[Report] The Social Media ROI Cookbook, by Susan Etlinger

1. The Social Media ROI Cookbook: Six Ingredients Top Brands Use to Measure the Revenue Impact of Social Media July 24, 2012 By Susan Etlinger With Jeremiah Owyang and Andrew Jones Includes input from 66 ecosystem contributors

2. Executive Summary Today, customers move constantly between the online and offline worlds, using a range of devices — such as smartphones and tablets — that didn’t exist a few short years ago. Thousands of applications and dozens of social media platforms collect and transmit an unprecedented amount of structured and unstructured data1, and API changes are a fact of life. The volatility of social data and the pace of change mean that tried-and-true measurement methods are no longer enough. Social data is different. The old rules don’t apply. Although many organizations have established formalized social media programs2, the vast majority — 75% — still lack a holistic measurement strategy3. Web analytics; social media monitoring; social platforms; and tool, application, and ecommerce providers have rushed to fill the gaps, while analysts at brands and agencies have borrowed accepted methodologies from adjacent disciplines to address the unique challenges and pitfalls of social data. As social media matures, new approaches to social media measurement will emerge to provide businesses with a greater level of insight, but the days of certainty (if ever they existed) are behind us. As George E. P. Box4, a noted statistician, famously said, “Essentially, all models are wrong, but some are useful.” In our research for this report, Altimeter Group identified six primary top-down and bottom-up approaches and developed three case studies that illustrate how organizations measure the impact of social media on revenue. But while these six ingredients are consistent, the emphasis each company places on them depends on the nature of their business. There is no “one-size-fits-all” approach. The following pages aim to identify and describe — based on business, product, media, and customer type — the most effective “recipes” for measuring the revenue impact of social media that we have seen adopted to date. Methodology Altimeter Group conducted both qualitative and quantitative analyses, using a combination of online survey, interviews, and briefings, on the ways large organizations measure the revenue impact of social media. Specifically, we conducted: • Interviews with 38 vendors of social media technology, whose products offer some ability to measure the revenue impact of social media • Interviews with 15 brands that are currently measuring the revenue impact of social media programs • Interviews with three agencies • Interviews with four domain experts • Quantitative study of 71 brand and agency-side professionals on measurement experiences and practices Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 1

3. Table of Contents Business Pain: Organizations Struggle to Quantify Revenue Impact of Social Media .............................................3 Problem: Industry in Transition Leaves Organizations Flying Blind ..................................................................................................3 Beyond Revenue: Improving Insight ..................................................................................................................................................7 The Six Ingredients to Measuring the Revenue Impact of Social Media .........................................................................8 Top-Down Approaches ...............................................................................................................................................................................10 Bottom-Up Approaches .............................................................................................................................................................................11 Case Studies ..................................................................................................................................................................................................13 Determining the Right Measurement Mix .....................................................................................................................................16 The Future of Social Media Measurement ...................................................................................................................................21 Conclusion ...................................................................................................................................................................................................23 Ecosystem Input .......................................................................................................................................................................................24 About Us .......................................................................................................................................................................................................26 Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 2

4. Business Pain: Organizations Struggle to Quantify Revenue Impact of Social Media Problem: Industry in Transition Leaves Organizations Flying Blind Social media is no longer optional for business; it’s a fact of life. Today more than 80% of the world’s online population uses social media, according to a recent report by comScore5. But social media poses a new series of interpretive challenges for organizations, which can make it difficult to assess its impact on the bottom line. Altimeter Group’s research identified the following primary barriers to measuring the revenue impact of social data: A. Social Media Is Proliferating. Although social media is still very new, Altimeter Group found in the research for our January 2012 report, “A Strategy for Social Media Proliferation,” that companies average 178 corporate-owned social media accounts. This raises serious questions: • Do companies know what value they are receiving from these social media properties? • Do they know what resources they are expending to build and support them? • Do they have accurate inventory of these properties? According to the State of Social report by eConsultancy, the answer to each is a resounding “No.” In its report, eConsultancy stated that 41% of more than 1,000 companies and agencies surveyed had “no return of investment figure for any of the money they had spent on social channels as of October 2011.”6 B. Multiple Challenges Hinder Insight. Fifty-six percent of brands and agencies that Altimeter Group surveyed reported “the inability to tie social media to business outcomes” as the primary challenge to quantifying the revenue impact of social media. But other, more granular challenges (“lack of analytics expertise and/or resources,” “poor tools,” “unreliable data,” “inconsistent analytical approaches”) closely followed, suggesting that measurement of social media poses as much of a challenge to organizations and processes as it does to technology. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 3

5. Figure 1: Brands See Multiple Barriers to Tying Social Media to Revenue “Which of the following have been challenges? (Check up to three)” 60% 50% 40% 30% 20% 10% 56% 39% 38% 35% 30% 0% Inability to tie social media to business outcomes Lack of Poor tools Inconsistent analytical approaches Unreliable data analytics expertise and/or resources Base: 71 respondents responsible for social media measurement in their organization Source: “The Social Media ROI Cookbook: Six Ingredients Top Brands Use to Measure the Revenue Impact of Social Media,” Altimeter Group (July 24, 2012) In addition to the 35% of survey respondents who noted “inconsistent analytical approaches” as a barrier to insight, several organizations we interviewed highlighted the educational requirements of social data. For example, Robert Ross, Vice President, Interactive & New Media of the American Cancer Society, commented, “We’ve found we have to help people understand the nature of the data and how to use it and apply it. That’s a delivery challenge.” C. Social Data is New and Different. As outlined in the “Executive Summary,” the complexities of social data make it substantially different from what enterprises have seen before. Following are the most commonly cited challenges of measuring the impact of social media: • Exists in online, offline, and across multiple screens, fragmenting data capture. Avinash Kaushik of Google7 has written extensively about the measurement challenges of the world we live in; specifically, the chasm between online and offline and the proliferation of screens through which we interact. This is a significant difference from the early days of the web, before smartphone and tablet devices began to grow in popularity. • Is volatile, making measurement a moving target. Even in the heyday of traditional media, the number of media outlets was relatively stable in comparison to the volatility of today’s social web. For example, from January 1, 2012 to June 5, 2012, Facebook announced the completion of 14 API changes8, while the Pew Research “Twitter Use 2012” report found that “the proportion of online adults who say they use Twitter on a “typical day” has doubled since May 2011 and has quadrupled since late 2010.”9 Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 4

6. • Organizations don’t “own” social media the way they do their websites or other owned properties. Unlike embedded web analytics on their own website, organizations do not have the ability to tag and track properties on third-party platforms (such as others’ blogs, Facebook pages, or online communities), so they have little direct insight into customer behavior on those properties. • Different apps and platforms give rise to different metrics, making a holistic view challenging. As the old saying goes, “The trouble with standards is that there are so many to choose from.” Facebook metrics differ from Twitter, which differ from Tumblr, communities, and YouTube. To make matters more complicated, new behaviors and features yield new metrics (such as “pins” in Pinterest), and APIs of these third party sites are constantly being updated. Because social media is still immature, it is tempting to think of it in terms of known quantities such as traditional/ digital media, marketing, advertising, or ecommerce. But unlike those disciplines, social media is driven from the outside in, and it happens whether or not we plan for it. As a result, the way we measure social media must adapt to suit the unique characteristics of the social web. The old rules do not apply. D. Organizations Lack Confidence in Measuring Revenue Impact. Altimeter’s research shows that only 30% of organizations claim to be “very effective” or “extremely effective” at connecting social media to revenue generation. Figure 2: Few Are Extremely Effective At Connecting Social Media to Revenue “On scale of 1-5, how effective is your organization at connecting social media to revenue generation?” 35% 30% 25% 20% 15% 10% 5% 17% 24% 30% 16% 14% 0% 3 4 5 1 2 (Extremely effective) (Not at all effective) Base: 71 respondents responsible for social media measurement in their organization Source: “The Social Media ROI Cookbook: Six Ingredients Top Brands Use to Measure the Revenue Impact of Social Media,” Altimeter Group (July 24, 2012) Says Ken Burbary, Chief Digital Officer at Campbell Ewald, “I feel like we’re all data chemists at this point, trying to put a bunch of stuff into our beakers to see if it works.” Although social media has proliferated during the past few years, there is a significant gap in the ability to articulate its value. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 5

7. E. Organizations Are Adapting Slowly. Although social media activity has grown dramatically within the past few years, measurement organizations generally remain small. Sixty-three percent of brands Altimeter Group surveyed reported that they have one or two people tasked with social media measurement, while nearly 75% reported fewer than five people in the function. Figure 3: Social Media Measurement Organizations Still Very Small “How many employees are dedicated to social media measurement within your organization?” 0 More than 20 6% 13% 11-20 3% 6-10 4% 11% 3-5 63% 1-2 Base: 71 respondents responsible for social media measurement in their organization Source: “The Social Media ROI Cookbook: Six Ingredients Top Brands Use to Measure the Revenue Impact of Social Media,” Altimeter Group (July 24, 2012) Because of the variation in company size, structure, and strategy, these numbers may not necessarily imply that social media measurement is under-resourced. Most organizations Altimeter Group interviewed have taken a cautious approach to resource allocation and process improvement as they learn more about the impact of social media on the business. Says Todd Forsythe, VP Global Marketing, EMC, “We started by saying, ‘Let’s build the organizational capabilities, dip our toes in the water.’ Now we’re increasingly becoming more programmatic.” Others brands reported that organizational silos hinder information-sharing, particularly in light of the “inconsistent analytical approaches” reported in Figure 1. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 6

8. Beyond Revenue: Improving Insight Organizations understand that revenue generation is only one benefit of social media and that its main business value is to deepen relationships with customers and community. While only one of the brands interviewed for this report admitted to embarking on a true ROI analysis for social media (analyzing the investment in, as well as return on, social media), all reported that they are making a concerted effort to measure the revenue impact of social media, albeit in various ways. Survey respondents reported overwhelmingly that the primary business impact of social media was not revenue generation, but “insight that helped us meet customer experience goals.” The next most-reported benefit was decision-making; 51% of respondents stated that social media measurement “enabled us to make better informed decisions based on social data.” Ali Ardalan, Media and Analytics Strategist at Intel, believes that social media has become a critical input to business decisions and to business cases. Ardalan says, “Why do you do an ROI analysis? To justify why you should do this project vs. another. Why you need more funding. You need to know the result; are you wasting money? Could you have done the same thing with 20% of the budget?” Wes Nichols, Co-Founder and CEO, MarketShare, agrees: “What we’re finding is that businesses will only move big money once they understand what’s truly working. To do that they need a comprehensive view of their marketing performance, not just the tactical channels.” Figure 4: The Primary Business Value of Social Media: Customer Insight “What have been the primary positive impacts of social media measurement within your organization? (Check up to three)” 90% 80% 70% 60% 50% 40% 30% 20% 84% 51% 35% 32% 26% 10% 0% Customer/ community insight Decision-making Investment Financial impacts Organizational development Base: 69 respondents responsible for social media measurement in their organization Source: “The Social Media ROI Cookbook: Six Ingredients Top Brands Use to Measure the Revenue Impact of Social Media,” Altimeter Group (July 24, 2012) Companies that fail to quantify the hard and soft benefits of their social media programs and activities risk flying blind into a storm. Those that start now to formulate a measurement strategy, as the companies in the following pages have done, will be best positioned to succeed in this brave new customer-centric world. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 7

9. The Six Ingredients to Measuring the Revenue Impact of Social Media While we identified no “perfect” solution to measuring the revenue impact of social media, several best practices have emerged that are bridging the gaps between what is possible today and what may be possible in the future. Altimeter Group identified six primary ways that organizations currently measure the revenue impact of social media, which should be used as a guideline to determine the most effective measurement mix for your business. The following are brief descriptions; more detailed descriptions follow. Figure 5: Six Ways of Measuring Revenue Impact of Social Media Top-Down “ Anecdote Specific examples where social media was known to influence a sale or sales. 1. Anecdote Correlation Comparing two data sets (for example, number of likes vs. revenue) to determine whether there may be a relationship. Note that most correlations are quite simple, although companies such as MarketShare are working on far more advanced social econometric models. 2. Correlation ✓ ✓ ✓ Multivariate Testing A B Comparing one group exposed to social media content with another that was exposed to different or no content. C 3. Testing Bottom-Up Links and Tagging Links refer to short links, such as bit.ly, goo.gl, or custom links embedded into content. Tags (and cookies) refer to a piece of code that is embedded into links or URLs for the purpose of conversion attribution. 4. Links and Tagging Integrated Integrated refers to apps or Software-as-a-Service (SaaS) offerings with integrated analytics, such as those offered by Buddy Media, Wildfire, or Facebook apps for Timeline. 5. Integrated Direct Commerce Addition of an ecommerce storefront to a social platform such as Facebook; frequently referred to as “fcommerce.” 6. Direct Commerce Source: “The Social Media ROI Cookbook: Six Ingredients Top Brands Use to Measure the Revenue Impact of Social Media,” Altimeter Group (July 24, 2012) Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 8

10. The chart below reflects both the immaturity of social media measurement and the resourcefulness of brands trying to understand its impact on their business in a holistic way. Top-down approaches are as widely used as bottom-up approaches; anecdote and correlation tied at 44% as the most popular ways to measure the revenue impact of social media, while links were a close second with 42%. Figure 6: Brands Blend Top-Down and Bottom-Up Measurement Approaches “In which ways does your organization measure the revenue impact of social media?” 50% 45% 40% 35% 30% 25% 20% 15% 44% 44% 42% 37% 32% 17% 16% 10% 5% 0% Anecdote Correlation Links TaggingÊ&Êcookies Integrated A/BÊorÊMutivariate Testing Direct Ê Ê Base: 71 respondents responsible for social media measurement in their organization Source: “The Social Media ROI Cookbook: Six Ingredients Top Brands Use to Measure the Revenue Impact of Social Media,” Altimeter Group (July 24, 2012) What is important to take away from this data is that, while top-down approaches provide business context and bottom-up approaches provide granularity, they are most valuable when viewed in context of each other. The case studies that follow illustrate how three very different organizations orchestrate these methods to provide insights that help drive decision-making. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 9

11. Top-Down Approaches Figure 7: Top-Down Revenue Measurement Approaches Definition and Usage Considerations Sample Vendors Type 1. Anecdote • Examples of relationship between social media and sales; information is often shared verbally, sometimes entered manually into CRM. • Seen in large, often B2B companies with high consideration and long sales cycles • Lightweight and practical for some companies • Manual • Cannot scale • No ability to share broadly • You can use anecdotes from any and all social media service or product vendors. This may take verbal or written form, depending on the company. See the SAP case study for an example. 2. Correlation • Correlation refers to the ability to compare one data set with another to identify patterns. It can be as simple as chart overlays comparing likes and sales to highly complex econometric models that take into account external data, such as gas prices, interest rates, jobless claims, etc. • Properly applied, provides insight into the relationship between social strategies/tactics and business outcomes • Well accepted by the industry • Requires trained analysts who can control for variables and interpret data to minimize irrelevancies and distortion • Manual (therefore not scalable) • Whatever tool you are using — web analytics, email service provider — usually imported into an Excel spreadsheet. Tools such as MarketShare and Compass Labs perform more advanced correlations. Expect this to become more common as tools mature. 3. Testing (A/B, Multivariate) • In statistics, multivariate testing or multi-variable testing is a technique for testing hypotheses on complex multi-variable systems, especially used in testing market perceptions.10 • Used by digital marketers to compare performance of tactics across different populations; examples could include news headlines, social content of any sort (video, image, text). Also used by multichannel organizations with both online and brick-and- mortar presence. • Properly applied, provides insight into the relationship between social strategies/tactics and business outcomes • Well accepted by digital marketing • Requires trained analysts who can control for variables and interpret data to minimize irrelevancies and distortion • Manual (therefore not scalable) • You can compare the performance of any social content to any other social content, either within the tool itself or from tool to tool. Note that source data may come from a variety of tools, such as listening and monitoring, social media management, or any other tool with a social data output. Some organizations download data into an Excel spreadsheet.11 Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 10

12. Bottom-Up Approaches Figure 8: Bottom-Up Revenue Measurement Approaches Definition and Usage Considerations Sample Vendors Type 4. Linking and Tagging • Using a piece of code (a short link, ROI tag, or cookie) to identify the source of a conversion or sale • At the simpler end: short links; at the sophisticated end, ROI tags, such as those available as part of web analytics solutions • Broadly applicable to any online property in which an item or service is sold directly to a customer (direct B2C) or a piece of social content culminates in a desired action, such as a contest entry, white paper download, application submission, or other desired conversion action/lead • Industry standard for conversion attribution • Enables tracking from click to conversion • Facilitates (measurable) social spreading • Only work on owned online properties • Don’t (always) work across screens • Don’t account for macroeconomic or business factors (price of gas, earnings, etc.) • Only works for single- browser sessions. Links may break easily or may not be passed through • Vendors below use links, tags, and/or cookies to identify the source of social content. While revenue attribution is a shared feature, they represent a range of services, from web analytics and digital marketing optimization to social analytics and social ecommerce. Adobe Omniture Argyle Social Awareness Inc. Badgeville Bazaarvoice Buddy Media (acquired by Salesforce.com) Campalyst Exact Target Expion IBM Coremetrics Interpreter Meltwater Buzz Offerpop Power Reviews (acquired by Bazaarvoice) Revinate ShopIgniter Vitrue WebTrends Wildfire Interactive Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 11

13. Definition and Usage Considerations Sample Vendors Type 5. Integrated • Analytics integrated into a social media app, widget, SaaS solution, or service installed on a social platform • Highly measurable (if the conversion occurs within the app) • Requires development or purchase • Managing complexity (multiple apps with different analytics) • Metrics may be siloed or inconsistent with other metrics Argyle Social Awareness, Inc. Buddy Media Exact Target Facebook (Apps for Timeline) Lithium Momentfeed Moontoast Offerpop Proprietary Tools Shopkick Webtrends Wildfire Interactive • Broadly applicable to any online property but requires development of an application or purchase/use of a tool/ service, such as those listed under “Sample Vendors” 6. Direct Commerce • Addition of ecommerce storefront to a social platform (typically Facebook, “fcommerce”) • Broadly applicable to any online property • Highly measurable • Limited if you don’t track full engagement 8th Bridge Moontoast Offerpop ShopIgniter Spiceworks Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 12

14. Case Studies Case Study: SAP Business: Direct and indirect sale, mixed online and offline Conservative culture but with support for test-and-learn approaches Very high consideration, very long sales-cycle product/service Mixed paid, owned, and earned Customer:Business customer Product: Media: The power of anecdote: Social media frees SAP sales team to focus on lower-funnel activities, improving productivity and close rate. Given SAP’s size and highly metrics-driven culture, one would expect that the company would insist only on quantitative metrics to evaluate the success of its social media initiatives. But SAP values both qualitative and quantitative measures. While it does track more granular metrics (such as numbers of white paper downloads or webinar sign-ups) for lead generation purposes, the company also values qualitative measures that contribute to institutional knowledge. Todd Wilms, Senior Director/Evangelist, Communities and Social Media, reports strong support for social media within SAP: “We have been extremely fortunate from a culture perspective,” he says. At SAP, one of the goals for programs groups and SAP-branded channels is to drive leads. Wilms says that social media has changed the point at which many sales professionals begin to engage with prospects, because it helps prospects to “self-qualify” by engaging with others in SAP communities early in their decision process. As a high-consideration, business-to-business product with a long sales cycle (months to years), SAP is able to track many of the factors that contributed to a single sale. The company has a well-developed customer community (which generates its own far more granular and empirical metrics) with which prospective customers can freely engage. Prospects self-report that they were able to answer their questions and educate themselves through a variety of SAP social channels before engaging directly with the SAP sales team. As a result, says Wilms, “Our sales people can now get involved later in the sales process; they don’t have to jump into the pipeline as early, which has enabled them to have deeper conversations with fewer clients. Then, when they do engage, they want someone to walk them through that last step of fine-tuning SAP into their organization.” Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 13

15. Case Study: EMC Business: Direct and indirect sale, mixed online and offline Culture supports test-and-learn approaches Product: Medium/high consideration Medium/long sales-cycle product/service Mixed paid, owned, and earned Customer:Business customer Media: Using a mix of quantitative and qualitative methods to prove cause and effect at EMC EMC is taking a holistic approach to measurement, but with quantitative measures at the core. Says Keith Paul, Chief Listener at EMC, “We’re trying to figure out the revenue impact of social. We’re building an integration and media lab to align everything: social, advertising, search, and marketing sciences.” At the most tactical level, this means working with marketing teams to develop consistent usage of Omniture codes and bit.ly short links. At a strategic level, it means a shared approach to understanding the impact of social media on revenue, as well as on other business goals. Paul has already seen benefits to evangelizing tagging throughout the organization. Recently — using Adobe Omniture codes and bit.ly links — he was able to prove that social media was responsible for generating 30% of the viewership for simulcast of a major product launch. Says Paul, “Web analytics is becoming more strategic again.” At the same time, the company has set its sights on a more ambitious goal: building an ecosystem with use cases and tools that can eventually be used in concert with other enterprise data. Says Todd Forsythe, Vice President, Global Marketing, “What we’re hoping we can do is connect linking and listening to action in a streamlined way and track — on a real-time basis — the impact of social on business.” In the longer term, this will mean more integration of “Big Data,” specifically, advanced correlations of customer behavioral data, leads, transactions, and service experiences. While EMC is still in the process of making measurement more programmatic and scalable, the end game, say Paul and Forsythe, is for social data to become fully integrated into enterprise data and business strategy. Says Forsythe, “We always have taken the approach of ‘Plant a thousand seeds, and let the flowers bloom.’” Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 14

16. Case Study: Eventbrite Business: Product: Media: Customer:Mixed B2B/B2C Highly social consumer and business customer Mostly online; service Metrics-driven, adaptive culture Short sales cycle Low(er) consideration service Paid, earned, owned Integrating social media into the product provides clarity for Eventbrite. Eventbrite is a company in which social media — in this case, Facebook — is deeply integrated into the product itself, making it highly measurable. This wasn’t always the case. “When it was first built, Eventbrite was focused on SEO optimization to drive traffic,” says Vice President of Marketing Tamara Mendelsohn. “Then in about 2008, we saw that Facebook had popped up as a top referrer of traffic. Two things were happening: first, event organizers were creating events and including links back to Eventbrite to buy tickets. Second, attendees, once they discovered the event, were sharing the link either pre- or post-purchase. Those two behaviors pushed more traffic.” Eventbrite reached out to Facebook, which opened up the event API to them. It then incorporated sharing features into the product itself. Within a few months, Facebook was the top traffic referrer, which it remains today. Recently, says Mendelsohn, Facebook’s mobile site (m.Facebook) began to show up in the top 10 referrers as well. While the product is integrated with Facebook, Eventbrite still must use some of the simpler techniques, such URL tracking, to measure business outcomes. While purchases may originate in Facebook, the transactions themselves occur on Eventbrite. The online nature of the business, and the integration with Facebook, means that the company is able to produce clear, quantitative metrics that demonstrate the relationship between social media and revenue. For example, Mendelsohn says, “We can see how many shares and clicks occur and how many of the clicks convert. And that’s how we derive a dollar amount. Our main financial metric is gross ticket sales. Our top social metrics are total dollars driven by sharing divided by total shares, and total visits driven by sharing divided by total shares.” But transactions don’t tell the complete picture. Says Mendelsohn, “The transaction is the most sacred part of the funnel, but we’re optimizing all parts of the funnel. For example, if you look at total attendee sharing, 60% of sharing occurs after the purchase. One in 100 people who look at an event page before purchase share it, while 1 in 10 share it after purchase. And a post-purchase share drives 20% more ticket sales than a pre-purchase share.” Ultimately, says Mendelsohn, the question is how to increase the number of shares, especially post-purchase. “If 10% of customers are sharing after purchase,” she says, “how do we make that 20%?” While Mendelsohn is philosophically against incenting people to share — for fear of promoting spammy behavior toward friends — there is still a lot of room for optimization and growth as Eventbrite looks for effective and authentic ways to optimize the relationship between social and sales. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 15

17. Determining the Right Measurement Mix There is no universal recipe for measuring the revenue impact of social media. While social media measurement is still nascent and organizations are still experimenting with approaches, we found that the most advanced companies consider the following four factors to determine the appropriate measurement mix: • Business: the nature and structure of the business • Product: the nature and type of products or services offered • Media: type of media being used • Customer: the nature and type of customer(s) Figure 9: Decision Matrix – Assessing the Measurement Mix That’s Right for You 1. Identify Business Type 2. Assess Product Type 3. Factor In Your Media MiX 4. Identify Customer Profile • Demographics: Where and Who They Are • Sales Channel: Indirect or Direct • Type: Product or Service • Paid (taggable) • Delivery Medium: Online Only or Mixed Online & Offline • Sales Cycle: Short or Long • Owned (taggable) • Socialgraphics: Where and How They Interact Online • Cost/Consideration: Low or High • Earned (not always taggable) • Culture: Conservative or Experimental • Shared (not always taggable) • Target Market: Business (B2B) or Consumer (B2C) Source: “The Social Media ROI Cookbook: Six Ingredients Top Brands Use to Measure the Revenue Impact of Social Media,” Altimeter Group (July 24, 2012) As social media matures, we will see deeper integration and industry benchmarking that will provide more guidance for organizations of different sizes and types. For now, however, best practice measurement approaches use the above decision criteria. The following pages provide guidance on how to determine the measurement mix that is most appropriate for your organization. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 16

18. First, Identify Your Business Type. The way your company goes to market largely drives what is possible when it comes to revenue measurement. If your business is … The most appropriate primary metrics are … Best Practices Exclusively online (e.g., Zappos, Eventbrite) • Links and tags measure revenue impact at all stages of the purchase path. • Awareness: views, impressions • Consideration: engagement (re-tweets, likes, shares) • Conversion (downloads, purchases, registration, transaction) • Integrated: Apps and services offer integrated metrics that you can use to better understand impact of specific content, channels, or campaigns. • Build in measurement at the beginning of every significant campaign or program. • Clearly define goals and metrics at all stages of the path to purchase. • Map volume metrics (views, shares, retweets, likes, fans, etc.) with the appropriate stage of the purchase path to ensure your metrics have business context. • Review analytics provided with apps and services you are considering. The analytics should be a critical purchase criterion. • If you are using multiple apps and services, correlate metrics to better understand relationships. Multichannel (mixed online/offline) • Correlations will help you understand relationships between online and offline activities. • Where practical, use mobile apps to bridge the online and offline experience and collect data on in-store/offline behaviors. • If you are using QR codes and barcode scanning, correlate their analytics with other online sources. • If you are using multiple apps and services as many companies do, correlate metrics among similar apps to better understand relationships. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 17

19. Second, Assess Your Service or Product Type. The key criteria that drive revenue measurement strategy based upon service and product type are sales cycle and whether the product/service is a high- or low- consideration item. The longer the path to purchase, the less reliable clickstream data becomes, because there is generally so much elapsed time and so many variables between awareness (the reveal of a new car, for example) and purchase (going to the dealer and buying it). Google Analytics has a good way of looking at this challenge from a measurement standpoint. It has divided conversion attribution into two types in their “Social Reports” products. They refer to referrals that lead to conversions immediately as “Last Interaction Social Conversions,” compared to what they call “Assisted Social Conversions,” in which a “referral from a social source doesn’t immediately generate a conversion, but the visitor returns later and converts.”12 If your product/service is … You should … Best Practices A lower-consideration item (event tickets, pet food) or has a short sales cycle • Use links and tags to measure revenue impact at all stages of the purchase path. • Awareness: views, impressions • Consideration: engagement (re-tweets, likes, shares) • Conversion (downloads, purchases, registration, transaction) • Integrated: Apps and services offer integrated metrics that you can use to better understand cause and effect. • Build in measurement at the beginning of every significant campaign or program. • Clearly define goals and metrics based on path to purchase. • Map volume metrics (views, shares, retweets, likes, fans, etc.) with the appropriate stage of the purchase path to ensure your metrics have business context. • Review analytics provided with apps and services you are considering. The analytics should be a critical purchase criterion. • If you are using multiple apps and services, correlate metrics to better understand relationships. Longer sales cycles and higher- consideration items (cars, real estate) • Experiment with correlation, as these items are frequently sold through channels. • Use linking and tagging for calls to action such as white paper downloads, webinar registrations, dealer/agent referrals. • Don’t disregard anecdote as a tool to connect the online and offline worlds, especially if you are able to log customer verbatims in a CRM system. While this is not scalable, it may yield insight when you aggregate the data. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 18

20. Third, Factor In Your Media Mix. The type of medium (Paid, Owned, Earned13) also influences your measurement method, as you can only tag online properties that you control. If the media you are using is … You should … Best Practices Paid • Use links and tags to measure revenue impact at all stages of the online purchase path. • Print can be linked and tagged via bar or QR codes, while broadcast media generally cannot, and must rely on conventional metrics (or use correlation, as UFC has done). • A/B testing will show you which media perform better than others. • Build in measurement at the beginning of every significant campaign or program. • Clearly define goals and metrics based on path to purchase. • Map volume metrics (views, shares, retweets, likes, fans, etc.) with the appropriate stage of the purchase path to ensure your metrics have business context. • Start now to build connections between the digital and social analytics teams. Earned • Because earned media cannot be tagged, you must use correlations and trend analysis to understand patterns. • Map volume metrics (views, shares, retweets, likes, fans, etc.) with the appropriate stage of the purchase path to ensure your metrics have business context. Owned • Owned media (as available via video, blog posts, social posts, microsites) can be linked and tagged, although only across the same browser. • “Jumping” between screens (phone, tablet, desktop/laptop) breaks these connections, which requires the use of other top- down methods of measurement. • See “Paid,” above. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 19

21. Finally, and Most Importantly, Consider Your Customer Profile. Ultimately, the customer or consumer profile will influence what measurement is possible. If your customer is … You should … Best Practices A business customer • Look at forums, blogs, and communities to see where customers congregate and what you can test and learn from their interests, questions, and behaviors. • Factor in known social media behaviors (Socialmetrics), as well as behavioral and demographic data, to help determine how best to engage. • Test lightweight links and tags in forum replies (as consistent with the behavior of the community) to better understand interest and consideration. A consumer • The decision to use direct ecommerce (a storefront) should be driven by the type of relationship you have with your customer base. That said, the deeper the integration of social and commerce, the more granular the analytics. • Correlate behaviors at different stages of the funnel as Eventbrite has done, so you can better understand pre-purchase and post-purchase sharing and conversion. Highly social • Correlating shares with sales will provide insight into how and whether the online social experience drives sales. • Integrating apps and services on your Facebook brand pages yields deep analytics. The key is to translate volume metrics to insights and actions (i.e., people who do X tend to do Y). • A/B testing social posts against the same content elsewhere (Facebook, YouTube, your website) will provide insight into how and where people consume your content and where they go (and what they do) from there. • Be mindful of the balance between authentic and spammy behavior before incenting customers to share. • Look at referrers in your web analytics to find new and trending sources of traffic (Pinterest, Tumblr, others). Finally, remember that no one set of measures can tell you everything; they all come with trade-offs. But looking at your granular bottom-up data in context of broader trend data will deliver a more representative view of the revenue impact of social media than either can in isolation. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 20

22. The Future of Social Media Measurement The ways organizations used to measure web behavior in the past are no longer suited to today’s realities. The fragmentation of the customer journey (across screens, apps and, platforms) combined with heterogeneous data streams make it near-impossible for organizations to trace “digital breadcrumbs” from a transaction to its source.14 The challenges, as Avinash Kaushik has articulated them15, are straightforward: connecting the customer from online to offline and connecting the customer across multiple screens. To this I would add another challenge: the need to integrate social, enterprise, and external data for a holistic view of behavior and trends. Following are some of the trends we should expect to see emerge in the next few years. Mobile technologies will bridge the online and offline worlds. Mobile Smartphone and Tablet Apps. While still relatively nascent, smartphone applications such as Shopkick and Checkpoints, which use mobile and geolocation technology to deliver insight on in-store behavior, illustrate the possibilities of mobile technologies to connect the dots between online and offline interactions. Scanning and Visual Search. Whether it is QR codes, Microsoft TAG, bar codes, or eventually Google Goggles, technologies will continue to emerge that add metadata to offline experiences and enable organizations to view the customer experience more holistically. While we are now in a period of feverish development, eventually we will start to see standards emerge in this area. In the meantime, however, the challenge for business will be to select vendors that provide the most reliable and stable features and integrations and manage the new data streams these devices create without creating undue complexity. Emerging technologies will connect the customer across multiple screens. Matching and Authentication. One of the greatest challenges for brands is the proliferation of browsers and screens, from tablet devices to smartphones, laptops, desktops, and television. In fact, a recent study conducted by Boston’s Innerscope Research found that “digital natives” switch screen 27 times per hour.16 Many web analytics vendors aim to connect the social customer using attribution algorithms, while Facebook Connect, Klout, and apps like Empire Avenue attempt to encourage users to self-authenticate so that brands can “know” them across social channels and platforms. Identity brokers, such as such as Gigya and Janrain and technology startups such as Fliptop are uniquely focused on this issue, offering solutions that aim to authenticate and connect customer identity across the social web. The ability to authenticate identity across the social web also offers an intriguing promise — the ability to connect transactions to social and interest graphs to better understand social influence on the path to purchase. Data will be the true predictor of influence. As authentication and attribution capabilities improve, the question of who influences whom will become much clearer. Actual influence (seeing which customers, and customer types, tend to influence other customers to buy) will overtake potential influence (algorithms that predict influence based on fans, followers, and frequency of social activity) as a critical business metric. As a result, influence vendors will need to integrate with other transactional data sources to validate their predictions. The winners will be those who use machine learning based on actual business outcomes to refine their algorithms. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 21

23. Companies will integrate social, enterprise, and external data for a holistic view. Social media should not be a data silo; it must be tied to business strategy. The challenge is to normalize social data to the extent possible and integrate it with other enterprise data (such as business intelligence, CRM, and market research) and external sources (such as industry and economic data) to build sophisticated econometric models that can be used for modeling, scenario planning, and decision support. We are already seeing movement in this area via industry consolidation (Salesforce’s acquisitions of Radian6 and Buddy Media), Oracle’s acquisition of Collective Intellect, Involver, and Vitrue, and SAP’s partnership with NetBase, although it will take some time to realize the full benefits of these acquisitions. Ultimately, social data, in context of other enterprise data, will become a standard input into business decision- making. The winning technology vendors will be those who seek to solve the whole business problem, rather than looking at social as a silo. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 22

24. Conclusion Social media for business is still immature, and the mechanisms by which we understand its impact are still evolving. Even if it becomes possible to “match” the majority of people using the social web across platforms, there will always be those who, for personal, cultural, age-related, security, or political reasons, cannot or will not be identifiable. For that reason, most organizations should expect to use a combination of rigorous top-down and bottom-up measurement methods for the foreseeable future, and — to solve the ROI puzzle — will need to start quantifying their investments in social, as well as their returns from it. Whatever ingredients you choose for your measurement mix, the important point is that the organizations that have been most successful at understanding the financial impact of their social media programs share several characteristics: They are customer-centric, value experimentation, accept that social media is in its infancy and, most importantly, have the courage to learn from — and the generosity to share — their experiences. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 23

25. Ecosystem Input This report includes input from practitioners, vendors, and market influencers who were interviewed by Altimeter Group during the course of this research. Input into this document does not represent a complete endorsement of the report by the individuals or companies listed below. Brands (19) American Cancer Society, Hilary Noon, VP Customer Insight and Experience American Cancer Society, Robert Ross, Vice President, Interactive & New Media Cisco Systems, Petra Neiger, Senior Manager, Digital and Social Media eBay, Sudha Jamthe, Social Media Strategist EMC, Keith Paul, Chief Listener EMC, Maria Mariotti, Sr. Marketing Programs Manager EMC, Todd Forsythe, VP Global Marketing Eventbrite, Tamara Mendelsohn, VP Marketing Hallmark, Camille Lauer, Social Media Insights Manager IBM, Ranjun Chauhan, Digital and Social Intelligence Strategy Intel, Ali Ardalan, Media and Analytics Strategist SAP, Todd Wilms, Senior Director and Evangelist of Communities and Social Media Starbucks, Alex Wheeler, VP Digital Marketing Starbucks, Ryan Turner, Director of Global Social Media The Coca-Cola Company, Vincenzo Piscopo, Global Director Knowledge and Insights Thomson Reuters, Jaime Punishill, Global Head, WM Digital Distribution and Content Strategy Ticketmaster, Kip Levin, EVP, Ecommerce Ultimate Fighting Championship, Kristin Adams, Social Media Manager Whirlpool, Stacy Lukasavitz, Social Data Analyst Vendors (38) 33Across Adobe Argyle Social Attensity Awareness Inc. Badgeville Bazaarvoice Buddy Media (acquired by Salesforce.com) Campalyst Compass Labs Converseon Crimson Hexagon Exact Target Expion Fliptop Google Lithium MarketShare Meltwater Buzz Microstrategy Momentfeed Moontoast NetBase Networked Insights Offerpop Power Reviews (acquired by Bazaarvoice) Revinate ShopIgniter Shopkick Simply Measured Solariat Spiceworks Topsy Labs VinTank Visible Technologies Vitrue (acquired by Oracle) Webtrends Wildfire Interactive Agencies (5) Campbell Ewald, Ken Burbary, Chief Digital Officer Edelman Digital, Dave Fleet, VP Edelman Digital, David Armano, EVP Edelman Digital, Aniz Ruda, Team Lead, Measurement & Analytics WCG, Chuck Hemann, Director of Analytics Domain Experts (4) Matt Hixson, Co-Founder and CEO, Tellagence Marshall Kirkpatrick, CEO, Plexus Engine Nitin Mayande, Chief Scientist, Tellagence Jim Sterne, Founder, eMetrics Marketing Optimization Summit; Digital Analytics Association Acknowledgements With thanks for support from: Jon Cifuentes, Asha Hossain, Charlene Li, Rebecca Lieb, Chris Silva, Brian Solis, Jaimy Szymanski, Christine Tran, Alec Wagner, Alan Webber, and Susan Wu. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 24

26. End Notes 1 Social networking is the most popular online activity worldwide accounting for nearly 1 in every 5 minutes spent online in October 2011, and reaches 82% of the world’s Internet population, representing 1.2 billion users around the globe. Source: comScore: http://www.comscore.com/ Press_Events/Presentations_Whitepapers/2011/it_is_a_social_world_top_10_need-to-knows_about_social_networking. 2 eConsultancy State of Social Report: http://econsultancy.com/us/reports/state-of-social. 3 http://www.kaushik.net/avinash/multi-channel-attribution-definitions-models. 4 Source: Facebook Developer Blog, https://developers.facebook.com/roadmap/completed-changes. 5 Source: Pew Research Center, “Twitter Use 2012,”1 http://www.pewinternet.org/Reports/2012/Twitter-Use-2012.aspx. 6 In statistics, multivariate testing or multi-variable testing is a technique for testing hypotheses on complex multi-variable systems, especially used in testing market perceptions. Source: http://en.wikipedia.org/wiki/Multivariate_testing#cite_note-0. 7 For a good overview, see ClickZ, “A/B Testing for the Mathematically Disinclined,” http://www.clickz.com/clickz/column/1704390/a-b-testing- mathematically-disinclined. 8 Source: “Capturing The Value of Social Media Using Google Analytics,” http://analytics.blogspot.com/2012/03/capturing-value-of-social-media- using.html. 9 See Jeremiah Owyang and Rebecca Lieb, “The Converged Media Imperative: How Brands Will Combine Paid, Owned and Earned Media” for more information. http://www.altimetergroup.com/research/reports/how-brands-must-combine-paid-owned-and-earned-media. 10 Altimeter Group explores these themes — The Dynamic Customer Journey, The Adaptive Organization and The Sentient World — in our research. For more about these research themes, listen to our webinars on the topic here: http://www.altimetergroup.com/research/research- themes. 11 See Avinash Kaushik, “Multi-Channel Attribution: Definitions, Models and a Reality Check”: http://www.kaushik.net/avinash/multi-channel- attribution-definitions-models. 12 Source: Time, Inc.: http://www.timeinc.com/pressroom/detail.php?id=releases/time_inc_study_digital_natives.php. Open Research This independent research report was 100% funded by Altimeter Group. This report is published under the principle of Open Research and is intended to advance the industry at no cost. This report is intended for you to read, utilize, and share with others; if you do so, please provide attribution to Altimeter Group. Permissions The Creative Commons License is Attribution-Noncommercial-Share Alike 3.0 United States at www.creativecommons.org/licenses/by-nc-sa/3.0. Disclosures Your trust is important to us, and as such, we believe in being open and transparent about our financial relationships. With permission, we publish a list of our client base on our website. See our website to learn more: www.altimetergroup.com/disclosure. Disclaimer ALTHOUGH THE INFORMATION AND DATA USED IN THIS REPORT HAVE BEEN PRODUCED AND PROCESSED FROM SOURCES BELIEVED TO BE RELIABLE, NO WARRANTY EXPRESSED OR IMPLIED IS MADE REGARDING THE COMPLETENESS, ACCURACY, ADEQUACY, OR USE OF THE INFORMATION. THE AUTHORS AND CONTRIBUTORS OF THE INFORMATION AND DATA SHALL HAVE NO LIABILITY FOR ERRORS OR OMISSIONS CONTAINED HEREIN OR FOR INTERPRETATIONS THEREOF. REFERENCE HEREIN TO ANY SPECIFIC PRODUCT OR VENDOR BY TRADE NAME, TRADEMARK, OR OTHERWISE DOES NOT CONSTITUTE OR IMPLY ITS ENDORSEMENT, RECOMMENDATION, OR FAVORING BY THE AUTHORS OR CONTRIBUTORS AND SHALL NOT BE USED FOR ADVERTISING OR PRODUCT ENDORSEMENT PURPOSES. THE OPINIONS EXPRESSED HEREIN ARE SUBJECT TO CHANGE WITHOUT NOTICE. Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 25

27. About Us Susan Etlinger, Industry Analyst Susan Etlinger (@setlinger) is an Analyst with Altimeter Group, where she focuses on social media analytics and strategy. Previously, Susan was a Senior Vice President at Horn Group, where she pioneered the agency’s social strategy offering. Susan is a published translator and has a bachelor’s degree in rhetoric from the University of California at Berkeley. Jeremiah Owyang, Altimeter Partner, Digital Strategy Analyst Jeremiah Owyang (@jowyang) is a Partner with Altimeter Group, where he focuses on social business and disruptive technologies for customer strategies. Previously, Jeremiah was a Senior Analyst at Forrester Research, Director of Corporate Media Strategy at PodTech Network, and Manager of Global Web Marketing at Hitachi Data Systems. He writes the Web Strategy blog (www.web-strategist.com). Andrew Jones, Senior Researcher Andrew Jones (@andrewjns) is a Senior Researcher at Altimeter Group, where he focuses on social business strategy, including how brands can manage social media proliferation. He also follows broader emerging technology trends such as mobile payments and the implications for governance and third-world development. Andrew previously worked in digital marketing and served in the Peace Corps. Altimeter Group is a research-based advisory firm that helps companies and industries leverage disruption to their advantage. Contact Us Advisory Opportunities Altimeter Group 1875 S. Grant Street, Suite 680 San Mateo, CA 94402-2667 info@altimetergroup.com www.altimetergroup.com Email: sales@altimetergroup.com Attribution-Noncommercial-Share Alike 3.0 United States | © 2012 Altimeter Group | 26