Socialnomics – Social Media Blog

Entries from November 2009

Social Media ROI Examples & Video

November 12, 2009 · 35 Comments

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by Erik Qualman

A big question out there these days is: What is the ROI of Social Media? Or the ever popular how do I measure the ROI of social media?  Often when I get this question it’s appropriate for me to retort: “What’s the ROI of your phone?”  Other times it’s not appropriate to respond with this answer, which, if done in the wrong tone, or place, can win you a free punch in the face.  Then there are the naysayers that adamantly proclaim, “We aren’t doing social media because there isn’t any ROI.”

To borrow from the Conductor of the Boston Philharmonic Orchestra, Benjamin Zander, there are those in life that sit in the back row with their arms folded, judging, and complaining.  Then there are those that sit in the front row with a vision and they are spending their energy on making that vision a reality.  This article and video have been put together with the hopes of it being a viable tool for those with a vision to get those seated in the back row to stand up and see the social media light.

Drafting off the success of the Socialnomics: Social Media Revolution Video – over 1.2 million views and counting – thanks for the support!  This newest video Socialnomics: Social Media ROI showcases that social media can help you achieve success on almost any front.  While the video uses familiar nomenclature like ROI, many pieces of social media behave so differently than anything we have ever seen, that I prefer to use “What does or will success look like?” rather than “What’s the ROI?”

After all, why are we trying to measure social media like a traditional channel?  Social media touches every facet of business and it should be viewed more as an extension of good business ethics.  Which, if done properly, will harvest sales down the line.  Co-Chairman Alex Bogusky of Crispin Porter & Bogusky puts it best when he states:

“You can’t buy attention anymore. Having a huge budget doesn’t mean anything in social media…The old media paradigm was PAY to play. Now you get back what you authentically put in. You’ve got to be willing to PLAY to play.” – Alex Bogusky, Co-Chairman of Crispin Porter + Bogusky

However to speak in a business vernacular that is more readily understood today please find below some salient examples and data points which are found in the video:

1.  Over 300,000 businesses have a presence on Facebook and roughly a 1/3 of these are small businesses.

wine-library-tv2.  Gary Vaynerchuk grew his family business from $4 million to $50 million using social media.  Gary’s eccentric personality and offbeat oenophile knowledge have proven a natural path to success with his Wine TV Library.

3.  Vaynerchuk found first hand that $15,000 in Direct Mail = 200 new customers, $7,500 Billboard = 300 new customers, $0 Twitter = 1,800 new customers.

4-5.  Wetpaint/Altimeter Study found companies that are both deeply and widely engaged in social media significantly surpass their peers in both revenue$ and profit$.  The study also found the company sales with the highest levels of social media activity grew on average by +18%, while those companies with the least amount of social activity saw their sales decline -6%.

6.  Lenovo was able to achieve cost savings by a 20% reduction in call center activity as customers go to community website for answers

7-8.  Burger King’s Whopper Sacrifice Facebook program incented users to give up ten of their Facebook friends in return for a free Whopper.  The estimated investment forwhopper-sacrifice this program was less than $50,000 yet they received 32 million media impressions which roughly estimated equals greater than $400,000 in press/media value.  Which to put in context is somewhat like reaching the entire populations of 19 states (understanding this doesn’t account for unique vs. repeat visitors, etc.)

9.  BlendTec increased its sales 5x by running the often humorous “Will it Blend” Videos on YouTube blending everything from an iPhone to a sneaker.

10.  Dell sold $3,000,000 worth of computers on Twitter

11.  To put things into perspective, only 18% of traditional TV campaigns generate a positive return on investment.  This is where the majority of media dollars reside today.  I don’t believe the majority of media dollars will reside there tomorrow.

12-14:  “You can’t just say it. You have to get the people to say it to each other,” says James Farley, CMO Ford.  Ford seems to know what they are doing, especially with Scott Monty leading the social media charge.  By giving away 100 Ford Fiestas to influential bloggers, 37% of Generation Y were aware of the Ford Fiesta before its launch in the United States.  Is it any wonder why 25% of Ford’s marketing ford-fiesta-social-mediaspend has been shifted to digital/social media initiatives?  Ford is the only US auto company that didn’t take a government loan.

15.  Naked Pizza, a New Orleans Pizzeria that specializes in healthy pies, set a one day sales record using social media.  In fact 68% of their sales came from people “calling in from Twitter.”  On top of that (no pun intended) 85% of their new customers were from Twitter.  So, yes, social media does work for small businesses.  Feel free to have a bottle of Vaynerchuk wine with your pizza.

16.  Volkswagen goes 100% Mobile for launch of GTI.  The reason that I mention this is that mobile drives social media usage and social media usage drives mobile.  More and more we will see most social media usage on the phone.

17.  Tweets for a Cause sent out a tweet from Atlanta to encourage support of Susan G. Komen for the Cure.  As a result of retweets from such notables as @mashable, @G_man, @zaibatsu and others, the Atlanta Chapter site received 11,000 visitors in 24 hours as a result of this initiative by ResponseMine Interactive.

18.  Intuit introduced “Live Community” into their TurboTax® products 2 years ago.  Due in part to the resulting word-of-mouth, they have seen unit sales increase +30% each year and have now integrated “Live Community” into their other products like QuickBooks, Quicken, etc.  “Live Community” allows customers to ask other customers questions which has proved both beneficial to the customer and to Intuit.  In some instances, the customer can answer questions that Intuit isn’t allowed to answer because of regulatory restrictions.

19.  Software company Genius.com reports that 24% of its social media leads convert to sales opportunities

20-23.  During Barack Obama’s rise to the White House, he garnered 5 million fans on social media and 5.4 million clicked on an “I voted for Obama” Facebook button.  Most importantly this resulted in three million online shepard-fairey-obama-hope-imagedonors contributing $500 million in fundraising. An astounding 92% of the donations were in increments of less than $100.

24.  The University of Texas MD Anderson Cancer Center witnessed a 9.5% increase in registrations by using social media.

25-28.  Web host provider Moonfruit more than recouped its $15,000 social media investment as their Website Traffic soared +300% while correspondingly sales increased +20%.  They also saw a huge lift in their organic search engine rankings getting on the first page for the term “free website builder.”

29.  eBay found participants in online communities spend 54% more money

30.  Co-Chairman Alex Bogusky of Crispin Porter & Bogusky puts it best when he states: “You can’t buy attention anymore. Having a huge budget doesn’t mean anything in social media…The old media paradigm was PAY to play. Now you get back what you authentically put in. You’ve got to be willing to PLAY to play.”

31.  “Think of Twitter as the canary in the coal mine.” – Morgan Johnston, JetBlue

32.  71% of companies plan to increase investments in social media by an average of 40% because: a) Low Cost Marketing b) Getting Traction c) We Have To Do It

33.  “Our head of Social Media is the customer” – McDonald’s

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A tremendous thanks to all the below social media luminaries! [if anything is incorrect please let me know]

1.   Jon Swartz, “More marketers use social networking to reach customers,” USA Today, 8/28/09

2.  Lee Oden, “Book Review: Crush It by Gary Vaynerchuk,” Online Marketing Blog

3.  Jan M. Rosen, “Be It Twittering or Blogging, It’s All About Marketing,” New York Times, 3/11/2009

4-5.  Wetpaint/Altimeter Group Engagement db study, 2009 http://www.marketingcharts.com/interactive/social-media-engagement-directly-linked-to-financial-success-9858/ & http://www.altimetergroup.com/2009/07/engagementdb.html

6.  Jon Swartz,  “More marketers use social networking to reach customers,” USA Today,  8/28/09

7.  http://www.advertolog.com/burger-king/print-outdoor/whopper-sacrifice-316211/

Estimate based on taking 32 million impressions at an average CPM of $13 based on eMarketer estimate found here. http://www.emarketer.com/Article.aspx?R=1007053  Less than $50,000 is a very conservative estimate (probably cost much less) to actually build the application + the cost to Burger King to give out less than 20,000 coupons/whoppers.  Please note these are estimates, but they error on the conservative side.

8.  Based on state populations of Arkansas, Kansas, Utah, Nevada, West Virginia, Nebraska, Idaho, Mississippi, Maine, New Hampshire, New Mexico, Hawaii, Rhode Island, Montana, Delaware, South Dakota, Alaska, North Dakota, Vermont http://en.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_population

9.  Kristen Nicole, “Will It Blend” Videos Boost Sales 5x,” Mashable, 9/27/2007

10.  Claire Baldwin, “Twitter helps Dell rake in sales,” Reuters, 6/12/2009

11.  “Marketing to the Social Web,” Larry Weber, Wiley Publishing  2007

12-14.  David Kiley, “Ford Spending 25% of Marketing on Digital and Social Media,” BusinessWeek, 10/16/2009 http://www.businessweek.com/autos/autobeat/archives/2009/10/ford_spending_2.html

15.  Jacob Morgan, “Two Examples of Companies Measuring Social Media ROI,” Social Media Globetrotter, 10/12/2009http://www.jmorganmarketing.com/two-examples-of-companies-measuring-social-media-roi/

16.  Karl Greenber, “VW Goes All Mobile For Launch Of GTI,” MarketingDaily, 10/22/2009 http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=115919

17.  Interactive Agency (Atlanta, GA)

18.  Intuit Inc. (Mountain View, CA)

19.  “Increase B2B Lead Generation Using Social Media,” Social Media B2B, 7/14/2009 http://socialmediab2b.com/2009/07/b2b-lead-generation-social-media/

20-23:  Jose Antonio Vargas, “Obama Raised Half a Billion Online,” Washington Post http://voices.washingtonpost.com/44/2008/11/20/obama_raised_half_a_billion_on.html

24.   Ed Bennett, “Hospitals and Social Media,” SlideShare http://www.slideshare.net/edbennett/hospitals-social-media

25-28.  Daniel Adler, “Twenty-One Top Twitter Tips,” Forbes, 7/31/2009 http://www.forbes.com/2009/07/31/top-twitter-tips-entrepreneurs-technology-twitter.html

29.  Marshall Kirkpatrick, “Social Media ROI: Dell’s $3m on Twitter and Four Better Examples,” ReadWriteWeb, 6/12/2009 http://www.readwriteweb.com/archives/social_media_roi_dells_3m_on_twitter_and_four_bett.php

30.  Alex Bogusky, Co-Chairman, Cripin + Poter & Bogusky

31.  Daniel Adler, “Twenty-One Top Twitter Tips,” Forbes, 7/31/2009 http://www.forbes.com/2009/07/31/top-twitter-tips-entrepreneurs-technology-twitter.html

32.  Social Media in the Enterprise White Paper by Vignette Software, 2/2009 http://www.vignette.com/dafiles/docs/Downloads/Social-Media-in-the-Enterprise.pdf

Categories: Social Media · YouTube
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9 Social Media Questions Answered

November 2, 2009 · 2 Comments

Someone suggested I periodically post some of the main questions I receive and my  corresponding responses  around Social Media.  I thought this was a good idea (please let me know if you don’t feel this way).  Hence, below are a few question pulled from an interview I did for the McCombs School of Business (University of Texas) with David Weneger.

David Wenger: You posted a video on YouTube called Social Media Revolution, I think it’s had over one million views.  What was that about?

Erik Qualman: That was designed to get people thinking about social media.  The term  Socialnomics is introduced, but I primarily wanted to give a tool to every marketer and every individual who has been struggling with all the hype about social media. Is it a fad or is it the next revolution?  The video is designed to show it’s not a fad and here are some hardcore statistics that show that it’s actually the biggest thing since the industrial revolution.  social media answers

DW: For every social media pioneer there’s also some senior executive who says, “Come on isn’t this just for kids?” What do you say to people that are hanging on to that outdated perception of what social media is?

EQ: Sometimes we’ll start with statistics. A good example is Twitter. It isn’t just for kids because of kids that are 12-to-17 years old, only 11% are on Twitter. Another stat is that the fastest growing segment on Facebook is females age 55-plus, and the reason is they want to engage with their sons and daughters and also their grandkids. Facebook has more photos than all the other photo sharing sites combined:  Snapfish, Flicker, and Photobucket. Going back to the video, when I pull up the stats for the 500,000 people that have viewed that video the most people are ages 45-to-55, both male and female.

DW: That suggests that social media is great for consumer products. Does it work for B2B or other kinds of marketing?

EQ: We get a lot of the B2B questions. And the answer to that is it’s huge, because social media is a lot about relationship building. And you could argue that in B2B you have a smaller pool of clients and the relationship is that much more important. So it doesn’t replace the face to face, it just strengthens your current relationship. It allows you to be in touch more often with your most important clients. Then the second piece is that companies can see downstream past their client into their client’s customer, so they can see the pain points. If you’re selling chips — let’s say you’re Intel and you’re selling chips to Dell and also Apple — you can see the pain points of the customer by seeing the conversation on Facebook, on Twitter and all these other social media tools, so you’re a step ahead of the game.

DW: So it actually becomes a type of market research.

EQ: Yes, it’s all transparent, if they roll up their sleeves and use social media as a type of a focus group i.e., collecting data on Twitter, to figure out what the pain points are, they’re going to be ahead of their competition.

DW: A lot of companies are trying to get on the social media bandwagon. You might have two companies, both wanting to leverage the power of social media but one gets it right and the other struggles.  What’s the difference?

EQ: The biggest shift for a lot of companies is to make sure your mindset is outward-in rather than inward-out. In the past you’d have marketing divisions that sit for a year and scope out what’s going to be their next message, and sit behind closed doors and think they have all the answers, when the answers are actually now on their fingertips externally. Their customers are more than happy to provide what their needs are. So that’s the biggest shift is one company that’s thinking outward-in is going to beat the company that’s thinking inward-out. That’s a huge paradigm shift.

The other piece is to keep the investment relatively light, because you’re not going to get it right the first time, so it’s important to be flexible and to adjust accordingly. Coca Cola gets a lot of things right but they jumped into Second Life thinking it was the next best thing and it was great, but they jumped into it a little too much. They didn’t go in with a light approach, and so they spent tons of money and then they only had about 30 people come to visit this pavilion that they built within Second Life. Some of the stuff is changing quickly so it’s important to be as light as possible and adjust quickly.

A great term to use is Beta. Google uses Beta a lot when they’re doing their stuff.  From a tax purpose you can write that off as an investment.

DW: Have companies figured out how to monetize social media?

EQ: Dell’s already been able to sell $3-million dollars on Twitter and that’s one great example. There are different ROI metrics. There are hard metrics like a sale. There are other metrics like traffic…so you look at how much traffic is now coming from Wikipedia, how much traffic is now coming from YouTube, from Facebook, etc. Then there are softer metrics. If you have 500,000 Facebook fans you can run against your database to figure out did these people stay a customer more than someone that is not a fan. Did they cancel less? People are starting to measure engagements, trying to figure out what that is worth. Other stuff is more of a brand awareness standpoint. Here are our overall sales before we ran social media, and here are our sales today. Obviously there’s a lot of other stuff baked in there but sometimes you have to take a huge step back and just look at the whole picture of your company.

DW: Is there a role for brand building in social media that is simply reputation building?

EQ: By all means. Let’s say you launched a video in your dance studio and that video gets 100,000 views, because you’re teaching how to tango, and you’ve got some brand messaging in that instructional video. It might be difficult to track exactly who came from that video to actually sign up for your dance classes, but it’s a huge brand awareness for your dance studio. There’s definitely a huge brand play involved within social media.

Even before social media, Ben and Jerry’s gave away free ice cream cones hoping to get foot traffic into the store, and people would buy more than just that free cup of ice cream. They gave out free ice cream on election day and their Facebook fan base went from around 200,000 to 300,000, they gained 100,000 followers in just one day. That cost them nothing in terms of messaging because they just pushed it out on Facebook.  They still have the cost of giving away the ice cream, they’ve historically always done that, but now they’re able to track it better and get that word of mouth out a lot more.

DW: Part of the concern many executives have is they feel they’re losing control of the conversation.  How can a company establish some sense of boundaries about what they feel comfortable with, and what they don’t feel comfortable with?

EQ: They do have to come to grips with their customer taking a lot more ownership of the brand and that’s actually a good thing on most aspects. If everyone thinks your product says this but you think it does that, then there must be something inherently wrong with your product, or it’s a huge opportunity.

DW: So there’s an element of trying something, taking a risk, and possibly being a failure at your first entree into social media. There’s also the aspect of letting go of the conversation. These are great concepts but it must scare the heck out of a lot of business people that you work with.

EQ: Anything that’s changed in a new world is always going to be scary. A lot of companies say we’re not going to do social because we’re concerned about letting go of the conversation, and what I argue is that’s like an ostrich putting their head in the sand. You’re not as powerful as you think. You’re not going to enable social to happen, it’s happening without you so you might as well have a piece in the conversation and be part of the conversation.

A year ago on John Deere, who sells lawn mowers and heavy machinery, did not have a presence on Facebook yet there were 500 Facebook groups, and many of those groups had over 10,000 followers. A lot of them positive and a couple of them negative. So this stuff was going on without John Deere jumping in there. They have arguably a fairly boring and mundane product, a lawn mower and heavy machinery, yet the consumer had a passion for that brand. And then there are also a couple of negative groups out there, so the worst thing that John Deere can do is not be part of that conversation. Now they have launched a Facebook fan page and it has, last time I checked they were close to 100,000 fans. So they’ve realized they do need to be part of that conversation.

The full article/interview can be viewed on ID University.

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Categories: Social Media · Uncategorized
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