ROI is King.*

2009/12/04 at 18:19 1 comment

* That’s not a cross-lingual pun, (roi meaning king in French) just a coincidence, but now doubly true, I realize.

As a burgeoning social media executive who comes from the international sales and marketing world (via licensing, brand and account management), I found this blog from Business Week exceedingly interesting. I twitter, I blog, I use Facebook to promote a photographer, a band and a South African safari camp and run a very successful industry group on LinkedIn.

I look for the “buzz-” the hits, the new members, the retweets, but often wonder how much of that is still just a simple click of a button. Is it the social media equivalent of reading the book jacket of reading a summary of the Odyssey in high school and then recommending it to others? Or is it actual viral promotion. Or: does it matter?

In my experience, and way of working, return on investment is what matters. Having been a licensing manager at an educational not-for-profit, with a zero dollar (0.00 USD or ZAR, EGP, CNY, RUB, BDT, etc.) marketing budget, I learned at an early stage in my career that return does not always mean revenue. Raising awareness, creating goodwill, gaining mind-share, PR, gaining outreach and ancillary educational partners, raising the perceived value of a brand’s equity, etc. could all be as valuable, or more valuable than immediate monetary return. But the question there, which resounds here, is what is that return? And how do you measure it? What are the statistics? Maybe even: does it matter what the metrics are?

I would argue that the last question is the 64 million dollar one. How do you know if what you’re doing is worth your investment (time, money, man-hours, tools) when you don’t have a simple, clear way of quantifying results? You may be gaining revenue, word of mouth, elevated goodwill or endless array of positive outcomes for your brand or product, but not be able to tell because it gets mixed in with the measurements from the more traditional methods. True action to outcome metrics really exist- how does one know that part of the spike in earnings during a tv ad push is actually incidental and comes from earlier word-of-mouth or viral efforts that are just now manifesting themselves in purchases?

Science (say chemistry, biology, mathematics) talks about direct, indirect, causal, related and coincidental relationships. The first three are generally the easiest to prove, but then, with science, it’s actually usually disproving that makes the advances. The Heisenberg Uncertainty principle rules: the more precisely the position of a particle is determined, the less precisely the momentum is known in this instant, and vice versa. It goes on to state (paraphrasing, of course): one can never discover the empirical truth without setting up false or contrived boundaries to measure a thing. Like focus groups, or revenue return during an ad spend (the ad spend period being the contrived boundary- there’s no way to know that it’s advertising that’s the end-all, be-all cause of anything).

Apologies, the nerd in me took the wheel for a bit, but the point is this: true ROI can only be known, or more accurately, felt over time. In current global business, that’s the one commodity that almost no one is willing to spend. Metrics for social media effectiveness as regards business will be developed, refined, thrown out and the process started all over again as technology and consumer habits evolve (or change).

In the meantime, this week’s article by Steven Baker in Business Week raises some very interesting questions, but does not overtly mention the most important: What is ROI (in any given instance) and how does one measure that?

Beware Social Media Snake Oil

Hordes of marketing “experts” are promoting the value of wikis, social networks, and blogs. All the hype may obscure the real potential of these online tools

By Stephen Baker

For business, the rising popularity of Facebook, Twitter, and other social media Web sites presents a tantalizing opportunity. As millions of people flock to these online services to chat, flirt, swap photos, and network, companies have the chance to tune in to billions of digital conversations. They can pitch a product, listen to customer feedback, or ask for ideas. If they work it right, customers might even produce companies’ advertising for them and trade the ads with friends for free. Starbucks (SBUX), Dell (DELL), and Ford Motor (F) have all testified to the magic social media can create.

But the same tools carry risks. Employees encouraged to tap social networking sites can fritter away hours, or worse. They can spill company secrets or harm corporate relationships by denigrating partners. What’s more, with one misstep, one clumsy entrée, companies can quickly find themselves victims of the forces they were trying to master. Thousands of bloggers attacked Motrin last year because of an advertisement from the Johnson & Johnson (JNJ) brand they found demeaning to mothers.

Over the past five years, an entire industry of consultants has arisen to help companies navigate the world of social networks, blogs, and wikis. The self-proclaimed experts range from legions of wannabes, many of them refugees from the real estate bust, to industry superstars such as Chris Brogan and Gary Vaynerchuk. They produce best-selling books and dole out advice or lead workshops at companies for thousands of dollars a day. The consultants evangelize the transformative power of social media and often cast themselves as triumphant case studies of successful networking and self-branding.

The problem, according to a growing chorus of critics, is that many would-be guides are leading clients astray. Consultants often use buzz as their dominant currency, and success is defined more often by numbers of Twitter followers, blog mentions, or YouTube (GOOG) hits than by traditional measures, such as return on investment. This approach could sour companies on social media and the rich opportunities it represents. “It’s a bit of a Wild West scenario,” blogs David Armano, a consultant with the Dachis Group of Austin, Tex. Without naming names, he compares some consultants to “snake oil salesmen.”

Critics complain that many of the new experts have adopted an orthodoxy that provides little flexibility for differing situations—or outcomes. Their pronouncements follow a rigid gospel: Be transparent, engage with your customers, break down silos. Yet these strictures don’t always make business sense. Adam Kmiec, director of interactive marketing at Marc USA in Pittsburgh, tells of a company he met with that got much of its revenue from the Defense Dept. and had allocated $4 million for social media. “What do you hope to get?” he asked them. Ultimately, the client decided the privacy-obsessed Pentagon may not be thrilled with a supplier publicizing itself through Twitter.

FURY VS. BUZZ

Scrutiny of the hype merchants is picking up. Rob Spencer, senior research fellow for idea management at drug giant Pfizer (PFE), mingles frequently with social media vendors and consultants as he looks for ways to amplify the company’s brainpower. He urges caution. “You have to tread your way carefully and have your B.S. sensors up,” he says. “I call them innovation hippies. ‘Here’s my book for free. Won’t you hire me for $500 to run some workshops?'”

Social media consultants’ own promotions can collide, on occasion, with those of their customers. Take the case of James Andrews, who was working early this year at the PR firm Ketchum (OMC). As a consultant, he helped companies such as Newell Rubbermaid (NWL), Monster Worldwide (MWW), and FedEx (FDX) work out their strategies for blogs and the microblogging service Twitter. On landing in Memphis for FedEx meetings, he says he had an ugly run-in with a racist at the airport and twittered that he would “die if he had to live” in the city. The tweet produced an outpouring of blogged fury from FedEx employees and a fast apology from an embarrassed Ketchum. But for Andrews, the tweet generated buzz and may even have boosted his brand. “It helps me today,” he says. “I use it as a case study. It creates authenticity.” In June, Andrews left Ketchum to launch a boutique consultancy, Everywhere. He helps Macy’s (M), CNN (TWX), and Jane Fonda promote their brands and monitor their audiences on Facebook, blogs, and Twitter.

Skeptics can draw from plenty of examples of social media experiments run amok. Consider Saatchi & Saatchi’s ill-fated promotion for the Toyota (TM) Matrix. Targeting young men, a demographic known to resist traditional advertising, Saatchi’s social media team last year created a campaign based on the pranks of the popular MTV (VIA.B) show Punk’d. According to the plan, a prospective buyer of a Matrix would single out a friend to be the target of a prank. The promise: a bit of fear, a lot of laughs, and perhaps a groundswell of free marketing across Facebook, MySpace (NWS), and Twitter.

Amber Duick, one of the targets in the short-lived campaign, says she received a series of e-mails from a fictitious British soccer hooligan named Sebastian Bowler. He said he was coming to visit her and bringing along his pit bull. He had a MySpace page where he bragged about “drinking alcohol to excess” and participating in riots. One e-mail Duick received was a fake bill for damage to a hotel room wrecked by Bowler. He had left her e-mail address, the message explained, as his contact info. Duick filed a $10 million lawsuit in October and says that to protect herself from the oncoming Bowler, she slept with a machete by her bed. “She was terrified,” says her lawyer, Nicholas Tepper.

In a statement, Saatchi and Toyota wrote that they would “vigorously defend against the claim,” which is “entirely without merit.” They said the plaintiff had granted “her permission to receive campaign e-mails and other communications from Toyota.”

CAN CHAGRIN BE GOOD?

James Cooper, Saatchi’s digital creative director, says social media, by their nature, are unpredictable, which makes them an easy target for critics. “Anyone who says ‘This is going to work’ is either lying or deranged,” he says. He compares the risk model with venture capital, where one bet out of 10 might pay off richly, while the others struggle or even bomb. And he stresses the difficulty of measuring results. “If something’s got 20 million hits on YouTube, that’s a good thing,” he says. “But what if half the comments are negative? I don’t think anyone’s got a long-term case study yet.”

Baker is a senior writer for BusinessWeek in New York.

permalink

Advertisements

Entry filed under: advertising- tv, branding, click through, contradictions, digital, equity, Facebook, intellectual property, linkedin, marketing, metrics, mobile, ROI, snake oil, social media, twitter, web.

Be careful watch you wish for: what happens when your marketing campaign is *too* successful? Measuring Social Media Marketing (positing some metrics- do they satisfy?)

1 Comment Add your own

  • 1. david baer  |  2009/12/28 at 08:44

    Affiliate Marketing is a performance based sales technique used by companies to expand their reach into the internet at low costs. This commission based program allows affiliate marketers to place ads on their websites or other advertising efforts such as email distribution in exchange for payment of a small commission when a sale results.

    ONLINE MARKETING

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed


Contributors

tweets

  • EXCLUSIVE: Li & Fung Acquires TLC | License! Global lnkd.in/b83qw9rat 4 years ago
  • Cannot believe Licensing Show is in 5 weeks. Better get those appointments in now! #Sony #LicensingShow2013at 4 years ago
  • Does anyone have a contact at the Petersen Automotive Museum in Los Angeles? Please message me. Thanks!at 4 years ago
  • Anyone looking for a creative, talented senior graphic designer? I know a great candidate looking in LA. Message me, please.at 5 years ago
  • Anyone in LA looking for a hardworking, talented senior Graphic Designer? Great candidate looking to make a move. Message me ASAP. Thanks!at 5 years ago

posterity


%d bloggers like this: