Friday, March 19, 2010

Real Examples of Social Media ROI

Summary: some published examples of "hard" ROI from social media.

As part of the preparation for next Tuesday’s Webinar with 1to1 Media and Neolane (register here), I poked around for some concrete examples of ROI from social media. Here’s what I found.

Socialnomics blog by Erik Qualman offers a dynamic video with 33 “salient examples and data points” about social media ROI. Some are pretty vague but the concrete ones include:

- Wine TV Library gained 1,800 new customers from Twitter

- Lenovo attributed a 20% reduction in call center activity to use of a community website for answers

- Burger King received 32 million media impressions from a Facebook app promotion costing less than $50,000

- reports that 24% of its social media leads convert to sales opportunities

- Moonfruit sales of its Web hosting service increased 20% on a $15,000 social media investment

Jacob Morgan cites a Computerworld article describing how online community platform vendor Reality Digital generated 72 leads over the first three months of its social media project, at a cost of roughly $9,000. The company expected this to yield at least one sale which would cover the entire annual cost of the program.

ReadWriteWeb reports “a Cisco study in 2004 found that 43% of visits to online support forum are in lieu of opening up a support case through standard methods.”

Socialtext corporate blog cites an estimate by TransUnion CTO John Parkinson that his $50,000 investment in Socialtext has avoided $2.5 million in tech spending by helping users share ideas on how to solve their problems more cheaply.

10e20 corporate blog gives three examples of social media conversion:

- response to a LinkedIn group query became a 10e20 client

- a "couple of hours per week" spent social bookmarking the contents of an online magazine at StumbleUpon and other sites drove “10’s of thousands of visitors as opposed to hundreds”, resulting in much higher ad pay-per-click ad revenue

- major national fashion brand invested the equivalent of "one mid-level employee’s salary" to run a dedicated social media presence, yielding 75,000 fans and followers and “several hundred thousand dollars in new sales in three months of marketing” as well as reaching a new audience, improving public relations and customer service, and gaining feedback for product development

HubSpot's The State of Inbound Marketing 2010 survey found that 41% to 46% of the companies using Twitter, LinkedIn, Facebook or a company blog had acquired a customer from that channel.

Predictive Marketing Blog by Bob Hodgson
reported that eight Tweets by a high tech conference with 350 followers generated 10 completed registrations worth $15,000.

I also found plenty of insightful content that doesn’t include specific numbers. In general, there are two schools of thought on social media ROI: some think it really must be tied to revenue and profits to be meaningful; others argue just as passionately that different measures are appropriate depending on the program objective.

Truth be told, my heart is with the “revenue and profits” school. But I suspect it may be too simplistic, so I do accept alternative measures as a valid alternative. The problem with tying social media to "hard" ROI is this often relies on complex intermediate calculations, which are subjective in themselves. That being the case, alternative measures are not necessarily less valid; it depends on the details. (Fallacy alert: just because neither is perfect, it doesn’t follow that both are equally bad).

In any case, here are a few discussions I found particularly worthwhile:

A SlideShare presentation from Peashoot (a social media campaign manager) listing different metrics for different campaigns. These are good examples even though there are no actual results.

An eConsultancy blog post sharing comments on social media ROI from a collection of British experts.

Another eConsultancy post listing ten specific ways to measure social media success.

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