions of Radian6 andBuddy Media), Oracle’s acquisition of Collective Intellect, Involver, and Vitrue, and SAP’s partnership with NetBase,although it will take some time to realize the full benefits of these acquisitions.Ultimately, social data, in context of other enterprise data, will become a standard input into business decision-making. The winning technology vendors will be those who seek to solve the whole business problem, rather thanlooking at social as a silo.
  24. 24. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 23ConclusionSocial media for business is still immature, and the mechanisms by which we understand its impact are still evolving.Even if it becomes possible to “match” the majority of people using the social web across platforms, there will alwaysbe those who, for personal, cultural, age-related, security, or political reasons, cannot or will not be identifiable.For that reason, most organizations should expect to use a combination of rigorous top-down and bottom-upmeasurement methods for the foreseeable future, and — to solve the ROI puzzle — will need to start quantifying theirinvestments in social, as well as their returns from it.Whatever ingredients you choose for your measurement mix, the important point is that the organizations thathave been most successful at understanding the financial impact of their social media programs share severalcharacteristics: They are customer-centric, value experimentation, accept that social media is in its infancy and, mostimportantly, have the courage to learn from — and the generosity to share — their experiences.
  25. 25. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 24Ecosystem InputThis report includes input from practitioners, vendors, and market influencers who were interviewed by Altimeter Group during the course of thisresearch. Input into this document does not represent a complete endorsement of the report by the individuals or companies listed below.Brands (19)American Cancer Society, Hilary Noon, VP Customer Insight and ExperienceAmerican Cancer Society, Robert Ross, Vice President, Interactive & New MediaCisco Systems, Petra Neiger, Senior Manager, Digital and Social MediaeBay, Sudha Jamthe, Social Media StrategistEMC, Keith Paul, Chief ListenerEMC, Maria Mariotti, Sr. Marketing Programs ManagerEMC, Todd Forsythe, VP Global MarketingEventbrite, Tamara Mendelsohn, VP MarketingHallmark, Camille Lauer, Social Media Insights ManagerIBM, Ranjun Chauhan, Digital and Social Intelligence StrategyIntel, Ali Ardalan, Media and Analytics StrategistSAP, Todd Wilms, Senior Director and Evangelist of Communities and Social MediaStarbucks, Alex Wheeler, VP Digital MarketingStarbucks, Ryan Turner, Director of Global Social MediaThe Coca-Cola Company, Vincenzo Piscopo, Global Director Knowledge and InsightsThomson Reuters, Jaime Punishill, Global Head, WM Digital Distribution and Content StrategyTicketmaster, Kip Levin, EVP, EcommerceUltimate Fighting Championship, Kristin Adams, Social Media ManagerWhirlpool, Stacy Lukasavitz, Social Data AnalystVendors (38)Agencies (5)Domain Experts (4)AcknowledgementsWith thanks for support from: Jon Cifuentes, Asha Hossain, Charlene Li, Rebecca Lieb, Chris Silva, Brian Solis, Jaimy Szymanski, Christine Tran,Alec Wagner, Alan Webber, and Susan Wu.33AcrossAdobeArgyle SocialAttensityAwareness Inc.BadgevilleBazaarvoiceBuddy Media (acquired by LabsConverseonCrimson HexagonExact TargetExpionFliptopGoogleLithiumMarketShareMeltwater BuzzMicrostrategyMomentfeedMoontoastNetBaseNetworked InsightsOfferpopPower Reviews (acquired by Bazaarvoice)RevinateShopIgniterShopkickSimply MeasuredSolariatSpiceworksTopsy LabsVinTankVisible TechnologiesVitrue (acquired by Oracle)WebtrendsWildfire InteractiveCampbell Ewald, Ken Burbary, Chief Digital OfficerEdelman Digital, Dave Fleet, VPEdelman Digital, David Armano, EVPEdelman Digital, Aniz Ruda, Team Lead, Measurement & AnalyticsWCG, Chuck Hemann, Director of AnalyticsMatt Hixson, Co-Founder and CEO, TellagenceMarshall Kirkpatrick, CEO, Plexus EngineNitin Mayande, Chief Scientist, TellagenceJim Sterne, Founder, eMetrics Marketing Optimization Summit;Digital Analytics Association
  26. 26. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 25End Notes1Social networking is the most popular online activity worldwide accounting for nearly 1 in every 5 minutes spent online in October 2011, andreaches 82% of the world’s Internet population, representing 1.2 billion users around the globe. Source: comScore: State of Social Report: Facebook Developer Blog, Pew Research Center, “Twitter Use 2012,”1 statistics, multivariate testing or multi-variable testing is a technique for testing hypotheses on complex multi-variable systems, especiallyused in testing market perceptions. Source: a good overview, see ClickZ, “A/B Testing for the Mathematically Disinclined,” “Capturing The Value of Social Media Using Google Analytics,” Jeremiah Owyang and Rebecca Lieb, “The Converged Media Imperative: How Brands Will Combine Paid, Owned and Earned Media” formore information. Group explores these themes — The Dynamic Customer Journey, The Adaptive Organization and The Sentient World — in ourresearch. For more about these research themes, listen to our webinars on the topic here: Avinash Kaushik, “Multi-Channel Attribution: Definitions, Models and a Reality Check”: Time, Inc.: ResearchThis independent research report was 100% funded by Altimeter Group. This report is published under the principleof Open Research and is intended to advance the industry at no cost. This report is intended for you to read, utilize,and share with others; if you do so, please provide attribution to Altimeter Group.PermissionsThe Creative Commons License is Attribution-Noncommercial-Share Alike 3.0 United States trust is important to us, and as such, we believe in being open and transparent about our financial relationships.With permission, we publish a list of our client base on our website. See our website to learn THE INFORMATION AND DATA USED IN THIS REPORT HAVE BEEN PRODUCED AND PROCESSED FROM SOURCES BELIEVEDTO BE RELIABLE, NO WARRANTY EXPRESSED OR IMPLIED IS MADE REGARDING THE COMPLETENESS, ACCURACY, ADEQUACY, ORUSE OF THE INFORMATION. THE AUTHORS AND CONTRIBUTORS OF THE INFORMATION AND DATA SHALL HAVE NO LIABILITY FORERRORS OR OMISSIONS CONTAINED HEREIN OR FOR INTERPRETATIONS THEREOF. REFERENCE HEREIN TO ANY SPECIFIC PRODUCT ORVENDOR BY TRADE NAME, TRADEMARK, OR OTHERWISE DOES NOT CONSTITUTE OR IMPLY ITS ENDORSEMENT, RECOMMENDATION,OR FAVORING BY THE AUTHORS OR CONTRIBUTORS AND SHALL NOT BE USED FOR ADVERTISING OR PRODUCT ENDORSEMENTPURPOSES. THE OPINIONS EXPRESSED HEREIN ARE SUBJECT TO CHANGE WITHOUT NOTICE.
  27. 27. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 26About UsSusan Etlinger, Industry AnalystSusan Etlinger (@setlinger) is an Analyst with Altimeter Group, where she focuses on social media analyticsand strategy. Previously, Susan was a Senior Vice President at Horn Group, where she pioneered the agency’ssocial strategy offering. Susan is a published translator and has a bachelor’s degree in rhetoric from theUniversity of California at Berkeley.Jeremiah Owyang, Altimeter Partner, Digital Strategy AnalystJeremiah Owyang (@jowyang) is a Partner with Altimeter Group, where he focuses on social business anddisruptive technologies for customer strategies. Previously, Jeremiah was a Senior Analyst at ForresterResearch, Director of Corporate Media Strategy at PodTech Network, and Manager of Global WebMarketing at Hitachi Data Systems. He writes the Web Strategy blog ( Jones, Senior ResearcherAndrew Jones (@andrewjns) is a Senior Researcher at Altimeter Group, where he focuses on socialbusiness strategy, including how brands can manage social media proliferation. He also follows broaderemerging technology trends such as mobile payments and the implications for governance and third-worlddevelopment. Andrew previously worked in digital marketing and served in the Peace Corps.Altimeter Group is a research-based advisory firm that helps companies and industries leverage disruption totheir advantage.Contact UsAltimeter Group1875 S. Grant Street, Suite 680San Mateo, CA 94402-2667info@altimetergroup.comwww.altimetergroup.comAdvisory OpportunitiesEmail: