Posts Tagged ‘social media R.O.I.’

As valuable as it may be to peel back the layers of a poorly put-together list of social business ROI examples, let’s now talk about how to do it right. Below is a quick 5-step guide in case you ever want to publish your own report or list of social business ROI examples:

1. Do your research.

This means talking directly with the company or agency involved with the campaign or program, not just bookmarking Mashable  articles and collecting a few white papers. Actually talk with the program or campaign lead. Have a discussion about what worked and what didn’t, what was done and why, etc. Obtain financial data, not just digital and marketing metrics. Without this data, you will not be able to add this campaign or program to your list.

2. Know the difference between writing a list of social business case studies and a list of social business ROI examples.

– Case studies may focus on a breadth of criteria for success or failure. Some may focus on the impact a campaign had on consumer perceptions while others may focus on customer acquisition or nipping a PR crisis or any number of things.

Case studies can focus on ROI but they don’t have to.

Case studies tend to be written in sections: Objective/problem to solve, theory, strategy/plan, tactics/execution, what happened, what we learned. The formula isn’t rigid but for a case study to be written properly, it has to actually study a case, hence the name. It has to have a beginning, a middle and an end. It has to show the connection between intent and outcomes.

Case studies can’t only be about what worked. They also have to be about what didn’t work. There’s value to that as well. Report on both.

– A list of social business ROI examples focuses on just one thing: Listing social business programs or activities with quantifiable ROI.

There are three parts to a social business ROI report: An explanation of the activity’s purpose and nature, the cost of that activity, and the ultimate financial benefit to the company.

The focus here is much more specific than that of a case study.

3. Format your reporting properly. 

Here is an example of how not to format an example of social business ROI:

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) Source: Peter Kim.

Note that in spite of the short formatting the above example does not  include any ROI data whatsoever. It focuses instead on trend engagement levels and promoted tweet engagement. This not what you want your ROI reporting to look like.

Here is an example of how to properly format an example of social business ROI:

Joe’s Pie Factory. JPF wanted to increase QoQ sales of carrot cakes by 25% by the end of Q4-2011. Leveraging its Facebook page, Twitter account, Youtube channel and blog, JPF launched an awareness campaign for its carrot cakes at the start of Q4-2011. Total cost of campaign: $27,391 (for video production and content & community management). Outcome: A 23% boost in QoQ sales resulting in $59,782 in net new revenue. (Add link to case study in case readers want to learn more.)

Note that this example focuses on campaign objectives and includes both cost and net revenue data for the activity. These are the three ingredients needed to properly qualify an example for a social business ROI list or report. (See item 4.)

You could stop there or you could do the math for your readers:

Joe’s Pie Factory. JPF wanted to increase QoQ sales of carrot cakes by 25% by the end of Q4-2011. Leveraging its Facebook page, Twitter account, Youtube channel and blog, JPF launched an awareness campaign for its carrot cakes at the start of Q4-2011. Total cost of campaign: $27,391 (for video production and content & community management). Outcome: A 23% boost in QoQ sales resulting in $59,782 in net new revenue. ROI of campaign: 118%. (Add link to case study in case readers want to learn more.)

4. Make sure that all of your social business ROI examples always contain these four pieces of information:

  1. A brief synopsis of the campaign or program.
  2. The cost of that program.
  3. The financial outcome of that program.
  4. A link to the case study / your source for the ROI data.

Anything other than those three pieces of information is unnecessary. Remember that you are writing a list of social business ROI examples and not a list of social business case studies.

Failure to include all four of these pieces of information will result in incomplete reporting.

5. Make sure that your documentation is in order.

Do not rely on anecdotal information to compile your list or report. Ever.

This means: do not assume that because a social business program was in place during a period of lift in sales revenue, the social media program was the cause of that lift. Don’t assume that if a digital marketing manager tells you that he knows customers responded positively to a campaign, they actually did. In fact, don’t assume anything. Back up every hypothesis and assertion with data. Disprove alternative cause-and-effect relationships where they may exist. Make sure you aren’t being sold a big fat lie.

If you cannot prove that a company’s social business program or campaign resulted in positive ROI, do not include that program or campaign in your list or report. Period.

Just to be sure, always document the source of your data so the rest of us can check it for potential errors or foul play.

Three more tips:

Don’t worry about gimmicks. If your list only gets to 23 examples, then that’s fine. Don’t try to stretch it to 25 or 75 or 101 just to have a catchy number that will score good SEO. Just stick to the facts. Everyone would much rather have 23 solid examples of social business ROI than 101 bad ones. Substance before flash. Always.

If you don’t understand how ROI and social business fit, you might not be the best person to compile and publish reports on the subject. If that’s the case, don’t feel bad. Life goes on. Publish stuff you actually understand for now. Someday, when the ROI thing isn’t such a mystery anymore, you can come back to it and give it another shot. Until then, just do yourself (and all of us a favor) and do your homework. Come prepared. Lead with what you know.

If you want to get better at this though, here is a primer on how to calculate ROI in 4 easy steps:

What you’ll need:

  • Campaign cost data and financial outcome data.
  • The ROI equation.

Here is the ROI equation in its most user-friendly format:

ROI = [(Financial outcome of program – Cost of program) ÷ Cost of program] x 100

Step 1: Calculate the financial outcome of the program – the cost of program.

Step 2: Divide that number by the cost of the program/campaign.

Step 3: Multiply that number by 100.

Step 4: Add a % at the end.

That’s it. So simple an 8-year-old at a lemonade stand can do it.

Now go forth and be a force for good and credible business reporting in the world.



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In case you haven’t yet, you might want to pick up a copy of #smROI. 300 pages worth of stuff like this in there. A full pound of knowledge.

And if your favorite social business “expert” doesn’t seem to get this stuff yet, don’t feel bad about sending them a copy. Knowledge is never a bad gift.

CEO-Read  –  Amazon.com  –  www.smroi.net  –  Barnes & Noble  –  Que

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This week, I had the pleasure of being interviewed on #mmchat (episode 68). We talked about social media (social business) integration, which is a pretty crucial topic. Pushing content through social media channels and setting up monitoring practices is the easy part. Making it all work and flow across an organization is where the real difficulties arise.

For almost every company adopting social media, the biggest challenge is not a lack of great ideas or social media expertise, but rather a lack of change management planning and execution. (Theory, presentations and case studies are great, but making someone else’s stories actually work for a business, that’s where the rubber really meets the road – or doesn’t, for the most part.)

Here were the questions:

Q1: So our topic tonight is on Social Media Alignment in organizations, can you describe your view on what this means?

Q2: [In reference to social media] what are some of the negative consequences experienced by organizations that are not aligned?

Q3: How should organizations begin when it comes to aligning their social media efforts with the rest of the business? Who should lead this initiative and how?

Q4: Are there specific steps required to align social networking within organizations?

Q5: Once alignment is achieved, can it be easily scaled or are there suggestions you can male to facilitate this process?

Q6: Are there different challenges & solutions for trying to align around the world in global organizations?

Q7: How does a company know when they have succeeded in the alignment quest? What are some of the major signs and benefits?

Because of the short amount of time allotted to the chat and the limited 140-character format, my answers and ensuing discussion don’t get super in-depth, but that comes with an advantage: They are VERY accessible. Even if you are still unsure how to effectively plug social media into a company so it doesn’t end up being just a marketing add-on, you will understand the fundamental principles covered here.

To access the chat’s full transcript, click here.

For a far more in-depth look into how to actually plug social media into a business (large or small), grab yourself a copy of Social Media ROI: Managing and Measuring Social Media Efforts in Your Organization (Que/Pearson).

It isn’t a “social media” book. It is a management book that focuses on social media for business. Big difference. If you aren’t sure that it is for you, download a free chapter here, then make up your mind.

Very special thanks to @thesocialcmo and @karimacatherine for hosting the #chat.

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Time to bring this post back for a second round.

This post is the continuation of a discussion started on Marketing Profs’ LinkedIn group on July 7th. (If you don’t yet subscribe to the group, consider becoming a part of it.)

Today’s video is actually two videos in one:

The first half (Part 6 of our Social Media ROI series) deals with defining ROI once and for all.

The second half (Part 7 of our Social Media ROI series) starts touching on the “how” of calculating the ROI of Social Media by outlining the investment-action-reaction-impact-return narrative.

If the video doesn’t load for you, you can go watch it here.

Let me start today’s post with a confession: Like many people in the business world, I have abused the term “ROI” from time to time. Yes, I admit it, even I have used “ROI” as a relative term on a number of occasions in the past. I’m not proud of it, but there it is.

Here are some examples of what I am talking about:

  • Q: What’s the ROI of adding 100 miles to my weekly cycling training?
  • A: Faster race times.
  • Q: What’s the ROI of writing better blog posts?
  • A: More traffic on my blog.

It’s easy to do, especially since sometimes, what you invest into something isn’t necessarily $$$. Perhaps you invested sweat. Perhaps you invested time. Perhaps you invested emotions. It doesn’t really matter. The point is that when the currency is variable, how you measure the “I” in ROI becomes variable as well. For lack of a better term, you start to refer to any kind of positive outcome as “ROI” even when you shouldn’t. It’s an easy habit to fall into, and if you aren’t careful, your definition of ROI can begin to get a little fuzzy. So I get it: I understand why this is confusing to so many folks, especially when it gets thrown into the world of Social Media.

But I’ve also spent enough time with executives (on the client side) to know that when THEY talk about ROI, the currency is NOT relative. In business terms, the currency implied in any ROI question or discussion is cold hard cash. Period.

Marketing professionals need to understand this: If the investment (the “I”) is $$$, then the return also has to be $$$. It can’t be eyeballs or impressions or clickthroughs. You have to tie your results to a $ amount. Anything short of that, and you’re not proving your value to your boss or client.

It isn’t to say that eyeballs, impressions and clickthroughs aren’t important. They are. But they’re one link (of the action-reaction-outcome narrative) shy of ROI. (They don’t tie the investment to the actual return.)

The best way to explain that narrative is this way:

$ Investment by company –> Action –> Reaction –> Non-financial impact –> Financial impact $

As explained above in the video, the relationship between a company’s investment and the return on that investment pretty much looks like this:


What happens between the investment and the financial impact (the return on that investment) is VERY important. And we’ll talk about the importance of monitoring and measuring it in order to tie the investment to the associated financial impact (and ROI) in future posts. But for now, I want to focus on the fact that eyeballs, impressions, positive WOM and social mention, even click-throughs and net new visits to websites do not constitute relevant currency when we are talking about ROI. Social media is no different here than any other business endeavor in this regard.

Impressions, eyeballs, net new visitors, etc. are forms of non-financial impact. In order to determine ROI, you have to take them to the next step: How they affect financial impact. THEN and only then can you tie the original investment to the return (financial impact/outcome).

roi1I know that bringing “media” measurement into the ROI equation is tempting , especially for folks with agency or media measurement backgrounds. That’s what the model has been for PR, Advertising and other marketing-specific firms for decades. And again media measurement is vital here, but when it comes to calculating ROI, that type of measurement is a lot like calculating a crop’s yield by estimating how many of X number of planted seeds will germinate come harvest time. It doesn’t work that way. You have to roll up your sleeves come harvest time *and physically count what the actual yield is. You actually have to do the work. ROI isn’t about potential. It’s about actual performance.

(*Luckily there is no seasonal constraint like a “harvest” in the business world, so ROI measurement – like most performance measurement – can be continuous.)

In order to adequately determine ROI, you must first understand how all the pieces fit. You have to see the entire equation, from start to finish. There is an order to how things happen, how, and why. You have to see how A leads to B leads to C in order to understand how an investment turns into a success or a failure, and to what degree. You also have to understand that the value of a pair of eyeballs, of an impression, is subjective until that pair of eyeballs actually does something. Then the body attached to that pair of eyeballs becomes one of three things: A browser, an influencer or a transacting customer. The first two don’t actualize a financial impact (yet). The third does. That’s where we want to focus when dealing with ROI.

Though we can infer and assign an estimated $ value to browsers and influencers, these values are subjective at best , usually measured in hindsight, and subject to change at any moment for any reason. So their value still falls into the category of non-actualized potential for now. (We will look at the financial impact of influencers in an upcoming post. No worries.) For the purpose of ROI calculation, however, you want to work with cold hard numbers. Not estimates, not potential, not yet-to-happen transactions, but “actualized dollars.” Real revenue from actual sales. Financial returns you can take to the bank and tie step by step through the above chain back to the initial investment.

(Incidentally, financial impact (ROI) manifests itself either as increased revenue or cost savings. Sometimes, ROI is revenue-neutral but cut costs internally. The model I just described above applies ti revenue-generated ROI.)

All of this to say that we have to be VERY careful not to a) mistake non-financial impact with ROI, and b) not to try and redefine “ROI” when dealing with business execs. (They won’t buy into “Return on Influence” or “Return on Interest” for very long, and anyone using these terms runs the risk of losing credibility with pragmatic decision makers in the C-suite.) Social Media is fun, but this is not a game. If a client doesn’t ask about ROI, great! Awesome. They probably get how Social Media is going to help them build relationships with customers and improve everything about their business. So to them, ROI is implied. It’s understood. It isn’t something they are going to worry about anytime soon. But when a client DOES ask about ROI, you have to a) understand what they are asking, and b) know how to adequately answer their questions and put measurement systems in place that will suit their needs and particular culture.

I hope this was helpful. Next, we’ll talk about the importance of timelines in the ROI determination process. (The next piece of the puzzle.)

By the way, if the video didn’t load properly for you or if you are accessing this post from a mobile device, you can go watch the video here (thanks Viddler).

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