“Our head of Social Media is the customer” – McDonald’s
“You can’t just say it. You have to get the people to say it to each other,” says James Farley, CMO Ford
Dell sold $3,000,000 worth of computers on Twitter
What do these statements say to you? For all of us it will be something different. I want you to think about these whilst you read the post below.
It’s common knowledge that social media is pretty tricky to measure, due to it’s fresh appearance on the scene and it’s diversity – many of the pieces that need to be evaluated are difficult to track.
Many times we get asked this question, as do many media agencies executing social media strategies. The Socialnomics blog put’s it extremely well: “What is the ROI of Social Media? Or the ever popular how do I measure the ROI of social media? Often when I get this question it’s appropriate for me to retort: “What’s the ROI of your phone?”Other times it’s not appropriate to respond with this answer, which, if done in the wrong tone, or place, can win you a free punch in the face. Then there are the naysayers that adamantly proclaim, “We aren’t doing social media because there isn’t any ROI.”
To borrow from the Conductor of the Boston Philharmonic Orchestra, Benjamin Zander, there are those in life that sit in the back row with their arms folded, judging, and complaining. Then there are those that sit in the front row with a vision and they are spending their energy on making that vision a reality. This article and video have been put together with the hopes of it being a viable tool for those with a vision to get those seated in the back row to stand up and see the social media light.
Social media is not for everyone, it’s for those companies and businesses that do want to reach their consumers on a whole new level,the ones that see the relationship building side one of the most important elements of any strategy. I believe there is no other marketing strategy that can touch this, as we are dealing directly with emotions. When you have built up a relationship with a consumer and harnessed it by strengthening trust, then nothing else can touch that. So back to ROI.
The Socialnomics blog states: “After all, why are we trying to measure social media like a traditional channel? Social media touches every facet of business and it should be viewed more as an extension of good business ethics. Which, if done properly, will harvest sales down the line. Co-Chairman Alex Bogusky of Crispin Porter & Bogusky puts it best when he states:
“You can’t buy attention anymore. Having a huge budget doesn’t mean anything in social media…The old media paradigm was PAY to play. Now you get back what you authentically put in. You’ve got to be willing to PLAY to play.” – Alex Bogusky, Co-Chairman of Crispin Porter + Bogusky
We are high 5ing that!
The video below by Socialnomics, simply get’s my heart thumping. It highlights the Social Media ROI on campaigns and companies that have launched themselves into the Social Media space. Sit back and soak it up!!
So what are you thinking now?
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High 5ing to you Ben .Good news and inspirational Thankyou 4 sharing
Thanks Sue for your feedback! I trust this helps. I actually wrote the post, yet it’s all one and the same here at Thinktank Media!
GREAT ARTICLE!!!!!!!!!
I was only arguing with my Biz partner today about this. I was arguing AGAINST social media as a platform for our new project, but after reading this boy am I eating my words…
I’m choking on them!
Although I am on Twitter and FB so maybe I’m doggy paddling with the tide.
Amelia
He he..thanks for taking the time to comment Amelia! It’s certainly a powerful medium yet it does take some time to truly “get it” if you are running a campaign/strategy without assistance. You’ll get there, it’s certainly worth being patient for. At least you are doggy paddling with the tide, and not against it!
If you have any q’s then feel free to hit us up!
Awesome Sam!
As you know first hand – we have met many “traditionalist” marketing managers, CEO’s & Business Owners of late, that simply rate marketing methods & mediums based purely on ROI in cold hard facts & figures…
Social Media is PR, relationship building, branding, emotional marketing and is a long term strategy for top of mind placement… but most importantly – its unique against every other medium out there, away from any marketing discipline.. exciting stuff and is great to be pushing the boundaries in this space!
So true Sam, can’t agree with you more and that video says it all. Half the problem is trying to convince our Board that social media requires an investment in time, I mean they get it and understand it’s importance in our communications and marketing strategy but don’t understand how much more we could be doing if only they didn’t load me up with other tasks that won’t net the same ROI
Mmm, hang on – let’s not get too excited. Erik Q is a great marketer (and video editor)..but let’s stop and think for a mo;.
First, a definition;
1. ROI = Net Profit After Taxes ÷ Total Assets (traditional formula) or
2. ROI = (Net Profit After Taxes ÷ Sales) x (Sales ÷ Total Assets) (DuPont formula)
ROI also has a few flaws…5 in total, but as an example – the above formula is skewed by length of life of the returns, capitalisation etc etc.
In order to populate this formula, and hence derive a true figure for ROI, you need all the inputs. This great little vid only gives one (maybe 2) examples of such values as total assets or NPAT.
Because the gorilla in the room is the labour and enterprise (intellectual capital) committed to getting a return on investment with social media campaigns, it is very difficult to measure these inputs.
So many examples that Erik and the Roosters use here are flawed in that they are NOT specifically social media campaigns. For example – Ford had to develop so many other things first to commit to a ‘social media campaign’ – like paying Scott Monty $450K p.a. + bonuses as an example.
I think it is great that we are having these conversations, and they are necessary to progress what is (possibly) an important conversation.
But plllllleeeeaaaassse, can I not see any more comments like “CEO’s just don’t get marketing” or “when will organisations get this”
This attitude is a bigger problem than ROI in itself.
Any woman or man that is a successful CEO (no matter what the metric is for success) will NEVER commit 100% to something they cannot measure (you cannot manage what you cannot measure). The onus is on people like us here to put a more compelling proposition to CEO’s than funky vids like this.
No CEO worth their salt will be impressed by this kind of presentation – marketers may be?
I make several points here; but the one central tenet I would like to suggest is that measuring the ROI for social media may not be the answer to influencing business owners or C level executives?
If ROI is not the case to be made for Social Media…then what is the case??
I agree with Luke but I want to stress that I’m new to this industry and have very little experience dealing with clients.
Unless you have a large budget – which is out of the reach of most organizations – the ROI can be very difficult to measure. Now, by working with Sam on some of the social media campaigns I know that social media is helping certain businesses like Carolineapts. I know it because its what I do – I’m in the trenches everyday, and pick up on things like sentiment really easily.
Luke – I remember you saying something similar at the Marketing Now conference. (I also remember you saying why didn’t I just speak to @problogger instead of tweeting
I did, later, once the presentation had finished hehe).
So I have a couple of questions for you:
- do videos like this have a place in educating people about social media
- how can people like myself create a compelling proposition. I aim to deal with small businesses, who are probably less resistant to change.
- You seem to bring this up a lot so do you have any suggestions on how we can change the conversation?
I’m not trying to nitpick here – I genuinely want to know your thoughts
- Jade
Thanks a million for your lengthy comment Luke, I think you have raised quite a debate. I agree with some of the points you gave, as mentioned in my post. It is very difficult to measure all inputs due to the diversity of social media. This post was written as a taster to show a grain of sand in the beach of what has been done here so far, and the results.
Ford obviously saw there was potential in social media to employ Scott Monty and pay him that amount of money in the first place.
I find your comment here interesting:
“Any woman or man that is a successful CEO (no matter what the metric is for success) will NEVER commit 100% to something they cannot measure (you cannot manage what you cannot measure).”
We are finding quite the opposite, many CEO’s we work with are far more open minded here and whilst measurement is executed in many areas, they are far more open to looking at the connection and relationship building process as apposed to hard, cold metrics. Matt Finnis, CEO of the AFLPA is a great example if this.
I love you ending statement Luke! The case to be made for social media in my opinion is it’s powerful connecting process, market influence and the trustworthy relationships and word of mouth that comes with it – you can’t buy that!
Brad – thanks for your comment…it says it all!!!
Great grist for the mill people…
For Jade – just to confirm, I do not go on a lot about this…the two occasions you have mentioned are in fact the only two occasions I raised the issue directly!
I raise the point to encourage anyone who deals with social media to apply good commercial acumen to the approach…I do not see a lot of this happening in the market place amongst the myriad of solo-preneurs out there pushing their services. This is because most of these people are fundamentally marketers or technologists first and good business people second!
So here some more specific thoughts in response to your questions;
- do videos like this have a place in educating people about social media – yes, but mostly for the un-informed marketers and visually stimulated folk…
- how can people like myself create a compelling proposition. I aim to deal with small businesses, who are probably less resistant to change. Work with others…fast. And I mean the right OTHERS. Here’s a really good test that has been applied by investors in the valley (silicon) when assessing good businesses. Firstly, they are only interested in WHO is involved. Next they want to understand who is a rainmaker (who can sell like a maniac, and CAN prove it), who is technically superior (i.e. has a technical skill that cannot be easily replicated) and finally, who has built something of value (i.e. built a business that is valued, and can be sold!). Look at your skillset, figure out where you sit – if this is tough, then work with those who can provide these qualities…then you are one step closer to developing a value proposition – regardless of what you are selling. What am I really saying here…creating something of value is tough…especially in an area where many people have little credibility (social media – noticed how there are a lot of people who have achieved little else in the field??). Don’t make it tougher by going it alone with a ‘brand’ that may not get you past the front door for small business..or any prospect for that matter
- You seem to bring this up a lot so do you have any suggestions on how we can change the conversation? – plenty…in fact doing some of that right now with a new business…working with a new business partner at the mo and have employed some funky types to have a crack at metrics like return on engagement, game mechanics, digital curation…more to follow, but me thinks the numbers around this stuff may go further to justifying expenditure and commitment to social technologies than ROI…(long post, but fun!)
Interesting Vid. I am not convinced.
Don’t get me wrong, I am convinced that Social Media is a key part of societies (and therefore companies) future. It has an important role to play. But I am not convinced that it was Social Media alone that had the impact the video says.
Like a lot of marketing, you can’t just throw time, effort and money at Social Media and think “hooray that will increase sales”. Like Fire, Social Media is a brilliant tool and a poor master. Social Media is just one more piece of equipment in the tool box.
The essence has to be “what is your marketing strategy?” Yes, some kind of interaction with the community is necessary, but on it’s own it is not enough. A good leader and manager will ALWAYS ask what the return on the effort and investment is. Flaky airy fairy statements are not enough.
The figures in the video are good, but maybe a little twisted. Ford didn’t receive bailout funds – was that ONLY because of social media or were there other factors? What I would like to see is relevant Australian examples of social media success.
There is a lot of crap out in social media circles. So called experts who fail the 5 word test (“What Five Things Have You Done”). There is a lot of effort in Social Media that amounts to little. I suggest the same could be said for other forms of media when they first came out.
I am a huge believer in Social Media and I belive Sam Mutimer has a lot of experience and success with it. But it is not the panacea for all that ails your business.
Warwick
So I know this is a tough topic and there is a lot of misconception out there. However, I have found you can actually measure return on investment for Social Media like any other medium.
I spend a considerable amount of my month benchmarking and reporting on metrics such as what I call ‘New Client Introductions’ (NCI), ‘Cost per Lead’ or ‘Lead to Opportunity’ conversion rates for marketing initiatives. Not very glamorous is it and it does take discipline. I now do this for all social media initiates too.
If a marketing program doesn’t yield – it is dropped – it is as simple as that. Social Media is no different.
Some of the figures in the video were a little fluffy but Intuit & Moonfruit reported a 20-30% increase in sales.
I think it is more a question of what people are familiar with. If you have always done it that way, you are more than likely to stick to it no matter the ROI.
My take on Social Media campaigns is this. I support PR consultants, speakers and small businesses.
It’s my job to monitor the Social Media stream to report my findings back to my clients so they can see where their information is landing and that people are noticing.
I don’t consider this as a ROI because this couldn’t be measured for what my clients’ do. For example they would submit a press release and sometimes this press release may or may not find its way onto twitter, a blog site or Facebook. How do you measure the ROI on a press release? How do you measure the ROI on a billboard in the street? I feel you can’t but you have to have your name out there as part of your advertising budget because if you don’t your competitors will. Social Media needs to be included as part of your Marketing/Advertising dollar and part of your marketing strategy.
For example Twitter is about interacting, building relationships etc but in the end we do like to find out what the person we are communicating with at the other end is all about and therefore what they do for a living which is a big part of who we are. I know whenever I gain a new follower I do check out their profile. If there is no bio I don’t follow!
Sometimes we also have a few moments to read and respond to blogs and see what others have written. This is Social Media. Someone’s response may hit home to us and they may have a service that would be of benefit to us, perhaps they are sharing great information. This saves me time in my research which is also a very large part of my services to my clients. How do you measure the ROI on information sharing, it’s unmeasurable in my opinion.
In the end Social Media is just another way of getting yourself known and perhaps putting yourself in front of a different audience than what you would normally do. Maybe making yourself a little uncomfortable by sharing more of your thoughts and feelings and by showing a personal side of who you or your business are, you are also showing that your business is run by people and not just a faceless person on the top floor of a building.
Wow! Gotta be happy with this discussion Sam…nice post
Why is anyone trying to measure Social anything? Is Marketing the new Anthropology? The moment it’s measured or has an ROI attached to it, is it still ‘Social’? I don’t think so…
So I reckon lets call a spade a spade. It’s not Social Media any more…it’s Business Media!
Twitter’s product WAS originally premised on the following – “What are you doing now?” But even they’ve recognised the reality of their situation and have at least been honest enough to change that product premise to “Share and discover what’s happening right now, anywhere in the world.”
I suppose they could’ve changed it to “What are you selling now?”
Why did they do this? Because it’s no longer a Social Medium. It’s a Business Medium.
I reckon that excerpt from Socialnomics Blog nails it pretty nicely – “What’s the ROI of your phone?” Moreover, whats the ROI of business calls on your phone? Do you measure personal calls as part of the ROI? Or do they just become a cost when there’s too many, then your boss kicks your butt and putts a call blocker on your phone?
We’re all so invested in our investments…don’t you think? What is the business community so afraid of that they have to charge consumers for their never ending pursuit of control over every aspect of human nature…and then grumble about the cost of being in business? Why doesn’t someone measure that?
Or why doesn’t someone measure the mathematical inevitability of the saturation of a finite system with the oh so sustainable notion of ‘constant & never-ending improvement’ (read – ‘insanity’)?…before it’s too late?…Oops! Too late…:-P
What happened to making a good product or service and delivering it? Or is perception the only thing that matters? Because if that’s all that matters, then measuring everything isn’t going to amount to anything, and we will be wallowing in a sea of nothing because we will have forgotten what really matters…real people & authenticity.
You know we’re soaking in it?…
Cheers
Stephen G
Dear Sam, I dug your article and really enjoyed the video. Thanks to Stephen G for the Twitter heads up. As a copywriter, I’m forced to whisper the word ‘apostrophes’. As a switched-on go-getter, I hope you’ll be cool with that. I look forward to reading more of your writing. Best regards, P.
Sam, I LOVE that you are so passionate about this however along side the passion is experience and an abundance of knowledge. You are not that naive in thinking you can measure the ROI from a profit point of view.
I do agree with Luke to a certain extent but I am a strong believer that ROI is also about building relationships and gaining knowledge by learning from others. As a small business it is nice to network with other experts and business in your field so you can bounce off each other and support each other. That is ROI, yes?
In saying that I have a few contacts who do well with conversions from social media and they can and do measure it.
I LOVE Stephen’s comment and I agree totally however I do sieve through the people who just try tell sell because it is more then that, for me anyway
You can not measure everything sometimes you just have to go with it, don’t think WHY? think WHY NOT?
Warwick, I agree with you in the fact that social media is only part of a marketing strategy, however it’s a very strong part.
You say” The figures in the video are good, but maybe a little twisted. Ford didn’t receive bailout funds – was that ONLY because of social media or were there other factors? What I would like to see is relevant Australian examples of social media success.”
I’d love to invite one of our small business clients to comment here, I believe they are a fantastic case study on all they have achieved within social media in the last 4 months – stats,facts,creativity,happier staff,stronger relationship with guests, increase in sales – plus so much more. I will hit them up to comment as it’s far better coming from them.
Monitoring, analysis, measurement and engagement are all crucial within any strategy and there are so many cowboys out there that do not do this – adding to the wishy washy effect that some people believe social media holds. When measurements are rolled out and bench marked( as Natalie says earlier) into hard and soft metrics then it becomes evident of the success of any social media strategy.
Great discussion folks. Here’s my two cents worth.
I worked in the corporate world for 22 years and still speak to many large, medium and small businesses. In that time, I’ve never met a CEO, MD, Director or business owner who was not willing to consider an investment that involved retaining their current customers and acquiring prospects by engaging them in a cost effective way.
This is the way social media needs to be pitched to business owners and managers. It’s the platform for individuals and communities who are prepared to connect with a brand to create opportunities through interaction. When you look at Australian adoption rates and how pervasive this technology is becoming, a business leader worth their salt must at least review whether to leverage the technology or not. ROI then becomes a factor, not the be and end all.
Social media is not the answer to every business challenge but it should definitely be a consideration for any business that wants to connect with its target market.
Iggy
Our small business has been working with Sam for a few months with an original plan to try to drive more traffic to our accommodation website and potentially get more customers. Our use of social media has done that and so much more! We’ve not only had a 68% increase in traffic to our website, we’ve also found that we’ve made some key connections with other businesses to either help add value for our guests or who actually do require our services. It seems that social media has become a fantastic way of spreading the word.
Our Facebook Page and Twitter Accounts have had a steady increase in followers daily, and we’ve developed a community of followers who are also connecting with each other as well as with our business. From a branding perspective, this activity has contributed to the number of people finding us online by using our company name has increasing by over 40% since we’ve began utilising social media networks.
Our newest staff member applied for her job after seeing it posted on Facebook. ROI on that? Well, a small amount of effort involved to mention a position vacant has lead to us finding the right person for the job who will hopefully be working with us for quite a while yet.
ROI through Social Media may not be as easy to measure as other more traditional forms of marketing. However for us, it seems to complete the puzzle of how we can reach our potential customers, as it’s enabled us to get our small business noticed on a much more far-reaching scale than we’ve ever had before. Like Renee commented, it has also become the perfect way for us to show our personalities and ‘humanise’ our brand by building relationships with others. I love that anyone can log onto any one of our social media pages and get a feel for the type of people who are running the business by viewing comments or posts and seeing how we interact with people.
I also agree with Monika that it’s near impossible to measure ROI on information sharing. Connections we’ve made with other hotels throughout the world has helped us in our other forms of marketing. Finding new ideas and information via Twitter has also assisted in motivating our team to try new customer service techniques, or marketing ideas. How do you measure ROI on staff motivation? Social media use has empowered the team to seek new information out that will both benefit our business and their own personal development.
Social Media will never replace the value of meeting a client/customer in the flesh, as someone’s body language can tell you a lot about how well things are going. Social Media will not replace our constant phone interactions with our key clients either. Both of these forms of communication/ marketing are probably far more effective than social media is in terms of ROI. However social media has given “word of mouth” advertising some ‘legs’ – for a small business, getting your name out there and known is so important for success.
Sorry to write so much, but you did throw me that line Sam, and I had to take the bait
Cheers for a great discussion – Ali (Caroline Serviced Apartments).
A quick follow up on Ali’s comments:
1) I would never have heard of their business without Twitter (and Sam & Jade in particular)
2) Had a quick look at what the fuss was about i.e. why all the “Tweeting”, thinking it was just another “spanny” type of exercise
3) This drove me to the website. This was the “sell” to me as it is beautifully presented, simple, clean and really showcased the accommodation (if it had been a crap site or “smoke and mirrors” that would have been the end of the “relationship”)
4) Friended up on Facebook (can’t remember why….probably some “Social media” Campaign lol)
5) Was impressed that Tweets & FB are just not business related. Whether it is part of the campaign, or just for fun, the team at Caroline Serviced Apartments seem to have engaged AS PEOPLE not just mindless “posters” who are trying to flog a product. This makes me feel engaged and more likely to retweet, comment on FB, enter a competition, tell my mates about it etc.
6) NOW, when we plan to visit Melbourne their business will be number one in my mind as a place to stay. The people seem really nice, the product looks great and there is an engagement/ previous “relationship”.
Well done to all involved, a marketing campaign using social media that has been very successful in my 50+ yo mind!
Dear Ali Vosebergen,
What a great name…there’s a brand just there…move over ‘Hello Kitty’
Sorry? You’re ‘Sorry’ to write so much?…Gasp, gag, stagger, stagger…crash! (Insert wall here!)
Good grief! Can you promise me something? Never EVER say that again? Ok?
Not only do you write really well, but if that’s not all that is ever necessary for any enterprise to know about how to sanely, humanely & sustainably augment their enterprise through improved communication technology I don’t know what is!
I also love Iggy’s piece. The only bit I take issue with Iggy is this – it’s not ’2 cents worth’ mate…it’s ’2 Bobs worth’…
You remind me of a mate of mine Iggy…he’s even older than me too ;-P He just loves to hover over a conversation, chiming in at the end with a grand 2 paragraph summary of what everyone else has said…Hehe! Just kiddin’ mate. Bluddy brilliant…just like my mate. His name is Malcolm. In fact, if I didn’t know any better, I’d say you are him…the shapes of your thoughts and writing styles are very similar…bluddy awesome.
Speaking of people that should be apologising for waffling on…here am I acting like this is my blog when all I intended to do was pop in and leave a couple of links.
But damn! They’re just such great comments…all of ‘em…I reckon ya gotta be pretty chuffed Sam…Congrats on inspiring a great conversation and thanks for allowing me to be part of it…
So here’s the links:
http://www.ted.com/talks/lang/eng/barry_schwartz_on_our_loss_of_wisdom.html
This one enscapsulates, far better than I can, the damage our over-reliance on measuring, policies and rules may be doing. And no, I’m not advocating that we don’t measure stuff…nor am I advocating ‘Balance’…I hate ‘Balance’. You mix that with our incessant attempts to control everything and it becomes static. You don’t find that in nature, or even in a market place do you? I just reckon that we can afford to rely more on our human faculties and relationships than rigid things that stop us thinking, that make us creatively lazy and inhuman. That we need to rely more on the ‘unmeasured’…as Ali so well illustrated and Iggy so well articulated…we need to rely more on what our need to control has been systematically suffocating… we need to rely more on the little unmeasured things that may hopefully lead to a renaissance of ‘common sense’ and our long lost ‘wisdom’, resulting in an increase in random acts of kindness; which brings me to the next link:
http://www.ted.com/talks/lang/eng/jonathan_zittrain_the_web_is_a_random_act_of_kindness.html
Ok! I’m shutting up now
Cheers
Stephen G
Hehe frank – I just want to point out one thing.
I’m very strict about spamming on twitter. Despite working for Thinktank, I don’t retweet stuff unless I feel my friends can get something from it. I don’t work on that campaign anymore but I still love what they do and will talk about them occasionally because they are rocking it.
I think part of the reason for their success though is that they were so switched on. Ali in particular lapped up new information. I think this is one of the reasons that we can show the campaign is working. Like me, she is in the trenches getting a feel of what people like. This stuff is really hard to measure and probably isn’t scalable.
Luke – thanks for your reply. Will definitely be keeping a keen eye on what you guys are doing
Social media is a revolution it has really made the world smaller………it is a business industry now
But still we have questions of the social media networks & their services provided for free…….for long to be charged?