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ROI in Social Media

ROI in Social Media. Google Analytics, Clicky.com … Versus : Your mom, your phone, wearing your pants…. MARKETERS ARE UNSURE HOW TO CALCULATE SOCIAL MEDIA ROI. The fact is there is an ROI of your mom, a phone and wearing your pants. There is an ROI of anything that provides value.

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ROI in Social Media

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  1. ROI in Social Media Google Analytics, Clicky.com … Versus : Your mom, your phone, wearing your pants…

  2. MARKETERS ARE UNSURE HOW TO CALCULATE SOCIAL MEDIA ROI • The fact is there is an ROI of your mom, a phone and wearing your pants. There is an ROI of anything that provides value. • However, how one would calculate social media ROI is not always obvious. • A study by Lenskold Groupassessed social media ROI measurement best practices compared to traditional marketing ROI measurement. • This study found less than 20% of marketers feel they can measure social media ROI

  3. Example • You sell mobile homes at $40,000 each. • You spend $5000 per month on local advertising. • You sell five mobile homes per month. • Your profit per home is $2000 • How many of those sales can be attributed to the $5000 per month you spent on advertising? • Can you bring in $10,000 gross revenue and spend $5K on advertising?

  4. Detailed example • Jungle Burger $18,540 / $4200 / $11,200 / $21,500 • $1500 / month for lease, $1,000 / month taxes & insurance, $600 electricity, $200 water,$5,000 / month supplies (meat, vegetables, etc.) – • 10 employees at $800 / month each = $8,000 • + 28% = $2,240 (taxes, unemployment insurance, etc.) • Profit desired – 10 % • Average sale per customer = $6 ; average customers per day = 100 = $4200 / week • Average sale per customer = $8; average customers per day = 200 = $11,200

  5. Think of an online presence • How much time spent creating content? • How much would you need to bring in from revenue to pay your bills? • What audience are you trying to reach? • What else is vying for their attention? • How effectively are you getting their attention? • How do you improve that?

  6. Social Media Bottom Line • It’s not about what people are doing • It’s about knowing where they are, why they’re there and what they’re looking for • Knowing this, the business side is about how to reach those people, just as traditional media was about how to reach people

  7. Marketers for whom measuring social media is a high priority (55%), said the reasons why measurement is a priority are because: • 65% need to improve effectiveness • 59% need to improve integration with other marketing • 48% feel pressure to report quantified outcomes

  8. So, you decide to re-open … • College Corner Café • What will the name be? • What will you sell? • How much will it cost to run the business? • How many revenue per day / week / month? • How much profit needed?

  9. How do you bring in customers? • Advertising / Marketing / Promotion • WOM • eWOM / Social Media • How much on advertising / ROI • How much on Social Media / ROI

  10. for marketers who cite measuring social media as a low priority (45%), the study found that: • 41% are still experimenting with social media • 19% don’t have defined metrics or objectives • 18% currently have very low social media budgets

  11. The Study shows…

  12. Diffusion of Innovations • The Innovators • They are the smallest group, but the first to adopt a new technology. • The Early Adopters • If the technology proves to be interesting to the Innovators, the second smallest group, the Early Adopters, jump on board. • This is the group that is saying, “The ROI of Social Media is that you will be in business in 5 years.” To them it’s that clear that without it, you’d go out of business. • The Early Majority • This is one of the largest groups of people who work in companies. They have a “wait and see” attitude towards new things.

  13. Diffusion of Innovations • The Late Majority: • If the Early Majority adopts, they provide the proof the Late Majority needs to consider the new technology. • The Laggards • This group may never adopt a new technology. • The reason social media ROI is coming into prevalence now is because we are in the third phase, or wave, of social media ROI.

  14. Social Media Diffusion

  15. Cases from this article • Domino’s handling of food • The Gap logo change • United Airlines breaks guitars

  16. Why Zappos last week? • Zappos, Intuit, iRobot and American Express fall into the category of proactive types of early adopters and innovators. • When the leaders of Zappos started the company, they didn’t have money for traditional marketing and sales. • They adopted social media proactively because the leadership based the growth of the company on great Customer Service. • The leadership intuitively knew that social media could be used to gain customer and press advocacy. They used positive word of mouth to go from a $0 to a $1 billion company in ten years.

  17. Social Media ROI • Apply the SMART Methodology (Specific, Measurable, Actionable, Realistic, and Timed) to social media objectives. • If your organization doesn’t usually measure objectives, then that’s the place to start. • Then you can develop a plan to measure social media objectives. Solid measurement programs require testing and evaluating the same data over time. • Just like Nielsen measuring TV shows, stations and networks. • Most companies are just starting down this path in Social Media.

  18. Analytics vs. ROI: Collect Social Media Data, Metrics and KPIs • Many people mistake social media data, metrics and Key Performance Indicators (KPIs) for ROI. • This week’s ROI article goes through ROI and shows how Metrics and data are not ROI. • Metrics are how you show a positive or negative change in your business. Some things go up, some things go down. Metrics are numbers that describe which business indicators go up or down. • But metrics alone won’t show your company’s return on its investment. To get to ROI, you have to take the metrics and turn them into business benefits.

  19. Know What ROI Is and Isn’t • ROI is not metrics, but you need metrics to measure business value of an initiative, • whether it’s driven by social media or not. The equation goes like this: • ROI = Benefits – Costsx 100= Percentage Return on theInvestment Costs

  20. This article • …shows you more about calculating Social Media ROI • Compare that to Google Analytics • See previously linked introductions • See next Google Analytics reading • On Monday’s Quiz • Compare that to www.clicky.com • See basic overview • On Monday’s Quiz • Tutorial #1 / Tutorial #2 / Testimonial

  21. Monday • Be ready to show us a new Social Media site • Everyone, project or not • See course outline • 3 minutes – have an bullet point outline • Tweet once you select one • Check tweets • Write it on the sheet on 121 door • No duplications

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