How do I write this piece without making Peter Kim hate me? I guess I’m just going to have to give it a shot and hope for the best. It’s important to remember that this post isn’t about him. It’s about a piece of content.
None of this is personal. I even think I like the guy. (We’ve never met in the real world, so I don’t know for sure.) I have a lot of respect for him and for what I think he does. (We’ve never worked together so I don’t know for sure either.) But I have to be honest, the 101 Examples of Social Media ROI list he published this week is
crap seriously flawed. Here’s why: Most of these 101 “examples” don’t show ROI at all, “social” or otherwise. Either the title is wrong or the list is wrong for that title. One or the other.
Before I get into specific examples and illustrations of where I think the list fails, let me give you four basic problems I have with it as it stands today:
1. Many of the examples on it could potentially show positive ROI but – as presented – only reference selective gains from social activity and not actual, factual, empirical ROI. If that made no sense, that’s okay. Let me explain:
For something to be ROI, you need two ingredients: The cost of the activity and the gain from that activity. (That cost is the investment. The gain is either revenue or cost savings.) It’s math. Really really really simple math. ROI is an equation and it generally looks like this:
($ Gain – $ Cost) ÷ $ Cost = ROI
($ Revenue – $ Investment) ÷ $ Investment = ROI
(You can also multiply the result by 100 to get yourself out of the decimals, but that’s a personal choice. You can do that in your head.)
Anything that isn’t the result of the ROI equation is not ROI.
Note that a gain is just a gain,like cost is just a cost. Neither gain nor cost is ROI on its own. Ever. Not in any known universe.
Put another way, bread and ham may individually be part of the ham sandwich equation but ham alone is not a ham sandwich. Ham is just ham. The problem we face today: This list pretty much mistakes ham for a ham sandwich. Good thing it was free or we would all be asking for a refund (or a word with the chef).
Take this example:
61. Paramount Pictures. #Super8Secret Promoted Trend created a tremendous spike in conversations: Tweets of the hashtag reached nearly nine million impressions in less than 24 hours and mentions of the movie skyrocketed to more than 150 per minute. Receipts for the sneak preview exceeded $1 million, and Paramount said weekend box office surpassed expectations by 52%. (Twitter, 2011)
Cool story, bro. What was the cost of the campaign?
Yes, this is an example of a successful use of social media (through a “promoted trend” media buy). Awesome. But where’s the bit that compares the $gain and the $cost? That would be an ROI example. This isn’t.
What’s sad is that there is probably an ROI piece hiding in the background but instead of focusing on that, the example dishes out a healthy helping of random gain data: Impressions. Mentions. Tweets. Retweets. Sales too, which is nice but no cost data… so thanks for playing but no. Without the cost piece, you don’t have an ROI example.
Your example needs to include this information or it doesn’t belong on that list:
($ Gain – $ Cost) ÷ $ Cost = ROI
Tip: If you can’t measure ROI or adequately prove it in this instance, that’s okay. Just don’t add it to a list of ROI examples.
(Speaking of proving cause & effect, let’s not forget that Super8 was a well anticipated $50M summer fare from director J.J.Abrams and producer Steven Spielberg. Not exactly a grass-roots indie phenom that would have flopped without a promoted trend on Twitter. Let’s not go crazy over the role that social media really played in opening weekend ticket sales. A little perspective goes a long way.)
More examples of this disappointing absence of actual ROI metrics later. In fact… almost the entire list suffers from this single basic flaw. But hey, at least this type of example makes the effort of including at least a portion of the data that goes into an ROI discussion. Not all examples on the list do.
2. Many of the examples on the list don’t even reference financial gain at all, let alone ROI. I list more later in the post but these will get things started:
“68% of respondents said they were “much” or “somewhat” more likely to purchase post-project.” (Subaru. 80.)
“32,000 video views, 25% regular return visits to the site, and average of almost seven minutes spent on the site per visit.” (UPS. 96.)
“Community drove a +20 NPS increase.” (Sage Software. 69.)
“58% higher engagement rate than people coming in from other channels.” (TurboTax. 91.)
These are very cool little successes, great things to celebrate and be happy about, but as valuable as they may be they are not ROI. Not one part of any of those numbers even fit in the ROI discussion. At least other examples on the list make an effort to list one element of ROI: Money saved or money earned. These don’t. Sorry but that’s a little perplexing.
Here’s an example of my own to illustrate how far these examples are from ROI: I love carrot cake and when people compliment me on my impeccable taste in carrot cake, that isn’t ROI either, no matter how much of those interactions happen online. I could call it ROI and score the number 102 spot on the list, thus:
102. Olivier Blanchard. Increased engagement with carrot cake enthusiast community by 37%. (The BrandBuilder Blog, 2012)
Except… no. It doesn’t work that way. Just because something is a success doesn’t mean it qualifies as ROI. Did my example mention that I even sold carrot cakes? Did I factor in the cost of making them or selling them online? Did I save money in any way by talking about carrot cakes with my twitter friends? Nope, I didn’t think so either.
Again, your example needs to include this information or it doesn’t belong on a list of ROI examples:
($ Gain – $ Cost) ÷ $ Cost = ROI
3. Some of the examples could have been bunched into one but legitimate examples were somehow omitted. Case in point: Cerner’s three examples (15, 16 and 17) are really one program / one example, but IKEA somehow didn’t make the list. (For more details on that particular program, click here.) Maybe scratching Giffgaff (32.) and replacing it with IKEA would have made sense? But okay, I’ll back off from this particular point. Lists tend to be incomplete. Someone always gets left out and sometimes you have to stretch yourself a little thin to get to the magic number. It’s no big deal.
4. Because of the source (Peter is well respected in this industry as far as I can tell), a lot of people will naturally accept this list as fact. It will become a template to be shared and passed around and referenced for the next couple of years. When marketing execs and digital agencies look for examples of ROI in social business, they will pull this thing from the Googlenets and use it as a resource for all sorts of things: Training of new social business recruits, client pitches, presentations at conferences, etc. They will do so without questioning the validity of the information they are not only ingesting but also sharing because they trust that Peter vetted the list before publishing it. That’s the unspoken contract of being a respected leader in the social business world.
Except… what if this one time, the information wasn’t properly vetted? What if much of it wasn’t even properly presented (using the right metrics, for instance)? Or what if the title is so wrong for the actual list that you end up confusing “value” with ROI for another 3 years as a result? Then what? No thanks. We can do better.
If you have 10 minutes to really get into it, read on. If not, you get the idea. (By the way, the list isn’t all bad.) Feel free to skip ahead to the end all the same. 😉
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Let’s look at a few of these examples a little more closely.
We’ll get to more obvious cases of “no, this isn’t ROI at all” a bit later. I want to start with some of the more subtle “maybe this could be ROI” examples first because a) they’re tricky and b) they illustrate pretty well some of the common traps people fall into when trying to establish ROI too quickly:
1. Aflac. Community drove online payments increase of 3% led to $95,000 in savings. (Lithium Technologies, 2011)
Q: What’s the problem with this one, Olivier? It looks legit to me. What’s your deal?
A: Yes it does look legit. And it might be. But do we know anything about other activity from Aflac that might have contributed to that 3% increase in online payments?
Could a concurrent email or advertising campaign have triggered a significant portion of that shift? Could the addition of a flyer in the mail to existing customers prompting them to make online payments have been the real cause of the shift? We can’t attribute the success of “the community” until we have ruled those out. If we know for a fact that this was 100% the result of community engagement, great. Roll on. If not, we need to find out before we high-five the community management team.
Lesson #1: Assumptions are dangerous and attribution is tricky. If you are going to present an ROI example, make sure it is rock solid. Don’t assume that social business was the biggest (or sole) cause of your success.
A better way of presenting this one would have been to maybe connect the 3% lift in online payments to the $95,000 in processing costs (context here would be nice so we know how the two might be connected). Tying these metrics to a specific campaign or activity on social channels wouldn’t be a bad thing too. Connect the dots a little bit: +3% in online payments isn’t ROI unless it results in $x savings. None of it is an outcome of social business unless you also show how “the community” helped you get there.
Not saying this isn’t a potential ROI win, but as presented, we can’t know for sure. Not yet. We’ll give that a cautious MAYBE. Just watch those assumptions though.
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2. Alberta Common Wealth Credit Union. Blog, YouTube, Facebook – 2 million impressions, 2,300 new accounts, and $4 million Canadian in new deposits. (Forrester, 2008)
First, scratch the 2 million impressions bit. It’s a distracting metric and not super reliable (or even relevant to this discussion).
$4 million in new deposits sounds like a great outcome for the program though. Here are the three problems with that:
– Assumptions again: How do we know that these 2,300 new accounts and resulting $4 million in new deposits were tied to the social media program (Blog, Youtube, Facebook) and not a combination of social and other factors (traditional marketing, advertising, PR, etc.). Can ACWCU realistically assign the 2,300 new accounts and $4M in net new deposits to the social media program?
If the answer is yes, great. They’re on the right track. Time to back that up. Show me how that happened.
If the answer is no, then we have a problem right off the bat. Remember that thing about assumptions.
– What about costs? What was the cost of the program? This example (and many others) don’t mention cost at all. They only mention gains. The ROI equation also factors in costs.
Here’s why this is kind of important in an “ROI examples” discussion: if the program or campaign cost $4,000,001 and the net new deposits amounted to $4,000,000, then your ROI was actually negative. Just sharing the gain from the campaign or program doesn’t give us any idea of what the ROI actually was.
Lesson #2: Don’t confuse ROI with gain. ROI is the ham sandwich, not just the ham. (Google the ROI equation, print it and tape it to your office wall. Before you tag something as ROI, make sure it fits the definition of ROI.)
– No benchmarking: What the example doesn’t tell us is what the time period for this gain was, and how the credit union normally trends for similar time periods. What if ACWCU usually sees the same amount of new accounts and deposits for the same time period even without social media? Say that ACWCU saw 2,300 new accounts for the exact same period preceding the start of their social media program? Wouldn’t that mean that the social media program might have had no impact at all? You have to factor in time frames and set up benchmarks before you can weigh gains before and after the launch of a program.
Result: As presented, we have no way of knowing if the program perpetuated a trend or brought in new business above and beyond normal performance trending.
Lesson #3: Without adequate benchmarking, your ROI “reporting” is incomplete and doesn’t stand up to scrutiny.
File that one under MAYBE. (As presented: An incomplete report of gain but not an example of ROI.)
Way too many of this kind of anecdotal “example” on this list to make me comfortable with it. Sorry.
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8. Blendtec. Viral videos increased company sales +700%. (Barnraisers, 2010)
That one actually does stand up to scrutiny. BlendTec’s hilarious videos (and live demos at trade shows) a) became such a hit and b) demonstrated the effectiveness of the blenders so well that orders for the blender increased almost overnight.
The reporting here is still pretty incomplete though: 700% over what time period? What else could have caused the increase? That’s a gain but not an ROI figure: What was the cost of the program vs. that 700% net gain in sales?
File that one under YES: ROI but with reservations. (As presented: another report of a successful gain but not an example of ROI.)
I really wish the legitimate ROI examples on this list actually focused on ROI instead of using disjointed metrics.
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10. Bonobos. Exclusive sale on Twitter generated 1,200% ROI in 24 hours on promoted tweet. (Twitter, 2011)
First, proceed with caution if the list is about Social Business and you are just talking about a one-time media buy on a social channel. Social business is a little more elaborate than buying the odd promoted tweet for a one-day promotion.
Second, we have absolutely no idea how that 1,200% ROI figure comes from. What is it based on? Could the figure erroneously reference a 1,200% increase in sales rather than ROI? As presented, we don’t really know. Red flag.
Third (and perhaps most important) we have no idea what the cost of that promoted tweet was in relation to the gain in net sales.
Knowing nothing about this one, I want to give it the benefit of the doubt. Filing it under MAYBE. (I can’t believe I am being so nice. This would never pass muster during a legitimate business audit.)
* * *
13. Burger King. Subservient Chicken video increased chicken sandwich sales 9% per week a month after launch. (Adweek, 2005)
Again: At a cost of…?
If the 9% increase in chicken sandwich sales amounted to less revenue than the cost of the campaign or program, then the ROI was negative. This example (like most on the list) mentions gain without factoring in cost. This is the list’s biggest problem.
Footnote: Subservient chicken wasn’t just a social media campaign. Subservient chicken was an advertising campaign with interactive digital components. This is very different from a business like Best Buy or Ford engaging with people via social channels to grow mindshare, improve the brand’s image and ultimately increase preference in the minds of x% of car buyers. When looking at this type of hybrid model of social and traditional media, you cannot legitimately talk about the ROI of “social”.
Lesson #4: When a campaign (note my choice of the term campaign and not program) is as much social marketing as it is traditional marketing, you cannot attribute its success to “social media” or even “social business.” An advertising campaign, even with social channel components is still an advertising campaign.
Effective, sure, but still just advertising.
File that one under a cautious and suspicious MAYBE. (As presented though: No ROI was actually demonstrated here. Value: yes. ROI: nope. Again.)
Let’s move further down the list.
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Let’s leave the gray area of “maybe” for a minute and look at a few examples that don’t fall anywhere near ROI (as presented):
15. Cerner. Community resulted in 13% fewer customer support issues logged. (Jive Software, 2011)
16. Cerner. Community resulted in 70% decrease in internal HR issues logged. (Jive Software, 2011)
17. Cerner. Community resulted in shorter approval cycles for writing technical documentation, from 2-6 weeks to hours or days. (Jive Software, 2011)
19. Charles Schwab. Online community drives 56% increase in Gen X customer base versus year ago. (Communispace, 2007)
20. Cisco. Community deflects 120,000 support cases each month. (Lithium Technologies, 2011)
24. Electronic Arts. EA was 2nd UK brand to use promoted tweets and trends to promote FIFA 12 video game. Trend engagement level was 11%, well above Twitter’s average ‘benchmark’ for trends, of 3% to 6%. Promoted tweet engagement averaged 8.3% over two-week campaign vs. Twitter benchmark of 1.5%. (Marketing Magazine, 2011)
25. Elsevier. Wiki drives 80% reduction in interdepartmental e-mail volume. (Socialtext, unkn)
28. FICO. Community: 850k customers served, resulting in 10% improvement in call deflections annually. (Lithium Technologies, 2011)
30. FONA International. Wiki eliminated almost 50,000 e-mails a year from one specific process. (Socialtext, unkn)
32. giffgaff. 100% of questions answered by community members in average time of 93 seconds. (Lithium Technologies, 2011)
34. Hershey’s. House party: 10,000 parties, reached 129,000 people, and say their campaign was seen by 7 million people. (Forrester, 2008)
35. Honda. Friending Honda campaign increased Facebook fans from 15k to 422k, generated over 3,500 dealer quote requests. (RPA, 2010)
36. HP. More than 4.6 people have told HP that the forum solved their support issues which HP says makes customer happier and saves the company millions in support costs. (Forrester, 2010)
42. Intuit Quickbooks. Business owners engaged with rated ProAdvisors 555% more often than unrated counterparts. (ratings and reviews). (Bazaarvoice, 2011)
No ROI in any of those examples whatsoever. There are more but I will let you find them all on your own.
Lesson #5: If it isn’t a $cost vs. $gain equation (or whatever currency you need it to be), it isn’t ROI. Customer base, leads, referrals, links, clicks, retweets, HR issues logged, email volume, estimates of future sales, deltas in NPS, quote requests, parties reached, impressions, engagement, etc. = not ROI.
Note: Too bad HP (36.) didn’t lead with the “saves company millions in support costs.” That looked like a legitimate ROI example. (Right company, wrong metrics to illustrate the ROI piece.) It matters that 4.6… wait. 4.6 people?
Maybe it was 4.6 million? Or 4 out of 6?
Anyway, whatever the number is, it matters but it is irrelevant to the ROI discussion. What would have been relevant would be how many millions in savings HP enjoyed as a result: The cost of implementing and managing the program vs. the $x million savings would have been a perfect way to illustrate ROI here. Missed opportunity #36 on the list so far.
Speaking of how to properly present ROI “examples,” here are a few quick tips on how to turn these examples into legitimate ROI stories:
It would have been great for the three Cerner examples to talk about actual cost reductions from the drop in customer service and HR issues, for instance, but they didn’t The metrics used had nothing to do with ROI. Financial gains (either via revenue or cost savings) were never mentioned. The cost of implementing and managing the program(s) was also never mentioned. Why? Those are far more relevant metrics than the ones presented.
Same with Elsevier: An 80% reduction in email is great but what is the impact on operational costs? That would be a potential ROI story.
Honda (35.) would have a great ROI story to tell if it could show the net number of sales from those 3,500 dealer quote requests and then scrubbed from that list every buyer who was going to buy a Honda anyway, regardless of the company’s social media activity. Presenting the example with “likes” and “dealer quotes” as the two principal KPIs (key performance indicators) instead of net sales (for example) puts the example squarely outside of a legitimate ROI discussion.
Intuit is another example of a company listed here with a legitimate ROI story to tell, but the description references a KPI that has nothing to do with ROI whatsoever. “555% more engagement resulting in net new $… versus a cost of $…” would have scored a bullseye. “555% more engagement” alone doesn’t.
Is it too much to ask for a list of ROI examples to actually use cost vs. gain numbers? As in… the actual ROI equation? Because that would be simple, clear and nice… and relevant. Instead of…
19. Charles Schwab. Online community drives 56% increase in Gen X customer base versus year ago.
… try this:
19. Charles Schwab. Online community cost: $X. 56% YoY increase in Gen X customer base attributable to online community resulted in net new revenue of $Y FY2011. ROI: $Z.
Simple. That’s how it’s done.
Perhaps there is an ROI story hiding somewhere in the background of every single example here. In fact, there probably is. But these examples, as presented, don’t talk about ROI at all. They reference non-financial gains without establishing any link whatsoever to ROI. So… Sorry, that’s a big zero on all of those.
Filing these under: NO ROI ANYWHERE (except for the vague afterthought in number 36).
My thinking: Far too many of these on this list as well.
* * *
Okay… I’m starting to feel bad about this so let’s look at a legitimate example on the list. #22: Dell.
22. Dell. @DellOutlet on Twitter generated $2 million direct sales, influenced $1 million addt’l (2007 – 2009). (Direct2Dell Blog, 2009)
Yes. Tweets linked to offers were tracked and a direct path of tweet-to-purchase was clearly established. Empirically.
File that one under YES: ROI. (But it would have been nice to see it as an ROI example and not as just another example of gain.)
Cost of program vs. $ in net sales from the program. Simple. Another missed opportunity to demonstrate ROI properly.
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27. Epson. Reviews drove 98% higher revenue per visitor for Epson. (Bazaarvoice, 2011)
First, I have absolutely no idea how one leads to the other. How do we know that “reviews” drove higher revenue per visitor? Show me how you came up with that figure.
Second, what does that have to do with ROI? (Gain from reviews – Cost of reviews) ÷ Gain from reviews = … oh wait. What was the cost of those reviews again? #Fail. Value: Yes. Correlation between A and B: Maybe. ROI: Nope.
Sorry but I have to file this one under NO. Interesting but not ROI.
* * *
Dancing back into ROI territory now. (I still feel guilty about pointing out the problems with this list.)
See? It isn’t all bad.
37. IBM. developerWorks community saves $100 million annually from people who use this resource instead of contacting IBM support. (Forrester, 2010)
38. IBM. Crowd-sourcing identified 10 best incubator businesses, funded for $100 million, generatiung $100 billion in total revenue for a 10-to-1 ROI with a 44.1% gross profit margin. (Barnraisers, 2010)
Now we’re talking. ROI can come from cost savings, not just net new revenue. Well done, IBM.
Filed under YES: ROI.
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45. Jewelry TV. Customer reviews boost mobile sales by 30% (ratings and reviews). (Bazaarvoice, 2011)
Aside from the obvious problems already encountered with previous examples, this one introduces us to a new one: The 30% boost in mobile sales. Is this 30% net new sales or simply a shift from non-mobile sales to mobile sales? Whether someone buys from a mobile device or their land line, is there really a difference? Does it have anything to do with ROI?
53. Mattel. Despite product recalls, online community helped support Q4 2007 sales increase of 6%. (Forrester, 2008)
How do we know that the online community helped support a Q4 2007 sales increase of 6%? isn’t it more likely that back in 2007, advertising, product placement and good PR might have been more responsible for that 6% increase than an online community?
Also, 6% versus what? Is this YoY or QoQ? Was it normal for Mattel to expect 6% growth in Q4 of 2007 with or without an online community?
Too many unanswered questions = too many assumptions.
Filing these and others like them under NOT SURE WHAT THAT WAS. MAYBE.
Another reason why benchmarking matters. Just throwing numbers around without establishing a context for them doesn’t really tell you anything. Data can be manipulated to tell wonderful stories when no one is there to ask hard questions like “prove it.”
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I want to end on a positive note, so here are several examples that either have potential or are clear examples of ROI (in no particular order):
11. Bupa. Community drove £190,000 savings through collaboration, online events. (Jive Software, 2011)
100. Vistaprint. Community tracked $30,000 in social revenue in 2009. (Lithium Technologies, 2011)
23. Domino’s Pizza. Foursquare drove 29% pre-tax profit through promotions. (Barnraisers, 2010)
71. SAP. Community drive 5% increase in partner sales. (Jive Software, 2011)
57. National Instruments. Community resulted in 46% of all support questions answered by peers instead of support. (Jive Software, 2011)
84. TomTom. In one month, community handled 20,000 cases resulting in $150k of savings. (Lithium Technologies, 2011)
65. Precyse Technologies. $250,000 savings in crowdsourcing new product design. (InnoCentive, 2010)
92. TVG. Community members spend 36% more than average. (Lithium Technologies, 2011)
67. Rhapsody. 50% decrease in support costs and 53% decrease in weekly support contacts via sCRM solution. (GetSatisfaction, unkn)
60. Orange. Listening: saved a few million euros in support costs and helped avoid several potential PR problems. (Forrester, 2010)
75. Secret. Among women viewing the video, 57% said their impression of the Secret brand improved and purchase intent among women who participated on Facebook went up by 11% (33% for teens). Clinical sales increased 8% despite a 70% decrease in TV support. (Forrester, 2010)
85. Toshiba. Saved $213,000 by adding online component to 5 events, doubling attendance. (Jive Software, 2011)
95. University of London. Internal social network allows students to collaborate remotely, expected to deliver future savings in the region of £300,000 per year in print, courier and administration costs alone. (IBM, 2008)
While examples like Secret (75.) and SAS (71.) require you to make leaps of faith (as presented) and don’t actually give us ROI data (not just gain but relative cost of the new activity vs. traditional spend), you can see an ROI story forming in the background. It’s still vague but you can tell it’s there.
Let’s file those in the “PROBABLY ROI (if we dig a little more)” folder.
Examples like Orange (60.), Precyse Technologies (65.) and TomTom (84.), on the other hand, are cut and dry: The cost savings are empirical. You can tie the cost of the activity to the financial gain to the company.
We’ll file those in the “YES: ROI” folder.
Special mention for actually listing both gain and cost:
88. TransUnion. Estimated $2.5 million in savings in less than five months while spending about $50,000 on a social networking platform. (Socialtext, 2009)
If only all 101 had done that.
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(If you skipped ahead, pick up the post here. You’re almost done.)
If you look at the list from the perspective of “these are 101 examples of where social business has benefited or added value to a company” then it is solid. Kudos to Peter and his team. Great title, lots of value there, please share with the world. Just make sure you scratch out the title or petition Peter to change it.
If you look at the list as a collection of “101 examples of social business ROI,” then the list is almost entirely wrong. Back to the drawing board. Sorry. It doesn’t work.
I don’t want to just point out the flaws without offering Peter a way to fix it, so here are the only two options:
1. Change the title to something along the lines of “101 examples of successful Social Business campaigns”. (Remove the ROI bit from it if you aren’t actually going to focus on ROI.)
2. Include actual ROI numbers for each of the 101 examples. (Those can just be the cost and the gain from activity figures. Real simple.) Even if some of those ROI numbers turn out to be less than impressive, the list will still be factual and valuable.
Oh, and 3. Include IKEA. It deserves a nod.
* * *
I almost forgot…
Lesson #6: Ask the hard questions. Don’t assume that information (or insight) from anyone in any industry that touches marketing in any way is accurate. Not even mine. Put everything through your own stink test. Use your noggin’. Challenge everything that raises a red flag. Learn the definition of business terms too. They matter. Worth keeping in mind next time a list like this pops up (and there will be more like it).
Or your could just Google “R.O.I. calculation” for crying outloud. Every kid with a lemonade stand grasps that math. Why can’t social media gurus? It boggles the mind.
CEO-Read – Amazon.com – www.smroi.net – Barnes & Noble – Que
PS: Everything in this book could also be dead wrong. It could all be pure BS. Scrutinize it as well. I’m not immune to the occasional wrong conclusion either. You never know. 😉
You have an immense amount of patience to dissect another person’s very long post like that. It’s probably more than most people would do to try to educate people. Well, it’s more than I would do because, uh, I haven’t done it.
You are on a very important crusade, Mr. Blanchard, and I couldn’t possibly applaud you more for it, but it is a great uphill battle. I have said it before and I will very probably say it again, but I think the onslaught of non-marketers into social media “marketing” tainted a lot of words that marketers hold sacred. Things like “brand,” “ROI,” and probably “CPM” were not fully understood, and hence they became “a logo,” “Return on Influence,” and “Crap Per Million” (or some such). The really sad thing is that extremely educated, extremely smart, extremely reputable people are not fully grasping these definitions. They are leading companies astray with faulty information.
At some point, the lack of understanding about ROI (not just Social Media ROI, b-t-dubs) is going to cost companies so much money that they will no longer have any money, and they will have no idea why. I hate it when bad things happen that could have so easily been avoided.
So, keep on fighting the good fight. Good luck with the conversation that I am sure will ensue here.
Also, your opening image may be one of the best things ever in the history of humanity. My people are checking on that.
And now I’m depressed because I think you’re 100% right.
But hey, at least I have funny illustrations. 😉
Sorry, dude. It’s really your fault though 🙂 If you hadn’t written this post I wouldn’t have been compelled to respond.
Fantastic read, thanks for posting and sharing your thoughts on this.
Olivier – Great post. I hope that Peter Kim reads this.
It’s not so hard:
($ Revenue – $ Investment) ÷ $ Investment = ROI
And as Marjorie sez ROI does NOT mean: Return on Influence
He probably went through it but I doubt he’ll ever admit in public (or in private) that his list was poorly put together.
Outstanding post Oliver — to quote Tom Webster — “Do The Work Folks” — nice to see you clarifying and calling out a rather disturbing trend in the social space that has been going on for some time now.
Thanks, Tom. I thought that trend would end once enough people read the book, but some people clearly don’t want to learn. Publishing bullshit is much easier. So… it may stay like this a while.
Clearly, you’ve done the work, Olivier 🙂
I couldn’t agree more. Just a change in title would have been wonderful. But, hey. People love to throw the term ROI around. Keep up the good work. One thing the article is good for, however, is to take into a meeting of C-suite people who think social media is a waste of time. Just make sure there are no bean counters present.
There’s always a bean counter present somewhere down the road. That’s the problem with mistaking likes with dollars. Peter Kim ought to know better. People look to guys like him for solid insights, not this.
Thanks Olivier. It’s so funny, I literally thought to myself when I read Peter’s post “oh dear, Olivier’s going to be all over this.” And half an hour later… Bam!
I think his post is good for listing and sparking the possibilities of what social media for business can be good for – but you are totally right, that most of it is not ROI.
Which is what’s so disappointing. Either the list is deliberately misleading or accidentally so. Either way, it isn’t the quality of work I expected from a guy like Peter Kim.
Great post. Should be required reading for all of us.
yes it should. 😀
This sounds more like he was reviewing influence rather than investment.
Yeah. A change of title could make the list work. Don’t hold your breath though. Egos may be at stake.
Olivier, thank you for taking so much time to think about my work. While I’m not personally a big fan of your pedantic approach, I appreciate your confirmation that it’s a great piece of work that resonates with many people, most positive, some negative. After all, research from Bazaarvoice and others shows that negative reviews drives sales – which contribute to positive ROI.
That’s your answer? I’m “pedantic” and this post confirms that your “piece of work” is awesome? Seriously?
1. Peter, asking for a list of “ROI examples” to actually include ROI data instead of fluff metrics isn’t pedantic. It isn’t even academic. It’s as basic as it gets. Just include the data. How hard is that? You have it, right? Isn’t that how you came up with the list in the first place? Isn’t it why you called it “examples of ROI” instead of “examples of success”?
If you can’t back up your examples with factual data, then take them off your list.
2. If you really can’t tell the difference between what is and what isn’t ROI, read this post in small increments until you get it. Your ego will survive. I promise.
3. I’m sorry you got that wrong too but this post is not at all “confirmation” that your list is “a great piece of work that resonates with many people.”
If this negative review helps drive your sales, good for you. Too bad this is what you’re selling. It’s very disappointing.
Wow. Very, very disappointing example of marketing/pr spin. I’d expect more if there were a comment at all.
Olivier, I love this post. I had not seen the list of 101 ways to do social media marketing (at the end of the day, that’s really what this is) but I have to add to the chorus of people thanking you for your brazen approach in just calling things like you see them. I have come to the conclusion that we almost shouldn’t even combine the words social media + ROI at all, so many people are buying and selling clueless bullshit around this concept. As many of the examples show, using social media for any kind of return on investment is really a long-term marketing choice – I don’t think it happens on a single campaign in 95% of the cases, but it is a reflection of a company’s willingness to interact in new mediums with customers and prospects that helps them see gains over time (the mindshare you mention, or even Dell’s sales on Twitter.) Regarding Dell, for example, much gets made of their new sales channel and model of using Twitter – but how much are they spending? How many people are involved? What’s the cost of the new command center?
The sooner clients get this is a long-term process and gains sometimes come from experiments performed online and sometimes don’t, the better off genuine consultants will be. We all want to help the companies we work for grow, but fluffing up examples to sound like ROI has occurred when it hasn’t is NOT the way to do it.
You are awesome! 🙂
Saying that negative reviews drive sales is utter nonsense. A mix of positive and negative does. People want to take informed decisions and know there is something rotten when there are only positive. You do not need research to understand that. Too bad many marketers still influence the reviews by asking for them in a specific way. Again simplifying.
Mr. Kim: allow me to find this a pedantic answer. I guess that it was meant to be cynical when you say it required so much time to think about your work. It might have taken some time to draft your list, which will probably serve some people when making their PowerPoints. I can also understand that it can be hard to know ROI since not many businesses like to share that many data. I presided enough interactive marketing award jury’s to know that: the data that matter rarely are made public. However, please use the word ROI with extreme care because if not you are selling nonsense. Like Gary V. who recently said at a conference in my country that the ROI of social media is whether your business will still exist in 10 years or not (amazing that such speakers are paid a double digit number in thousands of USD, starting with a 4, to claim such things).
I also noticed your reply on your own blog that “Social media gurus expect a lot from one to three sentences in a bullet point. Unfortunately, I have not yet reached that level of blogging zen, so you’ll have to use this list at your own risk”.
I don’t know what social media guru you are talking about and I don’t know what blogging zen is but I do know that words are important and providing context to data as well. I also think you know what blogging is, at least what writing tweetable blog titles are.
This being said, allow me to add that the fact you claim in this reply is utterly wrong. Reports are no excuses for simplification (and serve those that make them). Negative reviews do not drive conversions. A healthy mix does. In fact, it’s even not the negative or positive reviews as such. It’s the fact that consumers, who like to take considered buying decisions, smell bullshit. So, only positive reviews make people wonder because people are not stupid. As it happens I wrote a post about that yesterday. So, unless a business makes perfect products or offers perfect services, it will get a mix of positive and negative reviews and consumers will consider them. Unfortunately many marketers also know how to trick that, even without openly foul play but simply by the way and the words they use to ask for reviews, when they do.
So: negative reviews do not drive sales. In fact, if you only get negative reviews you have a big problem. But I guess you know that. Thank you very much.
Always beware a rebuttal that has an ad hominem attack within the first few sentences. There is no substance to you response, Peter, which just bolsters Olivier’s assertions.
I will boil down your response much the same way Olivier did with your post:
My work is great.
Your work is not great.
My work is great.
Even if you hate my work, it’s great.
That being said, your list of 101 GAINS in social media is a great list and is really useful for people like me. That being said, let Olivier has his win, it’s a good win and it’s an important win. And it should make you better at what you do.
The reed that bends in the wind does not break, instead it becomes stronger. Bend with the wind my friend.
Wow. Just…wow. I was really looking forward to an intelligent, articulate exchange of ideas between two folks whose contributions I’ve found extremely enlightening in the past. Mr. Kim, the only thing you’ve accomplished is making me rethink my previous estimation of you and your work. You should feel honored that someone put as much time and effort into a criticism of your piece, and you should welcome the opportunity to engage in a substantive defense. The fact that this is all you can muster is just, well, pathetic. Your job isn’t to “drive sales” of bad ideas – it’s to advance our understanding through sustained thought leadership. With this reply, you’ve pretty much abandoned any pretense of thoughtfulness or leadership. Congratulations on crafting a nifty piece of link bait. Just do us the favor of not pretending it’s anything more.
David, I might have to buy you a beer someday. Thank you.
If this is the only comment you’re going to make to Olivier’s proper ROI overview, you really shouldn’t have bothered. As others have rightly mentioned, it just makes you look like a kid who says, “So what – my dad is bigger than your dad, so neh neh neh.”
Better still, just don’t comment. At least then people still would have respect for you…
Thank you, again, for writing such a detailed post and clarifying ROI for people, again. It drives me crazy when social media folks don’t include the cost half of the equation or equate social media mentions and shares with return. It’s about the money, money, money!! Shares and mentions are just a proxy, or what I call interim measure, used to judge the progress of a social media campaign. It’s especially terrible when bigger names misuse ROI, because ultimately that misuse affects all of us working in social media. It makes the C-suite and serious marketer think this SM stuff is all fluff. Ugh.
kind of funny that in a society so obsessed with money and the bottom line, the concept eludes so many when it comes to ROI. Maybe if we created a reality show…:)
Olivier, I don’t want to be pedantic but there is a typo in the beginning of your post. To Peter Kim: what a pathetic reply. To Marjorie Clayman: I think I love you. The on-slaught of non-marketers etc. part sounds like poetry. To all: can you please read Marketing ROI by Jim Lenskold as well. Please…
Thanks for reminding me. I saw that earlier and forgot to fix it. Done. 🙂
You pedantic Belgian, you. So obtuse, man. Can’t grammar be as optional as business definitions? 😀
Is it possible we’re not getting true ROI numbers because the companies in question want that to remain confidential…but then they also want to showcase a great case study so they put out the numbers that sound good but don’t reveal anything they deem confidential.
It’s likely for many of them, yes. I run into the same problem with clients (NDAs are common). Here’s how that applies to this list though:
1. If you have the data, include it in your list/report. Several of these examples actually have ROI data available but it wasn’t mentioned in the post. Curious.
2. If the company won’t release that data, then their campaign/program doesn’t get to be on the list. No proof, no deal. Simple.
Holy crap. Not only did you psycho-analyze this extremely well, you made my own post on the same subject look tiny by comparison. We should talk.
I’d say more, but I was running errands all morning. I tried to quantify the ROI of going to Whole Foods. The ROI is awesomeness!
This one reminded me of some high school test questions. “For each of the following statements, mark them true or false. Where the statement is false, explain why or how to make it true.”
Suppose you were to come up with a battery of, oh, 101 or so could be true, could be bullshit “social media ROI” statements. Get a simple piece of code developed which would allow someone to enter their email address and receive a randomly generated list of 10 test questions (with answer guide) to ask a would-be social media consultants. Include an invitation to connect, should their search prove disappointing.
Spend a grand getting something like this built, invest maybe one hour per month (at $X/hr) socializing it, and then subtract the cost from the new customer revenue gains directly attributed to this little widget, all divided by the cost. Sound about right?
(It’s amazing how easy this is once you ‘get it.’ Thanks for making me smarter.)
I do what I can. 😉
Olivier, great post. However, allow me to be pedantic. There’s a typo in it (I’m allowed to do that, you’re not). You wrote “I even think like the guy”. It should be “I even think I like the guy”. No thanks, I’ll send an invoice 😉
To Marjorie Clayman: please allow me to say I love you. Especially where you write “the onslaught of non-marketers into social media” etc., it sounds like divine music in my ears. I guess this is also the reason why I see books by self-proclaimed social media marketing gurus in which theories are elaborated in expensive words, saying basically what for instance the Eisenberg brothers wrote in 2011 or others in 1972 (not kidding).
To Kristi Colvin: agree except that you can nearly always measure ROI of marketing, even when it’s related to branding and less-tangible metrics. Marketing ROI or Return On Marketing Investment (a.k.a. ROMI) can be done on micro-levels, campaign levels, departemental levels, program levels, whatnot levels. I happen to know since I wrote a book on it, unfortunately in Dutch and as a ghostwriter. In fact, measuring on a marco-level is best done by working on all micro-levels. Please read “Marketing ROI” of James D. Lenskold (Jim for the friends), published in 2003, a must (!). And, to quote Jim Sterne (you might also want to read “Social Media Metrics” by the man: “you can’t measure the ROI of a blog post”. But you can sure measure the rest. Nice “talking” again.
To Peter Kim: saw the tweets. It’s not about lift, it’s about ROI. Olivier’s formula is the ROI formula. Period. It is a financial one (which ROI is) and the fact that it’s financial is why many marketers resist implementation of ROMI (wrongly, again, see Jim Lenskold). The ROI formula is also a bit different in marketing since it’s not a capital investment. A last time: please see Jim Lenskold for extremely detailed break-downs of ROI in a marketing context. Attention: you do need a calculator or an Excel sheet, or just go to http://www.lenskold.com/content/roi_content.html
To Olivier: keep fighting it.
To all: On top of Olivier and Jim’s book, please also make sure you read “Marketing metrics: 5O+ metrics every executive should master”. Make sure you understand at least half of them. The exec decides on the budget.
Thank you and pedantic regards.
Aw, thanks sir 🙂
That’s the most positive response I’ve ever gotten for laying down a stinky truth bomb 😀
Now that I think about it: I never did. But we aren’t in marketing, social or not, to have a nice and positive reputation, right? We are in it because we want results and a good ROI with a nice balance of low-risk (proven) and more risky (innovation, potential high contribution to overall ROI) investments so the business makes money, the employees get paid, the customers are properly served and not overcharged and the marketers, including brand marketers, can go to their CxO with data in their hands to get their great ideas approved and not have to explain what social is (ROI in marketing is BTW meant to forecast, correct during and analyze and improve after) since the CEO and CFO only care about the bottom-line. Another stinky truth bomb many marketers hate to hear.
We’re marketers and we aren’t full of shit. I know more like us. I think it’s time to take our profession back from the charlatans and posers who have taken it over like parasites.
No reason why we can’t all strive to kick ass AND have real numbers to celebrate. Screw spin. Spin is for posers.
Crap. As a marketer I have to do all of that? I thought I was just trying to get a new car for myself =/ Man. I need to figure all of this out now!
I’ve got a few other revolutions cooking currently – convincing people that librarianship is more than saying “Ssh,” for example. However, I can back-burner those and help y’all take marketing back. It’ll be a multi-front war. I’m good with that.
We need a good acronym though so we can create a catchy Twitter hashtag. Because the catchy Twitter hashtag, behold, is everything.
this is fantastic. The amount of times people use media measurements and say it’s ROI is tragic. Makes the industry look like we don’t understand simple business.
Did you make more money than you spent?
It’s really the simple.
Thank you. Yes. Not sure why that’s so hard.
I absolutely agree with the premise, that costs are often ignored in social media evaluation, so it’s great to put up a reminder.
But as devil’s advocate, the piece does come across similar to an ‘apostrophe Nazi’ piece, so invites a reciprocal, ‘pedantic’ reply.
Jargon terms have a long history of being appropriated outside their technical context and taking on slightly different meanings. I’m sure to many lay people ‘ROI’ is an equivalent term to ‘gain’. In which case, the title is just fine. 🙂
Just because tap water has a long history of being sold as pure glacier water doesn’t mean it’s either right or ethical.
This isn’t a slightly different meaning, Stapelgum. It’s a completely different meaning. It’s like calling a baguette a bagel.
As a non-Marketer who has been given a Marketing job thanks for making me smarter, Olivier.
Peter Kim should be graceful and just say “Hey I said ROI but it’s really not increase in ROI, just increase in sharing and exposure and growth”
Yeah, well… I can’t make people classy or gracious. I’ll settle for making them smarter. 😉
Thanks, man. I appreciate all the good vibes you send my way on a regular basis.
Great post. Very thoughtful and detailed.
Hi Olivier – many thanks for that this is a great post which actually re-inforces Peter Kim anthology. Having both side by side make a great asset to promote Social Business > the magic of online collaboration and the huge value it brings.
None of my business – I don’t know Peter Kim – but in all fairness I think this post is quite harsh on him. This guy has put some time to put a valuable list of 101 success stories of Social Media.
These are not ROI – understood – but Success Stories (I guess we now can tell the difference). Okay that’s clumsy and one sentence with the formula is enough to make it clear. What I don’t understand is why on earth you need a 5406 words post to decorate the formula and repeat the same mantra all over again (I guess Peter’s “pedantic” probably refers to this figure).
I understand you may be upset by people wrongly using ROI all over the place and making you daily job more complicated. But from a neutral perspective it’s pretty hard not to see in this relentlessness some kind of upset because someone is entering the territory of Social Media ROI which you planted a flag onto with your book.
Again, none of my business, but you may have to be careful about this as it may end up working against both yours and the community ‘s interests.
Thanks for the comment Ceciil, but the reason for this post is this: if you’re going to package something as A, make sure it’s A. If you’re putting tap water into a plastic bottle, don’t label it as “pure natural glacier water.” If you’re putting food into a package, don’t tell people it’s 100% organic when it isn’t. If you’re going to publish a list of 101 ROI examples, make sure there are actually 101 ROI examples on that list.
Either Peter doesn’t know what ROI actually is (in which case he probably doesn’t need to be talking about it) or he doesn’t care that the packaging/labeling of his list is misleading. Either way, that is a problem.
Was I harsh? That’s a subjective question. Harsh compared to what? Should I have given him a pass because he’s Peter Kim? Is there a double-standard I should know about that says that no-name charlatans get called out when they sell BS but A-list names get to be treated nicely when they do the same thing?
Perhaps more to the point, should we not stamp out bad information? Is being “nice” and making an effort not to hurt people’s feelings more important than saying “wait a minute… this is completely wrong”?
Here’s the thing, Ceciil: Guys like me, Peter Kim, Jeremiah Owyang, David Armano, Scott Monty Brian Solis and Chris Barger (and others) are the ones people turn to when they want to understand this stuff. For better or for worse, people look at us as sorts of “thought leaders” in the field of social business. I’m not a huge fan of the term, but okay, for the sake of argument, we are. As leaders, we have a responsibility to educate the public and give them accurate information. Another way to look at it is to say that part of that responsibility is to make sure we don’t give people wrong or misleading information.
If I tell you that for $3,000 my business partners and I will let you listen in on 8 webinars and that at the end of that you will be a certified social media strategist, that’s bad information. It’s bullshit. I have taken advantage of your trust, tossed my responsibility aside, and basically abused my position to make money. A short while back, a few “thought leaders” tried that. I went after them with all the outrage they deserved. Was I harsh in my condemnation of their scheme? Yes. Was it deserved? That’s up to you to decide. If I publish articles telling you that someone’s Klout score is the #1 predictor of success in selecting paid WOM “ambassadors” for influence marketing campaigns, I am doing the exact same thing. If I publish a list that makes you think I am a source of good information even though the list itself is wrong on every level, how is that any different? It’s more subtle, sure, but how is it different?
If I was “harsh” with Peter, it was for 2 reasons:
1. He has a responsibility to get this right. If he starts to skirt that responsibility, he starts to become part of the problem instead of being part of the solution. That isn’t good for him, for the credibility of social business as a whole, or for anyone who reads that list and believes it is accurate. Consider this: he could have looked at it and said “you know what, as much as I hate to admit it, the title is misleading. I didn’t realize it until now. I’ll change it.” That would have been great. It’s what I would have done. It’s what a lot of us would have done. Instead, he called me pedantic (before reading the post, by the way. The first time was on Twitter the night before, upon learning that I was writing a post about it). Peter Kim doesn’t think I am pedantic because of the level of detail I go into in this study of his list. It’s a lot simpler than that: Peter Kim thinks I am pedantic because I don’t agree with him, regardless of the reason. Most of us would have changed the title to reflect what this list actually is. That would have been the right thing to do.
2. That list perpetuates the cycle of “ROI is likes and follows” bullshit that continues to steer business investments in the wrong direction when it comes to social activity. – The thing is, being unnecessarily harsh isn’t the same as being appropriately harsh. I could have been a lot harder on him. As a “leader” in this field, he has less margin for error than a beginner because as a leader, he has a responsibility to get it right. However harsh I may seem to be, I think it was appropriate given how much damage the title of that list will cause to people who end up believing that these are examples of ROI. I could have been a lot harsher. People like Peter and I should be held to a higher standard. It comes with the job.
What ends up working against the community’s interest, Ceciil, isn’t me or anyone else pointing out bullshit. What threatens the community (and the credibility of this community) is that unfortunate group of people who have a responsibility to provide accurate information but choose instead to publish bullshit. This ROI thing might seem like an insignificant little detail to most, a semantic argument at best, but it is a much bigger problem than that. The mistake of confusing ROI with mentions and likes and retweets is costing companies billions of dollars per year in bad advice and wasted resources. That’s no small thing. Every time a CEO asks about ROI and you talk to him about influence or followers or engagement, he is either going to sink millions of dollars into the wrong effort or walk away from social media altogether because it sounds like bullshit.
There’s a simple solution to the community’s eroding credibility, and it isn’t me not being “harsh” with Peter Kim or the “Return on Influence” crowd or the “personal branding” coaches popping up in every employment search forum now: Stop publishing bullshit. Stop giving people bad information. Stop abusing their trust. Stop showing how ignorant of basic business vocabulary you are every time you open your mouth. (Not you, them.) These guys can start taking their responsibility seriously. Barger does. Monty does. Owyang does. Folks like J.P. De Clerk in Belgium, Danny Brown in Canada and Michael Brito in the US do. Peter Kim can too. It isn’t all that hard. It’s a choice, nothing more.
And for everyone else who might be watching from the sidelines, stop acting like the people who raise their hands and point out when the “100% pure glacier water” is actually just tap water are the bad guys. They aren’t. They’re looking out for you. If you want someone to criticize, look instead to the guys who sold you one thing by pretending it was another. I really wish there were a Better Business Bureau in this space. It needs one badly.
Thanks for the comment all the same, man. I appreciate it. Cheers.
Waow, thanks for the reply. that was not dashed off !
The value perception is just a matter of perspective. As a SM ROI expert you’re upset by the loose use of the ROI word while it does not striclty apply. From this perspective this is a critical issue. Not only there is no value in this list but there is negative value because it ternishes credibility of people tryin to sell Social Media. I can understand that.
From my perspective as an amateur evangelist, I see great value in Peter’s post as an anthology. The idea of centralizing all these success stories in one place make it a valuable content (providing people fix the “ROI” thing when using these values – with your post they won’t have any excuse anymore).
I agree, though, he sould have amended his post, he should have made it clear he made a mistake and fix it : “the right to make a mistake but the duty to react quickly.”
My problem is this : if you are too harsh on people making mistakes, you kill initiative.
Thanks again for the great post and the great conversation. Cecil.
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