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Social Metrics - The Search for ROI in Social Media
1.
Measuring Value from
Social Media Steve Latham Spur Digital January 2008
2.
Outline Industry Trends
Digital media landscape Why Social Media Barriers to Online Investment Metrics ROI analysis Case study 2 © 2007 Spur Digital LP. All rights reserved.
3.
Industry Trends
Global online ad spend > $80 billion by 2011(1) $42 billion to be spent in U.S. Online = 11.4% of U.S. ad budget (up from 6.6% in 2006) 2007 online video ad spending to exceed $650mm(2) $1.7 billion by 2009 Video ads will be 8% of Internet ad spend (2.3% today) Media fragmentation is proliferating In 1966 5 mediums dominated In 1986 there were 12 In 2006, 30+ mediums were defined “Prime-Time” has been replaced by “My Time” Consumers determine when and how to engage brands Advertisers must adapt to changing marketplace (1) Piper Jaffrey & Co., February 2007“The User Revolution (2) eMarketer 2006 3 © 2007 Spur Digital LP. All rights reserved.
4.
Media Consumption is
Changing Interactive now accounts for >30% of media time (1) TV = 35%, Radio = 12%, Print = 9% Gen Y (<26): 12 hours per week (vs. 10 hrs TV)(2) Gen X (27-40): 9 hours per week “Communitainment” is new model for internet usage Community, Communication and Entertainment Over 10 years, >50% of Internet usage will be “Communitainment” Social Media is the platform for communitainment Networking Interactive discussions Community User Generated Content is the medium Blogs / Discussions Photo sharing Video sharing (1) Credit Suisse 2006 (2) MultiChannel News 2006 4 © 2007 Spur Digital LP. All rights reserved.
5.
Today’s Media Landscape
TV Direct Mail Radio Print Mobile Digital $$$ 5 © 2007 Spur Digital LP. All rights reserved.
6.
Digital Media Landscape
Video E-Mail House & 3rd Search Display and Paid + Party email Display Pre-roll Natural Social Rich, Flash and Networks, Blogs, Static Ads Photos, Videos Portals Search Content Ad Networks Social Networks Affiliate Co-Reg $$$ 6 © 2007 Spur Digital LP. All rights reserved.
7.
Social Media Has
Gone Mainstream Internet Usage Increasingly Favors Social Media Watch Internet (streaming video) 34% Buy or sell products from other consumers 31% Read a blog 29% Comment or forward online ad to someone 27% Submit a rating or review of a product or service. 26% Use social networking sites 20% Publish a blog or personal journal 10% Upload video you created to Internet 7% % reflects all online users Source: Forrester’s NACTAS Q3 2006 Media & Marketing Online Survey $2.5bn Social networking revenue Social Networking is here to stay: • 34% watching video • 31% buying and selling online $350mm • 26% submitting a rating • 7% uploading a video 2006 2010 *Source: emarketer.com August 2006 7 © 2007 Spur Digital LP. All rights reserved.
8.
Trust in Peers
Trumps All Other Sources Online Consumers Turn to Friends or Acquaintances for Information Opinion of friend or acquaintance using product or service 83% Review in newspaper, in a magazine, or on TV 75% Information on the manufacturer’s Web site 69% A review by a known expert 63% Consumer reviews on a retailer’s site 60% Consumer reviews by users of a content site 52% Information at online consumer opinion sites 50% Online reviews by editors of content sites 49% Information in chat rooms discussion boards 37% An online review by a blogger 30% Source: Forrester’s NACTAS Q3 2006 Media & Marketing Online Survey. * 8 © 2007 Spur Digital LP. All rights reserved.
9.
User Generated Video
is Exploding User Generated Video • User-Generated Video made up 47% of the total online video Users want to be market in the US in 2006 • Engaged • By 2010, 55% of all online video • Educated content will be user-generated (44 • Entertained billion video streams) • Video sharing campaigns being utilized to engage customers Screen Digest January 15, 2007 9 © 2007 Spur Digital LP. All rights reserved.
10.
So What’s the
Problem??? If Social Media is so great, why aren’t more brands and agencies using it? (beyond the issue of inappropriate content) 10 © 2007 Spur Digital LP. All rights reserved.
11.
Barriers to Online
Investment 2007 McKinsey study of 410 marketing execs found the primary barriers to online investment were: 52% insufficient metrics to measure impact 41% Insufficient in-house capabilities 33% Difficulty of convincing upper management 24% Limited reach of digital tools 18% insufficient capabilities at agency 2 of the top 3 relate to ROI measurement Metrics Convincing upper management (Business Case) …which is why we are here today! 11 © 2007 Spur Digital LP. All rights reserved.
12.
Web 1.0 Metrics
(sample dashboard) Daily Downloads Daily Visits 1,000 6,000 900 800 5,000 700 4,000 600 500 3,000 400 300 2,000 200 1,000 100 - - /05 /05 /05 5 5 5 5 5 5 5 /05 /05 /05 5 5 5 5 5 5 5 05 05 05 5 5 5 5 5 5 5 05 05 05 05 05 05 05 05 05 05 0/ 0 3/ 0 6/ 0 9/ 0 2/ 0 5/ 0 8/ 0 2/ 0 5/ 0 8/ 0 1/ 0 4/ 0 7/ 0 0/ 0 /0 /0 /0 /0 /0 /0 /0 1/ 4/ 7/ 3/ 6/ 9/ 2/ 5/ 8/ 1/ 4/ 7/ 0/ 10 13 16 19 22 25 28 2/ 1 2/ 4 2/ 7 3/ 3 3/ 6 3/ 9 1 1 1 2 2 2 3 2/ 2/ 2/ 3/ 3/ 3/ 2/1 2/1 2/1 2/1 2/2 2/2 2/2 3/1 3/1 3/1 3/2 3/2 3/2 3/3 2/ 2/ 2/ 2/ 2/ 2/ 2/ 3/ 3/ 3/ 3/ 3/ 3/ 3/ Daily and Cumulative Leads Cumulative Downloads Cumulative Visits 20,000 180,000 18,000 160,000 16,000 140,000 14,000 120,000 12,000 100,000 10,000 80,000 8,000 6,000 60,000 4,000 40,000 2,000 20,000 - - 05 05 05 5 5 5 5 5 5 5 05 05 05 5 5 5 5 5 5 5 / 05 / 05 / 05 /05 /05 /05 /05 /05 /05 /05 / 05 / 05 / 05 /05 /05 /05 /05 /05 /05 /05 0/ 0 3/ 0 6/ 0 9/ 0 2/ 0 5/ 0 8/ 0 2/ 0 5/ 0 8/ 0 1/ 0 4/ 0 7/ 0 0/ 0 / / / / / / 2/ 1 2/ 4 2/ 7 3/ 3 3/ 6 3/ 9 2/1 2/4 2/7 0 3 6 9 2 5 8 3/3 3/6 3/9 2 5 8 1 4 7 0 Cost per Lead by Outlet 2/1 2/1 2/1 2/1 2/2 2/2 2/2 3/1 3/1 3/1 3/2 3/2 3/2 3/3 2/ 1 2/ 1 2/ 1 2/ 1 2/ 2 2/ 2 2/ 2 3/ 1 3/ 1 3/ 1 3/ 2 3/ 2 3/ 2 3/ 3 Campaign Summary # Leads by Outlet TOTAL TO DATE Visits DLs Cost Cost / DL Cost per Download Downloads by Outlet 127,942 15,984 $ 87,780 $ 5.49 7,000 $12.00 Email Email 6,000 $10.00 ACTIVE CAM PAIGNS Media Last This $ / DL Total $ / DL 5,000 Banners $8.00 Outlet Week W eek This Wk To Date To Date Search 4,000 List Vendor 1 371 363 $ 14.91 1,224 $ 9.56 $6.00 List Vendor 2 88 48 $ 2.00 1,889 $ 1.61 3,000 CPA 1 335 168 $ 3.00 1,796 $ 1.65 $4.00 Banners CPA 2 1,570 598 $ - 2,168 $ 4.61 2,000 Ad Vendor 359 104 $ 7.08 463 $ 6.09 Search Google 999 942 $ 1.90 2,380 $ 1.90 1,000 $2.00 Overture 206 155 $ 1.24 1,314 $ 1.24 AskJeeves 71 41 $ 3.80 244 $ 3.80 - $- Downloads Cost Per Download 12 © 2007 Spur Digital LP. All rights reserved.
13.
What Should We
Measure for Web 2.0? What are the “right” metrics? Exposure to media and/or web site Impressions Clicks / Visits Page views Referrers / Sources New vs. Returning Frequency Level of Engagement Pages viewed per visit Time on site Reading blogs / Participating in discussions Viewing Videos or Photos Uploading content Telling friends Inquiries / Registrations Transactions 13 © 2007 Spur Digital LP. All rights reserved.
14.
How Do We
Value Engagement? Determine how ACTIONS INTENT Action Value Visits Shows brand engagment; can adjust based on PVs or Time on Site Registrants People who join email list. Able to reach in future. Tell A Friend Actions Recommendations are strongest indication of intent Coupon downloads Shows interest in a specific offer Store locator clicks Shows interest in finding a store Determine how INTENT REVENUE (or value) Will vary based on the action Apply formula across each set of actions Use common sense to normalize results 14 © 2007 Spur Digital LP. All rights reserved.
15.
ROI Case Study
Client: consumer retailer seeking to drive in- store purchases Insight: target audiences are heavy internet users who are into social networks Strategy: create a seasonal social networking site and market via online and offline media 15 © 2007 Spur Digital LP. All rights reserved.
16.
ROI Methodology Define
the metrics that indicate intent Project conversion rates and expected value for each audience (and each action) Existing customers New customers Use rates and values to project expected revenue for each audience Normalize by averaging expected values 16 © 2007 Spur Digital LP. All rights reserved.
17.
ROI Analysis Value Impact
of Existing Customers Est. Conv PV per Existing Customers Total % of Total % Customers customer NPV Visits 50,000 100% 2.5% 1,250 $ 100 $ 125,000 Registrants 20,000 40% 25.0% 5,000 $ 100 $ 500,000 Tell A Friend Actions 2,500 10% 60.0% 1,500 $ 100 $ 150,000 Coupon downloads 7,500 15% 35.0% 2,625 $ 100 $ 262,500 Store locator clicks 2,500 5% 40.0% 1,000 $ 100 $ 100,000 Average $ 227,500 Value Impact of New Customers PV per New Customers Total % of Total Conv % Customers customer PV Visits 25,000 100% 2.5% 625 $ 500 $ 312,500 Registrants 5,000 20% 20.0% 1,000 $ 500 $ 500,000 Tell A Friend Actions 2,500 10% 30.0% 750 $ 500 $ 375,000 Coupon downloads 2,500 10% 28.0% 700 $ 500 $ 350,000 Store locator clicks 2,500 10% 32.0% 800 $ 500 $ 400,000 Average $ 387,500 17 © 2007 Spur Digital LP. All rights reserved.
18.
Sample ROI Analysis
(continued) Impact of New + Existing Customers PV per New + Existing Total Customers customer PV Visits 75,000 1,875 $ 233 $ 437,500 Contest Registrants 25,000 6,000 $ 167 $ 1,000,000 Tell A Friend Actions 5,000 2,250 $ 233 $ 525,000 Coupon downloads 10,000 3,325 $ 184 $ 612,500 Store locator clicks 5,000 1,800 $ 278 $ 500,000 Average NPV $ 615,000 Investment $ 150,000 ROI* 410% *ROI Calculation does not account for: - Word of Mouth (Buzz) - PR value While the Direct ROI is - Internal recognition and exposure compelling, it captures - Impact on Brand only part of the value - Value of User Generated Creative 18 © 2007 Spur Digital LP. All rights reserved.
19.
Now What? Once
you have a ROI model, build the business case Document the assumptions Show the expected economic impact Show your manager or client how it works Communicate your successes Internally Externally Continue to think about “what’s next” 19 © 2007 Spur Digital LP. All rights reserved.
20.
In Closing… We
all know the value is there… …We just need to be able to show it There is no silver bullet to building a business case Success requires… Analytical rigor Creativity Common sense Today I’ve showed you one approach Many others exist – feel free to share! Email me steve@spurdigital.com 20 © 2007 Spur Digital LP. All rights reserved.
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