Interactive Content

Social Media ROI: Does it Matter?

2009-11-01T15:22:00.006-05:00

Let's just say for the record that ROI always matters. No matter what, any time you are going to take a client's or company's cold hard cash and invest it in a marketing or product development program, ROI matters. Maybe not today, maybe not tomorrow, but somewhere along the line, someone very high up will want to know what came of that $50 or $100K you "invested" into social.

This post is dedicated to those CMOs and clients from my past and present who demanded on ROI forecasting and tracking for every project, and for my budget as a whole.

I'm going to take a shot at offering a way to handle forecasting of social media ROI here, and hope to stand up to tracking in a subsequent post.

ROI Primer
Real quick primer on ROI, or Return on Investment. Another way to think of it is Return OVER Investment. It's best calculated using a conservative estimate of the actual profit to be generated by the project, over only the costs that will be incurred directly for the project.

(Revenue - Cost) / Cost

Put this way, it's a fraction that needs to be greater than 1 for a project to even be considered. Generally we want to see ROI of 2-3x or greater forecasted to even seriously consider a project.

ROI + Social Media
This turns ROI on it's head. The masters say don't worry about ROI and
social. Barry Judge, CMO of socially adept Best Buy, stated at the
Forrester Consumer Forum in Chicago, that social needs to begin with
the customer, not the bottom line. And he is right.

This means that payoff will not come right away, if at all, at least
not directly. Instead, you need to look for social KPIs that fit your
objective with whatever project is at hand.

Forrester does a great job mapping POST objectives to metrics in Nate Eliot's recent report on measuring social ROI:

Raise awareness

Exposures to brand
Visits to fan page
Fans of brand
Comments, posts or submissions
Referrals or posts to user's news feed or status

Boost engagement

Participants in community
Suggestions or tips submitted
Active (repeat) users

The bottom line is to choose metrics that describe what actions your users will take on your
behalf.

Calculating Social ROI
The added dimension here is engagement over time. Social is not a
campaign, and results will not spike with a launch party. It's much
more organic. Even "viral" social programs begin with a small number
of first finders who build over time.

This means that first, you must decide how long you can give yourself
to succeed. Again, this correlates to your objectives.

Next, use a forecast formula that keeps all assumptions clear and
simple to understand. Here's one I use:

Audience x Engagement x Adoption x Value per User x Multiplier Effect X Time of Engagement
---------------------------------------------------------------

Investment X Time of Investment

Ideally, time cancels out top and bottom. But time on top might be
much greater than time on bottom: an evergreen success from a short
investment. Or it might be much smaller: a flash in pan fan page that never goes anywhere else and does not inspire ongoing engagement.

The other parameters go like this:

Audience - total size of your segment. Say, 80 million moms in the US
Engagement - rate of participation on the platforms you've chosen.
Say, 40% of moms aged 24-39 today are on Facebook. This is a stat you
should be able to find

Adoption - rate you forecast your audience segment will find and use
your app, widget, etc. Try to use a benchmark. Be conservative. One
third of iPhone users download the Facebook app. Yours will not come close to this rate

Value per User - another forecast, this time based on whatever lifetime lifetime value the participant imparts on your business. Keep in mind that social participation typically does not match up directly with site conversion! The input here might simply be a PPC amount you would have spent using paid keywords to attract this user. Instead, she found you as a result of your presence on a social platform she's using.

Instead, with social, the real value per user is typically supercharged by:

Multiplier Effect - this is the number of "friends" your participants will expose your brand to on your behalf. So that one participant who found you and offset your PPC spend also shares your brand implicitly with 120 of her friends on Facebook, when she posts to your wall.

So, there's a basic equation. The result will give you a value in offset dollars, new brand equity or user enthusiasm over time, over some investment which should not be very large.

The next step is to think about how this expression of value moves your customers to either consider you at some point, or stick with you time and again. For now, let me know if this formula works, or how you might improve it. Especially the Multiplier Effect and the value and velocity of referrals it implies.

Books I want to read

2009-10-04T20:58:00.000-04:00

Books I want to read:

The 10 Demandments and the Open Brand
Linda Resnick, Orchard of Rubies
Dan Aurelli, Predictably Irational
Ory Brafman, Sway
The Cro-magnon CEO
Kelly Mooney, Resource International

MySpace, Facebook Move Lots of Display Ads, Not So Much Money

2009-09-03T10:38:00.003-04:00

Apparently no one clicks on display ads on social networks anyway. That probably explains the sharp dropoff after MS and FB. And FB is aiming high since their lowest meaningful entry-level ad package costs $50K.

It’s just that social networks number 3 and beyond get about 2% of the total traffic of FB+MS combined. And display ads are bought against volume, not relevance. Plus I bet the CTR on blackplanet.com is way higher than FB.

So do we or don't we place ads on these things?

What does your mobile consumer strategy look like

2009-08-20T12:02:00.005-04:00

Notice the title isn't mobile strategy, but mobile consumer strategy: there's a difference.

We need to design mobile around a completely different set of use cases and objectives - it's not a replication of an online service or commerce funnel on mobile.

Instead, mobile complements, supplements or replaces online entirely for each consumer.

First start with data on your audience. Here're some interesting facts about mobile consumers in the US courtesy of eMarketer.

and from comScore:

It's not just Gen Y, it's not just professionals, or upper income users. There's a groundswell and that means a lot of opportunity for strategy to harness the power of earnest consumers.

iAP the news aggregator

2009-04-13T07:17:00.003-04:00

The Associated Press would build a search engine that aggregates news like Google's. My first instinct is to say "No!" "Buy don't build" and "Push your content out to where your users are, don't try to pull them in."

But with Google sagging, and its algos not completely knocking off my socks anymore, particularly in the area of news, I say, why not?

Consider AP's plan a "disruptive innovation," on the low end. What if it aggregated valuable local and global content and found a way to analyze that news and make meaning out of it? Which local newspapers are most influential? Could AP create a proprietary "NewsRank" for international sources? How great would it be to find similarities between in coverage between Detroit's and Wolfburg's city papers?

For more on this story, see Businessweek. Unlike the NYT and WSJ, who treat this as a saga of the dying newspaper industry, Businessweek's coverage of the AP more accurately treats this as a David/Goliath story focusing on the AP's operations and management.

And if I may, as a former AP'er: Please guys, get out of the tower and re-integrate yourselves with your communities. It's about the people and having an identity in the place you cover. Go "Hyperlocal." See my next post, or simply this a.m.'s NYT business section.

Rupert Murdoch wants a 4-color e-reader

2009-04-03T17:46:00.003-04:00

Rupert is on the search for a "4-color" e-reader that can save the traditional world of print news. While Plastic Logic certainly can reproduce about a 1/4 swath of the NYT print edition page layout, it is still very much a B&W affair.

The color request keeps the iPhone/iPod Touch device very much in the running, albeit one with a somewhat larger screen. 4x6? I'd carry that as a Touch - but no way I'd use that size as a phone. Give me a bluetooth and maybe then.

Check out this product demo from PL:

My Reading List for the Winter Break

2008-12-15T11:17:00.004-05:00

The McKinsey Quarterly: “Getting more from prepaid mobile services” (February 2008) -> good for understanding innovation and adding services for lower end pre-paid customers.

Wellsprings of Knowledge, by Dorothy Leonard-Barton, Harvard Press book on market research method that's good for discovering non-consumption, as mentioned in Seeing What's Next by Clayton Christainsen.

The Post-American World, Fareed Zakaria.

The Black Swan: The Impact of the Highly Improbable.

Infotopia, Cass Sunstein.

Meatball Sundae, Seth Godin.

Banktastic Blog.

Ethnio's Live Recruiter Goes Free

2008-11-25T11:00:00.002-05:00

Ethnio, a bolt/peters co, now offers its live recruiting tool for free. See a demo on this site pop up (the study is running as of today for a few weeks). This means you can now recruit users live on your site for follow up focus groups, phone interviews, usability studies, etc.

You monitor your recruitment on a dashboard online. Then, go ahead and either do the follow up meetings yourself, or ask bolt/peters to run part or all of the show.

My agency, IconNicholson, used them to recruit and carry out a usability study for a major hospital site. The results were great and the method helped us win the job.

Clintons to Obama: Sorry, bud, no time

2008-09-22T22:55:00.003-04:00

The Times is on to the Clintons and their lukewarm support of Obama overall. In the article today about Michelle Obama's role in the Obama campaign, they note Hillary's 2nd tier role:

Mrs. Clinton is campaigning only once or twice a week for Mr. Obama, as opposed to Ms. Palin’s appeals to women at events several times a day. That leaves Mrs. Obama as the Democratic campaign’s busiest and most high-profile female surrogate at a time when the fight for women is intensifying.

And today, AP found Bill telling us how great we all think Sarah Palin's life must be. But he'll be back on the trail after a four-day hiatus because of his Global Initiative.

Looks like Obama should be keeping friends closer ...

WSJ.com Adds SeenThis?

2008-04-03T22:07:00.005-04:00

Not many "seen it" yet

I enabled the SeenThis? widget by Loomia on my WSJ.com subscription, and invited a few newsy friends on FaceBook to join in. Only one did. That's too bad because the widget tells me what my friends are reading on WSJ when I'm on the site, and 9,999 other news sources when I'm on FB. Because fewer than 100 total people are actively using the widget on FB, I'm guessing that many people are encountering the same UX as me - a perfect mirror of my own reading habits.

SEO Haikus

2008-04-03T22:02:00.002-04:00

Today I gave an in-house presentation on SEO strategy. At finish, my co-presenter delivered these three haikus I wrote:

Google flattens sites
Every little detail page
Can now be a star

Don't make promises
Lightly. Users give you three
Seconds or they leave

Get links to your site
Make sure they are relevant
To the detail page

Redirect

2008-03-14T06:32:00.000-04:00

Please see my regular blog here.

Welcome to Interactive Content!

2008-03-14T06:04:00.000-04:00

Hi and welcome to my second blog. My first is my beta blog about news media. I frankly am surprised that Interactive Content is still available as a name. But it is, so I've grabbed it here. I