Social Media ROI

Social Media ROIMumbrella Talk September 6th 2011

Monday, 5 September 2011Hi I’m Tim Evans, Ogilvy Group Melbourne’s Digital Strategy Director.Before I get started I’d 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 I’m going to give you my thoughts on Social Media ROI.

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Agenda

•Say hello•What is ROI?•How can you measure social media ROI?•Questions

Monday, 5 September 2011I’ve prepared an agenda for my chat. First I’m going to say hello, so hello.Then I’ll explain what ROI is and how it can be measured in social media.Afterwards I’ll open the floor and take some questions.

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What is ROI?

Monday, 5 September 2011

So first - what is ROI? What does it stand for?Let me start by explaining what ROI is not.

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Monday, 5 September 2011ROI 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...

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ROI does not stand for return on interest


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ROI does not stand for return on interestreturn on interactions


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ROI does not stand for return on interestreturn on interactionsreturn on impressions


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Monday, 5 September 2011Return on Investment. It has a concrete formula that goes like this...

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ROI stands for return on investment

Monday, 5 September 2011Return on Investment. It has a concrete formula that goes like this...

(gain from investment - cost of investment)

cost of investment

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ROI =

Monday, 5 September 2011the gain minus the cost divided by the cost.that’s 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 that’s a 100% return on investment.Let’s apply this simple formula to a typical social media program.

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INVESTMENT ACTION REACTION SOFT GAIN GAIN

• Financial investment in social media program for Q1 is $30,000

• Socialise the customer call centre

• Introduce electrical buyer’s guide on Facebook

• Track interactions

• Customers served via social media

• Customers respond positively to buyer’s guides

• 10% more customers served

• 30% increase in positive sentiment

• 5,000 likes

• 10% increase in time spent on site

• 10% increase in traffic

• $15,000 cost reduction in call centre

• 5,000 more transactions = $45,000

• $60,000 gain for Q1

Social Media ROIAn example program

Monday, 5 September 20111st - 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 buyer’s guides and they get service via social media.The agency is proud to report on what I’m 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.

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This is money










• 5,000 likes





• $60,000 gain for Q1

Monday, 5 September 2011Just to clarify - this is money and...

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This is marketing

This is money





• $60,000 gain for Q1

Monday, 5 September 2011this 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 you’re doing it wrong.So in this example - the client invested $30k and gained $60k. Let’s plug those figures into our trusty formula and...

($60,000 - $30,000)

$30,000

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ROI = 100%Monday, 5 September 2011hey presto - another 100% return on investment!Now if it’s so easy to calculate ROI...t

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Why aren’t we doing it?

Monday, 5 September 2011hen why is it such a hot topic? If it’s so easy - why am I here talking to you about it?

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• 5,000 likes





• $60,000 gain for Q1

Most measurement stops here

Social Media ROIWhat usually happens

Monday, 5 September 2011Because the fact is - most measurement stops at the soft gain. It usually goes a little like this...

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Social Media ROIWhat usually happens


• Agency asks client to pay for a social media program

• Agency writes a strategy with soft gain success metrics i.e. 5,000 likes or service level agreements such as 5min response times

• Client signs-off on strategy

• Agency reports on program against soft metrics

• Program is optimised to produce better soft gain metrics

• Client and agency celebrate soft gain success

• Calculating real ROI is put into the too-hard basket

Monday, 5 September 2011Agency gets client to pay for social media programThe agency writes up a strategy with soft gain success metrics like 5,000 likes and service level agreements such as 5min response timesClient 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 doesn’t have to be that way...

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Measure social media ROI in 3 steps


Iʼm going to show you how to make the leap and measure social media ROI in 3 steps.

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Step 1.Find the starting line

Monday, 5 September 2011the first step is finding the starting line. because...

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Social Media ROIStep 1. The starting line

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7.5

15

22.5

30

Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011

The Electrical Dept

Start social media tracking


...you need to start somewhere. This is often the hardest part for agencies - because it means getting your hands on your clientʼs financial data - and keeping it. But once you have access, you need to draw a line in the sand. This is where you start step 2...

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Step 2.Track your social media activity

Monday, 5 September 2011tracking your social media activity. You can measure whatever makes the most sense to you...

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Social Media ROIStep 2. Track social media activity

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12.5

25

37.5

50

Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011

Positive MentionsNegative Mentions

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10

20

30

40

Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011

Traffic to Site from Facebook

Men

tions

Site

Tra

ffic

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100

200

300

400

Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011

LikesInteractionsImpressions

Face

book

Act

ivity

0

10

20

30

40

Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011

Customers Served

Cus

tom

ers

Serv

ed


Some examples are mentions - which can be split into positive and negative, customers served via social, site traffic driven from social or data from facebook insights. This is probably stuff youʼre already doing to measure your soft gain success. Itʼs the stuff you put in case study videos.

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Step 3.Prove the relationship between social media activity & financial performance

Monday, 5 September 2011the 3rd step is where we take the client’s transactional data and layer our social media activity across the same timeline.

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Social Media ROIStep 3. Relationship of sales & social media

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50

100

150

200

Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011

Likes InteractionsImpressions Sales RevenueNo. of Transacting Customers MentionsCustomers Served Site TrafficConversion Rate

Start social media tracking


Once we have all the data on the same timeline we look for patterns, isolate them and try to prove or disprove correlation...

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0

50

100

150

200

Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011

Likes InteractionsImpressions Sales RevenueNo. of Transacting Customers MentionsCustomers Served Site TrafficConversion Rate

Test & prove correlation


between social media activity and your clientʼs P & L.

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Increased conversion rate from customers who

used the Facebook buyer’s guide

Increase in customers serviced by other customers in your

community=

Demand reduction in call centre


Sometimes 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 your call centre. To calculate the gain on this youʼd have to...

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1.Tally the number of Qs answered by community5,000/m

2.10% are deflected5,000 x .10 = 500

3.Multiply by avg. cost of call500 x $20 = $10,000/m


Monday, 5 September 2011First, 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 socialThen 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 that’s a story for another time. Cos right now it’s time for my favourite part...

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And so,in summary

Monday, 5 September 2011The summary! Do y’all get that photo?

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Social Media ROISummary

•ROI=(gain - cost)/cost - So if cost = $ then gain = $•Don’t settle for soft gains - you can’t measure ROI in ‘likes’•Get that financial data•Layer your social efforts on top of financial data•Prove correlation between social efforts & financial gain


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Thanks.Questions?@tim__evans


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Digital Strategist

Learned ‘likes’ aren’t $Monday, 5 September 2011

Social Media ROI

Business

Transcript of Social Media ROI