Social Media ROI

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Old talk on social media ROI for Mumbrella masterclass.

Transcript of Social Media ROI

  • 1. Social Media ROIMumbrella Talk September 6th 2011Monday, 5 September 2011 Hi Im Tim Evans, Ogilvy Group Melbournes Digital Strategy Director. Before I get started Id like to thank Mumbrella for inviting me and thank all of you for coming along. There are some great speakers here today covering lots of interesting topics - and for the next 20 - 30 minutes Im going to give you my thoughts on Social Media ROI.

2. Agenda Say hello What is ROI? How can you measure social media ROI? Questions2Monday, 5 September 2011 Ive prepared an agenda for my chat. First Im going to say hello, so hello. Then Ill explain what ROI is and how it can be measured in social media. Afterwards Ill open the floor and take some questions. 3. What is ROI?3Monday, 5 September 2011So rst - what is ROI? What does it stand for?Let me start by explaining what ROI is not. 4. 4Monday, 5 September 2011 ROI is not return on interest, return on interactions or return on impressions. It is a business measurement with non variable values. And it stands for... 5. ROI does not stand forreturn on interest4Monday, 5 September 2011 ROI is not return on interest, return on interactions or return on impressions. It is a business measurement with non variable values. And it stands for... 6. ROI does not stand forreturn on interestreturn on interactions4Monday, 5 September 2011 ROI is not return on interest, return on interactions or return on impressions. It is a business measurement with non variable values. And it stands for... 7. ROI does not stand forreturn on interestreturn on interactionsreturn on impressions4Monday, 5 September 2011 ROI is not return on interest, return on interactions or return on impressions. It is a business measurement with non variable values. And it stands for... 8. 5Monday, 5 September 2011 Return on Investment. It has a concrete formula that goes like this... 9. ROI stands forreturn on investment5Monday, 5 September 2011 Return on Investment. It has a concrete formula that goes like this... 10. ROI = (gain from investment - cost of investment)cost of investment6Monday, 5 September 2011 the gain minus the cost divided by the cost. thats it. and because everything you put into your social media program costs money - from head hours to technology - the gain must also be measured in money. For example - if Mumbrella paid me $100 to be here and it cost me $50 to get here - well thats a 100% return on investment. Lets apply this simple formula to a typical social media program. 11. Social Media ROIAn example program INVESTMENTACTIONREACTIONSOFT GAINGAIN Financial investment Socialise the Customers served via 10% more customers $15,000 cost in social mediacustomer call centre social media served reduction in call program for Q1 is Introduce electrical Customers respond 30% increase incentre $30,000buyers guide on positively to buyerspositive sentiment 5,000 moreFacebook guidestransactions = 5,000 likes$45,000 Track interactions 10% increase in timespent on site $60,000 gain for Q1 10% increase intrafc7Monday, 5 September 2011 1st - The client invests $30k in their social program. For that - the agency socialises the call centre, introduces etc. Next the public responds. They like the buyers guides and they get service via social media. The agency is proud to report on what Im calling soft-gain success. These are non-financial metrics like - All this results in hard gain - which is money. 15k cost reduction in the call centre and 45k worth of sales for a grand total of $60,000. 12. Social Media ROI An example program This is moneyINVESTMENT ACTIONREACTIONSOFT GAINGAIN Financial investment Socialise the Customers served via 10% more customers $15,000 costin social media customer call centresocial mediaserved reduction in callprogram for Q1 is Introduce electrical Customers respond 30% increase incentre$30,000 buyers guide onpositively to buyers positive sentiment 5,000 moreFacebookguides transactions = 5,000 likes$45,000 Track interactions 10% increase in timespent on site $60,000 gain for Q1 10% increase intrafc8Monday, 5 September 2011 Just to clarify - this is money and... 13. Social Media ROIAn example programThis is money INVESTMENTACTION REACTIONSOFT GAIN GAIN Financial investment $15,000 cost in social media reduction in call program for Q1 is centre $30,000 5,000 more This is marketing transactions = $45,000 $60,000 gain for Q19Monday, 5 September 2011 this is marketing. Marketing is still very important, but if your cost of investment is measured in dollars and your gain on investment is measured in facebook likes - well youre doing it wrong. So in this example - the client invested $30k and gained $60k. Lets plug those figures into our trusty formula and... 14. ($60,000 - $30,000) $30,000ROI = 100%10Monday, 5 September 2011 hey presto - another 100% return on investment! Now if its so easy to calculate ROI...t 15. Why arent wedoing it?11Monday, 5 September 2011 hen why is it such a hot topic? If its so easy - why am I here talking to you about it? 16. Social Media ROI What usually happensMost measurementstops hereINVESTMENTACTION REACTIONSOFT GAINGAIN Financial investment Socialise the Customers served via 10% more customers $15,000 cost in social media customer call centre social mediaserved reduction in call program for Q1 is Introduce electrical Customers respond 30% increase incentre $30,000 buyers guide on positively to buyers positive sentiment 5,000 more Facebook guides transactions = 5,000 likes$45,000 Track interactions 10% increase in timespent on site $60,000 gain for Q1 10% increase intrafc12Monday, 5 September 2011 Because the fact is - most measurement stops at the soft gain. It usually goes a little like this... 17. Social Media ROIWhat usually happensINVESTMENT ACTIONREACTION SOFT GAIN GAIN Agency asks client to Agency writes a Agency reports on Client and agency Calculating real ROI ispay for a socialstrategy with softprogram against softcelebrate soft gain put into the too-hardmedia program gain success metricsmetrics success basketi.e. 5,000 likes or Program is optimisedservice level to produce better softagreements such asgain metrics5min response times Client signs-off onstrategy13Monday, 5 September 2011 Agency gets client to pay for social media program The agency writes up a strategy with soft gain success metrics like 5,000 likes and service level agreements such as 5min response times Client signs off and the agency reports on the program based on the soft gain metrics, so the program keeps being optimised to produce better soft gain metrics and we all celebrate our soft gain success. And that crucial last step where we convert our non-financial impact into real financial gain is simply put into the too-hard basket. But it doesnt have to be that way... 18. Measure social media ROI in 3 steps 14Monday, 5 September 2011Im going to show you how to make the leap and measure social media ROI in 3steps. 19. Step 1. Find the starting line15Monday, 5 September 2011 the first step is finding the starting line. because... 20. Social Media ROI Step 1. The starting line Start social media trackingThe Electrical Dept 3022.5 157.50 Q2 2010 Q3 2010Q4 2010 Q1 2011 Q2 2011Q3 2011 16Monday, 5 September 2011...you need to start somewhere. This is often the hardest part for agencies - because it means getting your hands on your clients nancial data - and keeping it. But once youhave access, you need to draw a line in the sand. This is where you start step 2... 21. Step 2.Track your socialmedia activity17Monday, 5 September 2011 tracking your social media activity. You can measure whatever makes the most sense to you... 22. Social Media ROI Step 2. Track social media activity Negative Mentions Customers Served Positive Mentions Customers Served 5040Mentions37.5 30 252012.51000 Q2 2010Q3 2010 Q4 2010Q1 2011 Q2 2011 Q3 2011Q2 2010Q3 2010Q4 2010 Q1 2011 Q2 2011 Q3 2011 Traffic to Site from Facebook Impressions Interactions Facebook Activity LikesSite Trafc 40400 30300 20200 1010000 Q2 2010Q3 2010 Q4 2010Q1 2011 Q2 2011 Q3 2011Q2 2010Q3 2010Q4 2010 Q1 2011 Q2 2011 Q3 2011 18Monday, 5 September 2011Some examples are mentions - which can be split into positive and negative, customers served via social, site trafc driven from social or data from facebook insights. This isprobably stuff youre already doing to measure your soft gain success. Its the stuff you put in case study videos. 23. Step 3.Prove the relationshipbetween social mediaactivity & nancialperformance19Monday, 5 September 2011 the 3rd step is where we take the clients transactional data and layer our social media activity across the same timeline. 24. Social Media ROI Step 3. Relationship of sales & social media LikesInteractions ImpressionsSales Revenue Start social media tracking No. of Transacting Customers Mentions Customers Served Site Traffic Conversion Rate 200 150 10050 0Q2 2010Q3 2010Q4 2010Q1 2011 Q2 2011 Q3 2011 20Monday, 5 September 2011Once we have all the data on the same timeline we look for patterns, isolate them and try to prove or disprovecorrelation... 25. Social Media ROI Step 3. Relationship of sales & social media LikesInteractionsTest & prove correlation ImpressionsSales Revenue No. of Transacting Customers Mentions Customers Served Site Traffic Conversion Rate 200 150 10050 0Q2 2010Q3 2010Q4 2010 Q1 2011Q2 2011Q3 2011 21Monday, 5 September 2011between social media activity and your clients P & L. 26. Social Media ROI Step 3. Relationship of sales & social mediaIncrease in customers servicedby other customers in your Increased conversion community rate from customers who =used the Facebook Demand reduction in callbuyers guide centre 22Monday, 5 September 2011Sometimes this will be clear - like an increase in the conversion rate from social media.Other times - it will require some further calculations. For example maybe you notice that as more customers get service on your Facebook page - there is less demand on yourcall centre. To calculate the gain on this youd have to... 27. Social Media ROI Step 3. Relationship of sales & social media 1.Tally the number of Qsanswered by community5,000/m 2.10% are deected5,000 x .10 = 500 3.Multiply by avg. cost of call500 x $20 = $10,000/m23Monday, 5 September 2011 First, you need to tally the number of questions answered by your community. Then you times that by 10% which is what salesforce tells us is the average amount of calls deflected after being served via social Then you times those deflected calls by the cost of a call to get your average amount of gain per month. In fact - socialising your call centre is a great way to project ROI and get some budget. But thats a story for another time. Cos right now its time for my favourite part... 28. And so,in summary24Monday, 5 September 2011 The summary! Do yall get that photo? 29. Social Media ROI Summary ROI=(gain - cost)/cost - So if cost = $ then gain = $ Dont settle for soft gains - you cant measure ROI in likes Get that nancial data Layer your social efforts on top of nancial data Prove correlation between social efforts & nancial gain 25Monday, 5 September 2011 30. Thanks. Questions? @tim__evans 26Monday, 5 September 2011 31. Digital Strategist Learned likes arent $ 27Monday, 5 September 2011