Tag Archives: ROI

Socialnomics — this video speaks for itself

Four minutes well invested (and the music is hot!) …

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Why are we so afraid to say “I don’t know” the ROI of social media?

Olivier Blanchard calls a spade a spade.  And he calls ROI, ROI.  I like that.  He takes to task those social media strategists who try to get around the question of measuring social media ROI with nebulous assertions about how it’s now all about “return on involvement,” or ROI is for the nerds and the number crunchers.  Many of the assertions made by so-called social media experts are so fuzzy around the edges, or just so intellectually sloppy, it’s enough to raise the “BS” antennae of even the most trusting of listeners.

Click-through rates, positive mentions, blog posts, re-tweets, celebratory customer reviews, etc. are all very nice things and important to measure, but they are not return on investment.  Return on investment is money — nothing more, nothing less. It’s the cash that comes into your business as a result of any effort above the dollars invested in that effort, as determined by material costs, man hours, overhead and other charges.  It amazes me that anyone writing, speaking or advising clients about social media for business needs to be reminded of that.

I don’t know why so many thought leaders in social media, when asked, what was the ROI, are so afraid to say, “I don’t know”?  It’s not a crime that we don’t know.  It doesn’t mean that we won’t get better at knowing.  And it doesn’t mean we have no indication of the contribution social media is making to our businesses or that we should stop doing it.  But instead they hem and haw, go off on some tangent, or otherwise attempt to circumnavigate the question.

Recently, Chris Penn asked Mitch Joel this question when he interviewed him on Marketing Over Coffee.  Now, I love Mitch.  He’s a great guy, a great thinker, blogger and speaker, produces a terrific podcast, Six Pixels of Separation, and has just published a book of the same name.  He is one of our greatest standard bearers for social media.  But when asked this question, he equivocated for 5 minutes — okay maybe I exaggerate — but it felt that long to me, and as I listened I couldn’t help thinking, “Mitch!  Just say you don’t know!”  He finally did.

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Okay, so we know what social media ROI is, and what it isn’t, and we know we need to get better at measuring it.  To this end, Olivier Blanchard has uploaded to Slideshare a very good presentation on the basics of social media ROI called Social Media is Not Free.  It covers some fundamental thinking and data one needs to track in order to measure social media ROI.  However, I think we need to go further than what Olivier provides here, because the metrics he takes into account are virtually all within the digital space and don’t consider the  competitive environment.

Without factoring in other elements of the marketing mix, both one’s own and competitors’, it’s difficult to determine the specific role of social media in driving business success.  I can see Olivier’s design would work, perhaps, for a company whose sales, marketing and communications take place mainly on the web.  But for many other businesses, we won’t be able to get to a true measure of social media  ROI without taking into account other factors like advertising, media weights, distribution, in-store activities, promotions, events, etc. — both for our own brand and our competitors’ brands.

That’s a much more complex task than the one Olivier suggests.  (In all fairness, he does say these are the basics.)  I’m not a statistician, but it probably requires statistical and other analytical techniques that can help determine the different roles and contribution to sales that each element in the marketing mix plays.  This isn’t a new challenge.  It has always been hard to determine the precise ROI of each component of the marketing effort — even before the internet and web 2.0.

So why are we so afraid to say “I don’t know” when it comes to the ROI of social media?

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Suicide Girls shows how online communities can monetize by thinking small

If you don’t know George Parker, you should.  Creative consultant, 30-year advertising industry veteran — he’s known for his no-holds-barred opinions and perspectives.  He writes a blog — Adscam/The Horror — and is a popular guest on various marketing podcasts thanks to his bitting, comic commentary.  He’s a bit too hard-edged for my taste and his humor often depends on the below-the-belt put-down — like the jokes of Don Rickles, a comedian I never could stand.  But beneath all the rancor, George is a pretty smart guy, has seen it all, and is worth listening to.

On a recent episode of the BeanCast, which has become one of my favorite podcasts on marketing and communications, George enjoyed a healthy rant about Facebook and Twitter and the fact that despite their popularity and growth, they don’t have a viable business model.  According to George, they never will.  The problem is that they’re too general.  They’re trying to be all things to all people.  So they can’t create a unique, distinctive online social experience that people will pay for.  In George’s opinion — and he may be right — the future belongs to small, niche online communities that offer a unique package of services, content and ways to connect that are highly desirable for that specific community.  One that he calls out is Suicide Girls.

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Suicide Girls is a web site tailored to the lifestyle and fashion aesthetic of young women (and men) who are into piercing, tattoos and living life well beyond the borders of  what most of us would consider mainstream.  You’ve got to pay $4.00 a month to join.  But that’s only the beginning.  Building on the common interests and attitudes of the community, Suicide Girls has grown into an “alternative” lifestyle brand that now includes books, DVDs, a magazine (how “old media”!), a burlesque tour and a fashion and accessories line.  Here are just some of the items you can order on the site:

The Suicide Girls Beauty Redefined Book ($40)

Women’s Huddie ($100)

Suicide Girls Graffiti Panties ($12 — that seems like a bargain!)

Suicide Girls Buttons (pack of 10 for $7)

According to Crunchbase, Suicide Girls has 5 million unique visitors a month.  So you can also imagine that the banner ad for the London Tattoo Convention in the photo of the SG home page above will garner a hell of a lot more clicks there than it would as link on Facebook or Twitter.  For the right advertiser, niche communities mean a much a higher ROI, boosting  the viability of advertising as an online revenue source for these narrowly targeted sites.  It’s not the quantity, but the quality of reach.

You can learn more about how Suicide Girls has successfully monetized its online community in this interview with its founder, Missy Suicide.  Her real name, of course.

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I’m all for social media, but in a recession it pays to advertise!

This link will take you to just one of numerous articles and reports coming across my radar screen recently documenting the advantages of investing in marketing during economic downturns, especially in innovation and advertising.  Again and again history shows that those companies that have the wherewithal to prioritize long-term growth over the short-term bottom line and spend during recession come out the better for it at the other end.  They gain market share and are better positioned to further build their business as the economy enters a new period of expansion.

Continued investment in innovation means companies can widen the performance lead between their products and those of their competitors more quickly and significantly as those competitors cut back on R&D.  This is good for both the post-recessionary period, and the immediate present, since it means companies can strengthen the performance side of the value for money equation of their products precisely when consumers are re-evaluating their brand choices.

Investment in advertising means companies get more bang for their buck, as media gets less expensive in the wake of competitors’ budget cuts.  So the absolute out of pocket decreases at the same time share of voice increases.it-pays-to-advertise-sm3

Despite my own personal passion for social media and the great promise it holds for marketers, it cannot be denied that above-the-line communications still build business.  The data is there.  I’ve seen it with our clients.  When we invest in above-the-line spend, business increases — presuming we’ve got something worth saying — and the ROI’s are right.  In a recession, those ROI’s will be even better.

So while I wouldn’t deny, as many now say, that social media can be especially valuable in a recession because it helps companies  strengthen relationships with their existing consumer base, no one should think it can be a substitute for the broad scale competitive advantage above-the-line media can achieve for brands in recessionary times.

Especially in a recession, it pays to advertise!

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