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Social Metrics - The Search for ROI in Social Media
- 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“Prime-Time” has been replaced by “My Time”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
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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
- -
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2/ 1
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3
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5
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3/6
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0
Cost per Lead by Outlet
2/1
2/1
2/1
2/1
2/2
2/2
2/2
3/1
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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.