Archive for December, 2009

Advancing the Discussion of Social Media & ROI

Monday, December 21st, 2009

Return on Investment or (ROI) is one of those terms that has been mis-used by all in 2009.  As we look to 2010, how can we get back on track.  We know there is going to be a strong influx of interest in social media projects by companies.  In fact, a report from econsultancy and bigmouthmedia suggest that 86% of the 1,100 companies surveyed plan to spend more on social media in 2010 and 13% plan to spend the same amount.  The report is further detailed here.  With all this investment in 2010, will any of it be tied to ROI or will it be looked at as non-financial impact?

We stated that the term ROI is widely mis-used.  Here’s what we mean:

This is NOT ROI:

  • The return of my Twitter usage is 2009 is 1,637 followers.
  • I increased the page views of my website by 300% on an investment of $120.
  • I increased my brand awareness by putting better content on my blog.

The actions above relate to non-financial impact on a business.  For more information on Impact on Business we did a post a couple of months ago here.  What seems to happen is that we take what is a financial term (ROI) and mix it around with investments in media measurement or listening tools or other social media tactics that are a part of non-financial metrics like building relationships, brand management or engagement.  While these are all necessary and they do require an investment, the results are almost always non-financial.  Therefore, if you are in front of executives and trying to attain funding or approvals, they will be interested in financial returns as measurement.  While redefining the terms to meet your specific needs may be fun or even cute, no one is going to sign up for ROI when it means Return on Interest or Return on INgagement. 

So what is ROI?  The accepted definition of return on investment is very straightforward: gain from investment minus cost of investment, then divided by cost of investment.  In other words, recruitment, engagement, interactions, listening are all very important pieces of the ROI equation however until that customer or prospect does something (ie: make a purchase) there is no financial measurement.  The exception to this is the relation to cost savings realized by an investment.  A great image of this was done by Olivier Blanchard:

roi1
 

 

 

 

 

 

 

Another important piece of the ROI pie is about actuals.  ROI is not about what we think is going to happen, it is about what happened.  Or in the words of Olivier again, “It’s not about potential, it’s about actual performance.”  So ROI is not a forward looking statement, rather it is backwards looking results.  So if you are looking for a quick refresher, check out this widely viewed deck on ROI here.

Olivier Blanchard Basics Of Social Media Roi

You may have guessed already on who could possibly by moderating this much needed discussion on ROI.  If you guessed Olivier Blanchard aka “The Brand Builder” then you are correct!  Olivier has long been a recognized and sought after practitioner and speaker on the topic of social media ROI.  He brings a very clear yet in-depth understanding to the topic and we are thrilled to have him moderating this chat with us.  The topic and question this week are as follows:

Topic: Advancing the Discussion of Social Media & ROI

Q1: How can strategy & planning can impact ROI?

Q2: What are the steps to integrate SM across a business?

Q3: What is the difference between measurement & ROI?

Please join us this Tuesday 12/22 for the weekly chat event at 12 noon EST.  The hashtag for this event will be #sm39.

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Posted in Measurement, ROI in Social Media, social media | 2 Comments »

The Future of Socialnomics

Sunday, December 13th, 2009

social-media-revolutionSocial media: The most important change in business or the biggest waste of productivity?  Looking back, 2009 brought about some better examples of the value that social media brings to businesses yet social is still very much an unknown quantity to executives and hard to execute by practictioners.  In short, it comes down to the economics of social media or, Socialnomics.

In order for social media and social networks to be truly transformational in the corporate world, they need to show value.  Many of the efforts of 2009 were experimental while there were a few glimmers of hope including Ford Motor Company and the acquisition of Zappos (a buisiness built almost entirely on social media).   We have discussed the need to move from campaigns to conversations and the importance of hiring an agency that has the skills to best serve your company.  For a better understanding of some metrics, Erik Qualman has put together a widely viewed video on the idea of socialnomics. Socialnomics 09 

Most of the digital experiments using social media for businesses has happened on two primary consumer networks: Twitter and facebook.  In looking into the future, what will be the goto networks next year?  What does it take for these networks to entice companies?  It’s apparent that size does matter.  How about quaility though.  Does it matter if the digital network has elements of quality without the quantity of users?   Consumers are using social networks to connect with old friends and get access into “a day in the life of” whoever they follow.  Will that be enough in the future though?  What will consumers require out of their digital interactions with brands?  So many questions and not enough answers.

To explore the value and economics of social media we went to the source.  Charlene Li has been the source of information for many of us since her days at Forrester, her bestselling book Groundswell and now with her company Altimeter Group.  Charlene has influenced corporate executive boards for many years and this week we have an opportunity for her to help shape this discussion.  So what does 2010 and beyond bring for the industry?  That’s what we will discuss: 

Topic: The Future of Socialnomics

Q1: What social networks will prevail in 2010?

Q2: How will consumers use them in the future?

Q3: What will the value metrics look like for consumers / businesses?

This week’s chat will take place Tuesday December 15th at noon EST.  Follow along using #sm38 or on our Live site.

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Posted in Measurement | 2 Comments »

The Future of Advertising & the Role of the Agency

Monday, December 7th, 2009

The Answer: Railroads, Newspapers and Advertising AgenciesDog Chasing Tail

The Question: What industries have / will decline because they did not understand what business they were in?

To take a skit from the great Johnny Carson, this could easily come true.  Much like railroads never adapted to other forms of travel and newspapers can’t shake their dependency on selling ads only on pulp products, the traditional advertising agency model is evolving.  For many years now, the advertising model has been morphing and traditional agencies seem stuck in their old ways.  They have left such an opening that new cottage industries are popping up all over to take on what’s being dropped beyond the old model of creative storytelling.  These new players are coming under the guise of digital shops, interactive shops, social media marketing shops and even traditional public relations (PR) firms are getting into the mix by creating their own digital practices. 

If that’s not enough, now you even have independents and consumers now coming up with extremely creative concepts and execution.  For $12 and change you can now create a super bowl commercial, build an entire Brand out of yourself or even take on the entire multi-billion dollar industry to develop creative for a multi-national brand.  A little imagination and a video recorder have altered the way consumers think of their involvement with a brand and completely re-structured how the corporate world must react to consumers ever changing interests, power and influence.  More importantly (and this is where the agencies are not effective) companies need to do more than just react to this new consumer, they must involve and engage the consumer in ways that are not even imagined yet. 

So how do agencies compete with all of the boutique industries popping up and the unique competition from near free crowdsourcing?  We’ve spoke here about the need to transition from campaigns to conversations and crowdsourcing is the equivalent of guerilla warfare as no one knows who the creatives are or where the production is coming from.  In fact, the media industry has struggled with managing the quality of crowdsourcing for years now and are even further away today from capitalizing on it than they were 4 years ago.  Traditional agencies seem well positioned to handle both of those challenges yet many are in denial and still calling crowdsoursing a “fad”.  Those are only some of the reasons there are dozens of these new age companies starting up to solve specific areas of untapped needs in the new agency model.

While the agency world is busy chasing it’s tale, Brands are still required to sell more product to new markets.  As a result, companies (and here) are gearing up their own resources to meet the challenge.  They are creating great products and product experiences then inspiring their consumers to tell their story for them.  So that begs the question if Agencies are even relavant anymore?  I certainly believe they are but now in their current form.  I always go back to an analogy I’ve been using for a couple of years: Just because you can go to the market, buy a chicken and some spices does not mean you can cook like Emeril LaGasse.  And the same holds true in this industry.

To bring some relvance to this dialogue, we have recruited on of the best thought leaders of the “New Agency World”.  Edward Boches is the Chief Creative officer and leads the Social Media practice at Mullen, a full service modern agency.  His insight is not only transforming the way Mullen does business, but also the way much of the industry is beginning to think about their businesses.  The topic and questions are as follows:

Topic: The Future of Advertising & the Role of the Agency

Q1:  What is the model of the ideal agency?

Q2:  What skills and talents are needed?

Q3:  How much should brands do in-house vs. outsource to agencies?

In keeping with our end of the year theme, this week’s focus on the future of advertising is sure to broaden your ideas of what advertising is and where it belongs with your company large or small.  The format will stay consistent with the first question at noon EST and following questions every 20 minutes.  To manage the conversation we will use #sm37 for the event.  Be sure to join us this Tuesday December 8 at noon EST as you will not want to miss an opportunity to interact with one of the industry’s most progressive minds.

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Posted in Branding | 5 Comments »