Tag: ROI

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Gary Vaynerchuk is Wrong: There is a Social Media ROI

At last year’s LeWeb, my colleague and social media superstar Ayelet Noff asked my favorite wine guy Gary Vaynerchuk the question that we were all hearing in 2009, 2010, and finally forced to answer in 2011: What’s the ROI of social media.

Gary answered that that’s the wrong question – and it’s a problem. Gary asked, “What’s the ROI of your mother?” It’s not about data or Facebook friends or Twitter fans, he said.

He also said that ROI should be “relationship with consumer.”

But ROI of social media is far more than relationships. It’s not just about the The Thank You Economy (though brand goodwill is one tangible ROI measurement)

There are a lot of people getting paid for “social media” consulting because they know how to use Facebook but not measuring ROI. This is how we were all doing it in 2009.

 

emarketer roi

In 2012, it’s time for accountability.

At work, I’ve been a passionate advocate for Twitter – not because I love it (I love whatever tool works) but because it has a high click through rate and is an appropriate tool to integrate with other campaigns to achieve one of my key business goals: qualified leads. But I’ll use whatever tool achieves that goal – Twitter or Facebook, a trade show, or a magazine ad. What matters is achieving the strategic goal – using whatever tool is appropriate given my budget and organization. Social media is part of ecommerce. I’ve made clear sales – actual dollars – directly attributable to blog posts.

What’s the ROI of social media? Here are some possibilities:

  • Sales – immediate, tangible revenue
  • Qualified leads, in whatever form – names/email addresses, downloads, form submissions, etc. – that are targeted and qualified, using your qualification definitions.
  • Lowered costs
  • Customer service questions answered

Define your KPIs first and maybe social media can help you achieve this. On the other hand, maybe not – either way you should be comfortable finding the tool to achieve your KPI.

Here are some answers from Groundswell, Forrester Research’s first book on social technologies, on how social TOOLS can be used to accomplish BUSINESS functions:

groundswell_figure_4-1

The ROI is tangible and quantifiable. Here is another example on how social tools can help save money in customer service can be seen here.

OK, I admit, this title was a bit of link-bait and I’m being a bit unfair to Gary – who knows that the ROI in social media is what we aim to achieve.

In a later interview, Gary made the point that most social media marketers are clowns — talking about Facebook likes and Twitter followers, instead of how social media is a channel to achieve business goals.

Gary made the point that you need marketers who know how to use digital tools to achieve business goals and hiring some 22 year old kid who knows how to use Facebook isn’t the right person to be managing your business.

It’s time to start being accountable – 99.5% of social media “marketers” are clowns – encouraged by marketers who are technoilliterates seeking out the 22 year old kid who doesn’t understand business – those of us who have been doing this for a long time, like Gary, Ayelet, and me all know that this a tool to achieve business results.

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The ROI of Social is "Will Your Business Be Around in 5 Years?"

I first blogged the latest edition of Socionomic’s now ubiquitous video about how the media landscape has changed to digital and its social implications back in December. Now, six months later, the world has changed again and Socionomics has come out with a new video called Social Media Revolution 2 (though not the second edition of their video, which has been around for over a year – an eternity in the age of the iPad).

A few facts, from Socionomics:

  1. Over 50% of the world’s population is under 30-years-old
  2. 96% of them have joined a social network
  3. Facebook tops Google for weekly traffic in the U.S.
  4. iPhone applications hit 1 billion in 9 months.
  5. We don’t have a choice on whether we DO social media, the question is how well we DO it.
  6. If Facebook were a country it would be the world’s 3rd largest ahead of the United States and only behind China and India
  7. 80% of companies use social media for recruitment; % of these using LinkedIn 95%
  8. The fastest growing segment on Facebook is 55-65 year-old females
  9. 50% of the mobile Internet traffic in the UK is for Facebook…people update anywhere, anytime…imagine what that means for bad customer experiences?
  10. The #2 largest search engine in the world is YouTube
  11. There are over 200,000,000 Blogs
  12. Because of the speed in which social media enables communication, word of mouth now becomes world of mouth
  13. 25% of search results for the World’s Top 20 largest brands are links to user-generated content
  14. 34% of bloggers post opinions about products & brands
  15. People care more about how their social graph ranks products and services  than how Google ranks them
  16. 78% of consumers trust peer recommendations
  17. Only 14% trust advertisements
  18. Only 18% of traditional TV campaigns generate a positive ROI
  19. 90% of people that can TiVo ads do
  20. Kindle eBooks Outsold Paper Books on Christmas
  21. 24 of the 25 largest newspapers are experiencing record declines in circulation
  22. 60 millions status updates happen on Facebook daily
  23. We no longer search for the news, the news finds us.
  24. We will non longer search for products and services, they will find us via social media
  25. Social Media isn’t a fad, it’s a fundamental shift in the way we communicate
  26. Successful companies in social media act more like Dale Carnegie and less like Mad Men Listening first, selling second
  27. The ROI of social media is that your business will still exist in 5 years

How is your company reacting?

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Socionomics takes on Social Media ROI

I’ve already written about social media ROI before, but this socionomics video further shows the economics of social media. As a recent HubSpot report showed, inbound marketing has a 60% lower cost per lead than traditional, outbound marketing. Companies that have a higher level of social media have higher sales. Gary Vaynerchuk was able to use the Internet and the power of video blogging to turn his father’s Shoppers Discount Liquors to the powerhouse that Wine Library is today.

Just a few stats from the video about how the Internet and digital marketing helps businesses save costs:

  • Lenovo had a 20% reduction in call center activity as customers go to their community website
  • Burger King spent less than $50,000 on their Facebook application — leading to over $400,000 in press and media value.
  • Blendtec tripled sales with its “Will It Blend” YouTube videos
  • 37% of Generation Y were aware of the launch of the Ford Fiesta via social media before it’s US launch. (Great car, I want one!)
  • 25% of Ford’s Marketing is spent on Digital/Social Media – They are the only US automaker that didn’t take a government bailout
  • Software company Genius.com reports that 24% of social media leads convert to sales opportunities
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The REAL Social Media ROI – Quantifiable and Measurable (Sometimes)

After writing my last post about the ROI – the return on inaction –  of social media, one of the commentators challenged me to actually quantify the social media return on investment. This give and take is one of the challenges and benefits of social media. Companies can’t just stand behind pronouncements – they are challenged and forced to strengthen their claims.

The interesting thing about the question of “What is the ROI of Social Media” is that we can track this in ways that weren’t trackable with traditional marketing. Despite the fact that many people have difficulty giving real numbers to the ROI of social media, it’s actually far EASIER to track than traditional media.

If someone watches an ad on a TV screen or in a newspaper and then goes visits my store, how do you know that they came because of your ad? Maybe a comment card if they choose to respond. Maybe they’ll tell you. Maybe they won’t.

But, if you’ve set up your site correctly, and someone comes to your website (today’s equivalent of the corner store) because they read your blog, saw your tweet, or even clicked on the link that accompanied the online version of your news article on Time.com or the Wall Street Journal online, you can look in your web analytics and tell. If 100 people came to your site because of a link from Robert Scoble on Twitter, or a news article, or because they were looking up “really cool widgets in Florida” and you sell cool widgets in Florida, your web analytics will show this search. You “just” have to know how to monitor it. But your ROI was that 100 visitors who now know about your brand. And might buy your products or hire you. Or tell their friends about you or let a stranger know on Twitter.

For example, my wine blog analytics are below. Here, I can discover that I had a spike in readership because influencer Gary Vaynerchuk linked to me on ONE Twitter post. The ROI of one link on Twitter from an influencer is this traffic spike and the building of my personal brand. Just like companies claim that such and such magazine did an article on them, I now can say that Vaynerchuk linked to me and I can see that it drove traffic (even if only temporarily). If I had an online portal and earned revenue through page views, my income would have increased because of one link on Twitter. By the way, I have to be honest. The post Gary V linked to? That’s what I was hoping for when I wrote it.

In this case I blog as a hobby – very few people make money on ad revenue from their blog –  but because of it, I’m known of as an expert in Israeli wine and was quoted in a magazine for the restaurant trade and have been invited to trade shows. And occasionally — and this is why established brands still need to be paying attention – the established brand that’s not online doesn’t get mentioned. Or the established brand that’s not online’s credibility depends on the younger upstart’s view – even if they’ve been building their own brand for longer than the Millenial’s been alive. And a thousand (or more) more people a month know about Israeli wine and have made purchasing decisions based on what I’ve written. Yet there are plenty of people who know more about the subject than me. But they aren’t blogging.

If you sell something online then you can track if they found you from a  Facebook page. If you are a major B2B brand with no online commerce option, you can tell who found out about your company/brand because of web analytics. As an example, in the past few days, we had several visitors who came to The Cline Group – after just launching the site this month – because they went to Google and searched “the cline group” and others came because they looked for “inbound principles.”

But that leads back to the question of ROI.

Why does The Cline Group have a blog? Well, one of the reasons is because we are a business and, yes, we want to get paid to provide our communications and marketing services. If we get one new client a day, month, or year because of something that we wrote on our blog, well, that’s our business ROI. If we get one client at $3,000 a month or $100 an hour because they loved what we have been writing – over time, that’s our quantifiable ROI. More importantly, though, if we are seen as reputable in our community because (for example) 1,000 people read what we have to say every week, than that’s valuable for our business.

If someone comes to your hotel because they Googled “four star virginia hotel” and stayed for 4 nights at $120 a night and found your website, than the ROI of that one Google search (and the SEO and web design investment that you spent) is $480. If you got just 10 customers a month because of this, than your ROI is $4800 a month.

It’s worth noting another use case. What if you can find that 30 people found your site, saw it hadn’t been updated since 2006, couldn’t find your room rates and weren’t able to book elsewhere so they went to the hotel down the street – even though your hotel was better but your web site didn’t reflect that? That’s also lost ROI. Even there, by the way, Analytics can help track how many people went to your website and were immediately turned off and bounced away.

If you have an event, and you sell tickets to that event for $50/ticket, and you get 500 buyers because of your active Facebook presence, 300 because you reached out to people interested in the subject of your event on Twitter, and you got 10 corporate sponsors at $500 than your ROI for this one event is $45,000. Not bad for free tools and a whole lotta marketing knowledge.  So, in this case the ROI of social media is $45,000?

Not exactly. Because, let’s say that because of your last event, 500 of the 800 people signed up for your e-mail newsletter, found out about your next event, and 100 bought $75 tickets (because they enjoyed themselves so much last time). And, let’s say 1 of your previous sponsors really enjoyed themselves that this time they pledge $1,000. Then your ROI for the second event – because of work you did on your last event, as well as keeping up the relationships with the previous attendees – is $8500. And what if the other attendees couldn’t attend this time, but shared your post about it on Facebook and Twitter with their friends and their friends bought tickets because of a Twitter link – and positive experience from someone they trusted.

What do you think?

Hmm… so who said there’s no ROI in social media?

ROI photo licensed under Creative Commons –http://www.flickr.com/photos/cambodia4kidsorg/ / CC BY 2.0
Hotel photo licensed under Creative Commons – http://www.flickr.com/photos/wili/ / CC BY 2.0
Audience photo licensed under Creative Commons – http://www.flickr.com/photos/megapolis/ / CC BY 2.0
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What is social media?

Following up on my previous post about the ROI of social media, perhaps it’s worth explaining what social media is.

Social media is not so new. Even the technology is new and major social networks have been on for close to a decade. Facebook only started in 2004. Twitter in 2006. Blogger in 1999 and bought by Google in 2003, and WordPress also was first released in 2003. College seniors that opened up a Facebook profile in 2004 are now your 27- year old workers. Moreover, humans have been social since the first caveman shared pictures on the cave walls.

However, many so-called social media gurus like to focus on the new technology, instead of human’s nature to be social and communicate, in order to confuse you (probably to charge you more). Watch the video below, if you want to understand what social media is without being confused by Tweet this, Twibe that, RSS, ping, or other buzzwords. This explains social media – not for technology, but for ice cream.