Point-Counterpoint Emerges Over the ROI of Social Media

It started out innocently enough.

Earlier this month, I posted a simple question online about how marketers measure the ROI of social media. I was blown away by all the responses I got.

The question was posted on eM+C contributor Jim Gilbert’s popular LinkedIn Group, Social Media Marketing Questions & Answers.

It started out innocently enough.

Earlier this month, I posted a simple question online about how marketers measure the ROI of social media. I was blown away by all the responses I got.

The question was posted on eM+C contributor Jim Gilbert’s popular LinkedIn Group, Social Media Marketing Questions & Answers.

Perhaps the most interesting response came from an exchange that took place in the discussion section of the LinkedIn Group between Steve Goldner, a social media/social network consultant who goes by the name Social Steve, and Doug Garnett, the founder and CEO of Atomic Direct, a brand DRTV agency. To me, it exemplified the ongoing battle between traditional direct marketers and new media executives when it comes to how to measure social media ROI.

Goldner started the discussion by posting a link to an article he wrote titled, “Measuring the Value of Social Media.” He noted that the article explained there’s a way to measure the ROI of social media, but marketers should be careful not to use “sales metrics” when measuring it.

That got Garnett thinking. “Steve’s article seems to suggest that ‘a metric of tweets, for example, is a valid ROI analysis.’ I don’t think that’s at all related to ROI,” he wrote.

He went on: “Having lots of tweets just might contribute to ROI. OR, it might be entirely tangential. You might have higher ROI with fewer Tweets if they’re of better quality.”

Garnett suggested that marketers stick with it and look for true ROI from social media, which he described as “increased sales (at some reasonable point) or same sales with lower marketing costs.”

Goldner countered that what Garnett considers true social media ROI — increased sales (at some reasonable point) or same sales with lower marketing costs — is really lead generation and that “social media should be measured in lead generation and increasing the probability of sales, not sales. Same is true for all other marketing endeavors.”

Garnett countered, “[I] guess one place we part ways is the goal of marketing. The advertising and communication goals are not necessarily focused on sales. But to me, marketing is the process of bringing an entire range of efforts (yup, the ‘4P’s’ are still quite valid) together to create revenue, profit, and market share.”

To read the whole discussion, click here.

I guess it all really depends how you look at it. Coming from the direct marketing world, I hear what Garnett is saying. But as I get more immersed in new media as editor of eM+C, I see Goldner’s point as well. So, I guess I haven’t made up my mind yet about what is the right way to look at it. What’s your take on the ROI of social media? Or the role of marketing in general? Let’s start a similar discussion here.

Point-Counterpoint Emerges Over the ROI of Social Media

It started out innocently enough.

Earlier this month, I posted a simple question online about how marketers measure the ROI of social media and was blown away by all the responses I got.

The question was posted on eM+C contributor Jim Gilbert’s popular LinkedIn Group, Social Media Marketing Questions & Answers.

It started out innocently enough.

Earlier this month, I posted a simple question online about how marketers measure the ROI of social media and was blown away by all the responses I got.

The question was posted on eM+C contributor Jim Gilbert’s popular LinkedIn Group, Social Media Marketing Questions & Answers.

Perhaps the most interesting response came from an exchange that took place in the discussion section of the LinkedIn Group between Steve Goldner, a social media/social network consultant who goes by the name Social Steve, and Doug Garnett, the founder and CEO of Atomic Direct, a brand DRTV agency. To me, it exemplified the ongoing battle between traditional direct marketers and new media executives when it comes to how to measure social media ROI.

Goldner started the discussion by posting a link to an article he wrote titled, “Measuring the Value of Social Media.” He noted that the article explained there’s a way to measure the ROI of social media, but marketers should be careful not to use “sales metrics” when measuring it.

That got Garnett thinking. “Steve’s article seems to suggest that ‘a metric of tweets, for example, is a valid ROI analysis. I don’t think that’s at all related to ROI,’ he wrote.

He went on: “Having lots of tweets just might contribute to ROI. OR, it might be entirely tangential. You might have higher ROI with fewer Tweets if they’re of better quality.”

Garnett suggested that marketers stick with it and look for true ROI from social media, which he described as “increased sales (at some reasonable point) or same sales with lower marketing costs.”

Goldner countered that what Garnett considers true social media ROI — increased sales (at some reasonable point) or same sales with lower marketing costs — is really lead generation and that “social media should be measured in lead generation and increasing the probability of sales, not sales. Same is true for all other marketing endeavors.”

Garnett countered, “[I] guess one place we part ways is the goal of marketing. The advertising and communication goals are not necessarily focused on sales. But to me, marketing is the process of bringing an entire range of efforts (yup, the ‘4P’s’ are still quite valid) together to create revenue, profit, and market share.”

To read the whole discussion, click here.

I guess it all really depends how you look at it. Coming from the direct marketing world, I hear what Garnett is saying. But as I get more immersed in new media as editor of eM+C, I see Goldner’s point as well. So, I guess I haven’t made up my mind yet about what is the right way to look at it. What’s your take on the ROI of social media? Or on the role of marketing in general? Let’s start a similar discussion here.

Awards Bring Out Key Elements of Social Media

If social media had an Oscars, the annual Forrester Groundswell Awards would be them.

Now in their third year, the awards honor companies for excellence in achieving business and organizational goals with social technology. The program was developed to support principles outlined in the Forrester book “Groundswell: Winning in a World Transformed by Social Technologies” (Harvard Business Press, 2008).

If social media had an Oscars, the annual Forrester Groundswell Awards would be them.

Now in their third year, the awards honor companies for excellence in achieving business and organizational goals with social technology. The program was developed to support principles outlined in the Forrester book “Groundswell: Winning in a World Transformed by Social Technologies” (Harvard Business Press, 2008).

On Oct. 27, Forrester honored 13 winners at its Consumer Forum 2009 in Chicago. For the first time, awards went to business-to-business and business-to-consumer companies, as well as nonprofits. For a complete look at the winners and finalists, click here.

To me, the awards are unique because winners are awarded based on the following actions: listening, talking, energizing, supporting and embracing. These concepts represent the strategic goals Forrester advises organizations to consider when using social technologies to interact with their customers. I found this particularly refreshing, especially in an age when marketing awards seem to be a dime a dozen and don’t really get to the heart of what matters when it comes to making money.

What’s more, this year, for the second year in a row, the Groundswell Award selection process allowed the general public to rate and comment on all entries on the Groundswell website. Forrester took the community’s evaluations into account when selecting winners, but chose winning entries based on proof of business value, and not which applications were the most popular.

Here’s a look at some of the winning companies and their programs, via the Groundswell site:

NASCAR Fan Council/Vision Critical. NASCAR and Vision Critical, which won in the B-to-C Listening category, created a community of 12,000 fans and used it to reduce research costs by 80 percent. NASCAR also took the community’s suggestions and changed its restarts from single file to double file, which fans loved.

Lion Brand Yarn Blog and Podcast/Converseon. These companies won in the B-to-C Talking division for a program where Converseon identified influential bloggers and social networks dedicated to knitting and crocheting. Lion Brand Yarn then created a biweekly podcast and targeted it to these groups. The podcast eventually generated 15,000 to 20,000 downloads and a blog featuring “knit-alongs.” This drove impressive e-commerce sales for the brand, including people who ordered the knit-along projects. Also, those who visited the company’s social media sites were 41 percent more likely to buy at the website.

Scholastic Book Clubs Reading Task Force Community/Communispace. These companies won in the B-to-B Embracing division for a program that involved redesigning Scholastic’s school book sales flyer, which is its main vehicle for book sales through schools. Using a community of 200 teachers and 100 parents created by Communispace, Scholastic embarked on a 10-week collaborative process to talk to members about how to improve the design of the flyer. The process generated ideas such as including student recommendations and showing interior pages so parents could judge the reading level of the books. Results? The new flyer has already generated a 3 percent increase in sales in test markets.

I think all of these programs exhibit great, unique uses of social media and technology, and show how the medium can bring about real, specific ROI. What do you think? Post your comments here.

Finally, Online Shopping With Friends

Don’t you just love shopping with friends? I do. I love getting opinions from them about what items of clothing look good on me, what would be considered a good value, what would
make a great gift and so on. When shopping with friends, I bet I also spend
more.

Don’t you just love shopping with friends? I do. I love getting opinions from them about what items of clothing look good on me, what would be considered a good value, what would
make a great gift and so on. When shopping with friends, I bet I also spend
more.

That’s why I was
interested in a new, free widget called Shoplication
that I received a press release about recently.
Placed in the checkout areas of
online retailers’ websites, the widget — which says, “Shop With Friends”
— enables shoppers who click on it to shop and share products with their
friends in real time. And online retailers can drive more sales.
The widget is the brainchild of Josh Bochner, CEO of Boston-based FriendShopper, a social platform that allows web shoppers to chat with their friends while shopping. The chat function docks to the right side of browsers to create an interactive shopping environment, and the dialogue feature allows users to converse and share with multiple friends simultaneously.

To use the tool, shoppers add the FriendShopper bookmark into their browsers’ toolbars, surf any
online storefronts and click the bookmark button whenever they find items
they’d like to save or share with friends.

The Shoplication widget takes this experience to the e-tailer.

Here’s how the widget
works: After FriendShopper members click on the Shoplication widget, they see a
pop-up featuring that product’s data that can be used to save the item, share
it with friends or both. If they’re currently shopping with a FriendShopper
member, that product data is added to the conversation. Users can also share
the online merchant’s store with FriendShopper friends by clicking the
“Add New Store.”

If consumers who aren’t members click on the widget, they see a co-branded pop-up window that
says the online retailer’s store has partnered with FriendShopper to bring them
a new shopping experience. Consumers can then sign up. Then they’re offered the
option to have the item be discussed in their “My Items” pages so
they can share it with their friends.

There are also some cool search options available for retailers. When they add the
widget to their sites, for example, they’re listed on the FriendShopper portal.

I thought this was a great way to allow friends to shop together and help online retailers expand
their reaches.
What do you think?

How Dell Leverages Social Media Across the Company

While attending the eTail East conference in Baltimore this week,  I was pleasantly surprised at what seems to be a pattern in online retail shows this year. While the show was small, all the sessions were packed. And everyone seemed to be in generally good spirits — despite the economic situation.

While attending the eTail East conference in Baltimore this week, I was pleasantly surprised at what seems to be a pattern in online retail shows this year. While the show was small, all the sessions were packed. And everyone seemed to be in generally good spirits — despite the economic situation.

One session I attended on Aug. 5 featured Liana Frey, the director of communities and conversations at Dell. Her session, “Community 2.0 — Lessons Learned From Engaging in Conversations With Customers,” focused on the success of the Round Rock, Texas-based firm’s use of social media.

Dell’s successful use of social media has been well documented. Dell Outlet, for example, has attributed $3 million in revenue to its presence on Twitter, where the division posts its latest offers.

What’s more, Dell Outlet has almost 1 million Twitter followers and is a “recommended” presence to follow by Twitter. It also occasionally makes “Twitter-only” offers available to followers.

Dell has put a concerted effort into its social media programs, according to Frey. It started them through a small group that was part of its corporate communications department. Today, however, social media is embedded throughout the entire organization.

“We’ve changed our organizational structure so that our tech department can answer specific technical questions through Twitter, and our customer service department can answer customer service questions,” she said.

While Frey admitted there’s some risk to this approach — where someone may say something that’s inappropriate, despite the social training, and damage the brand — she added that using this approach was worth the risk.

“We had enough confidence in our employees’ expertise that we felt it was important to make them transparent,” she said.

At lunch later that day, many folks agreed with Frey’s comments. Almost all of my tablemates said that for social media to work, it has to be part of a corporation’s culture. And, most importantly, there has to be buy-in from the top of the corporate structure — the CEO or president.

Do you agree? Let me know by leaving a comment here.

Virtual Worlds Marketing Is Kids Stuff

Remember virtual worlds? You know, those 3-D computer environments where users are represented on screen as themselves or as made-up characters and interact in real time with other users?

Remember virtual worlds? You know, those 3-D computer environments where users are represented on screen as themselves or as made-up characters and interact in real time with other users?

A few years ago, these online “other worlds” were the place to be for brand marketers. You couldn’t get through the day without reading about how such big brands as Cisco, Dell, Starwood Hotels and Toyota were plunking down a big percentage of their marketing budgets to be a part of the buzz — and hopefully get some returns.

These companies ran campaigns in these online worlds to build their brand names, test products and in some cases even sell digital merchandise.

The buzz around virtual worlds marketing has died down for sure. Many of these companies didn’t get the results they were looking for. The virtual worlds didn’t either. Second Life, for example, has even switched its business focus to training, promoting itself as a place where companies can hold meetings, conduct training, build product prototypes or simulate business situations “in a safe learning environment,” according to its Web site.

But despite the changes, virtual worlds marketing should not be ignored. Know why? Kids are now visiting these sites regularly, albeit not Second Life.

In 2008, eight million children and teens in the U.S. visited virtual worlds on a regular basis, according to a recent eMarketer article. What’s more, the online research firm projects that number will surpass 15 million by 2013. The report references an eMarketer report, Kids and Teens: Growing Up Virtual, which provides some more noteworthy findings.

The article estimates 37 percent of children ages 3 to 11 use virtual worlds at least once a month. By 2013, it projects that 54 percent will. In addition, 18 percent of teens will visit virtual worlds on at least a monthly basis this year; by 2013, that figure will rise to 25 percent.

What’s more, the article cited research from Virtual Worlds Management, which found that as of January, 112 virtual worlds aimed at children younger than 18 were already up and running worldwide, while another 81 were in development.

As a result, virtual worlds still offer tremendous opportunities for engagement, the article points out, such as offering marketers the ability to gain new insights into how consumers perceive and interact with their brands.

So, if you’re marketing to kids, why not give virtual worlds a try — especially those targeted to kids — either again or for the first time? You’ll be able to reach a captive audience with a unique marketing approach. You may even get a real ROI this time.

An Ill-Timed Folly for Facebook

Facebook has caused quite a stir lately. About two weeks ago, it revised its terms of use, but the change caused such a turbulence in the blogosphere that the social media pioneer backed off and reverted to its old terms — at least for now.

Facebook has caused quite a stir lately. About two weeks ago, it revised its terms of use, but the change caused such a turbulence in the blogosphere that the social media pioneer backed off and reverted to its old terms — at least for now.

What temporary revision caused the uproar? Basically, the terms said members own their information on the site and control who sees it. But when they’d go to delete their accounts, Facebook would retain the right to the information, so friends still would be able to access the shared information. Facebook sated that it would have an “irrevocable, perpetual, non-exclusive, transferable, fully paid worldwide license” to material on the site, per the short-lived terms.

But after the new rules were posted, many people contacted Facebook with questions and comments about the changes and what they meant for people and their information. Many expressed distrust and aired suspicions that the site would sell or share their information with third parties. Users protested on the site, while external groups also took action. The Electronic Privacy Information Center threatened legal action.

Data-sharing issues have been dicey stuff among American consumers since well before the economy tanked. Facebook has become such an American icon that this revision was ill-timed. Facebook made a mistake and had best rectify it quickly before the site becomes just another fad.

CEO Mark Zuckerberg explained in a Feb. 16 blog post that the revised terms were intended to make the site’s policies clearer to users. “One of the questions about our new terms of use is whether Facebook can use this information forever,” Zuckerberg wrote.

“When a person shares something like a message with a friend, two copies of that information are created — one in the person’s sent messages box and the other in their friend’s inbox. Even if the person deactivates their account, their friend still has a copy of that message. We think this is the right way for Facebook to work, and it is consistent with how other services like e-mail work. One of the reasons we updated our terms was to make this more clear.”

“In reality,” Zuckerberg continued, “we wouldn’t share your information in a way you wouldn’t want … Our goal is to build great products and to communicate clearly to help people share more information in this trusted environment.”

Nevertheless, based on the feedback on his blog on Feb. 18, Zuckerberg said Facebook had decided to return to the previous terms of use while it resolves the issues people have raised.
But the matter isn’t resolved. The Harvard-schooled boy wonder of social media said Facebook is working on a new version of terms. The next version, he said, will be a substantial revision from where Facebook is now. It will reflect the principles of how people share and control their information, and it will be clearly written in language everyone can understand.

He also said Facebook has created a “Bill of Rights and Responsibilities” and a forum where users can discuss the issues.

The incident marks the third time that Facebook has backed off changes after users voiced privacy concerns. The site’s news feed and its Beacon advertising program drew criticism, which prompted the social networking site to increase privacy protections.

So, what do you think? Is Facebook doing the right thing? Is the flip-flopping affecting your opinion of the site? Let us know.

At 5, Facebook Gets Older, as Do Its Users

Feb. 3 was Facebook’s fifth birthday. Can you believe it? Where did the time go?

To commemorate this occasion, the trend-setting social network’s boy wonder founder, Mark Zuckerberg, offered a note to members on Facebook’s Web site on Feb. 2. Among other things, he said the following:

Feb. 3 was Facebook’s fifth birthday. Can you believe it? Where did the time go?

To commemorate this occasion, the trend-setting social network’s boy wonder founder, Mark Zuckerberg, offered a note to members on Facebook’s Web site on Feb. 2. Among other things, he said the following:

“This is a happy occasion for Facebook, but much more significant to the Facebook team is the fact that over 150 million people around the world are using Facebook to connect with the people in their lives. Facebook was founded in 2004 to give people the tools to engage and understand the world around them. We are glad and humbled that so many people are using Facebook in this way.”

Indeed, Facebook has come a long way. Overall, Facebook was the fifth-ranked Web site by total market share of visits last month, according to online research firm Hitwise. One year ago, visits to Facebook represented 15 percent of the total social networking category, while MySpace captured 73 percent. By January, Facebook’s share had more than doubled to 31 percent, while MySpace’s total share of the category eroded to 57 percent.

What’s more, the time spent on Facebook has continued to increase, reaching an average visit time of just more than 21 minutes in January. In addition, the number of users aged 18 to 24 represented a 42 percent share of visits for the four weeks ending on Jan. 26, 2008. But that’s since decreased to 24 percent for the four weeks ending this past Jan. 24. Now, visitors aged 25 to 34 make up the largest share of visits with 27 percent, and visitors aged 18 to 24 and 35 to 44 closely following with respective shares of 24 percent and 23 percent.

This tells me that Facebook’s audience is more professional. No longer can it be thought of as competing head to head with MySpace, but perhaps LinkedIn, which is known more as a “business networking” tool.

Facebook really has made an impact on networking, communications and marketing online. How could we live without it today? I know I’m checking my Facebook page several times a day, and not just to see how old high school friends are doing. I’ve used the tool to find and communicate with long-lost business associates, learn about new online marketing trends and events in my area, promote eM+C, get questions answered for articles I am working on, and see what my competitors are up to.

How do you use Facebook? Is it an important part of your business day, or have you been thinking about exploring its uses? Let us know here at eM+C. Post a comment now.

5 Social Media Best Practices for Publishers

When it comes to social media marketing, some magazines and newspapers are doing it right, while some could improve their strategies. These issues were discussed at a session called “Social Media Marketing For Newspapers & Magazines,” held during the Search Marketing Expo East conference in New York, Oct. 6-8.

When it comes to social media marketing, some magazines and newspapers are doing it right, while some could improve their strategies. These issues were discussed at a session called “Social Media Marketing For Newspapers & Magazines,” held during the Search Marketing Expo East conference in New York, Oct. 6-8.

During the session, Adam Sherk, a search specialist at New York City-based search engine optimization firm Define Search Strategies, revealed the results of a survey showing that between the first and third quarters of this year, traffic on magazine sites coming from social media sites ranged from 0.6 percent to 18 percent of total traffic. Definitely a wide berth.

The session also discussed best practices in terms of getting a high percentage of social media traffic to a magazine or publisher Web site.

With this in mind, Chris Winfield, president and co-founder of 10e20, a New York City-based social media marketing consultancy, offered the following strategies for serving up a successful social media plan.

1. Research. “Find out where your visitors are already coming from,” he said. If they’re coming from Facebook, for example, start there. In addition, Winfield said that marketers should determine on which sites people are talking about you and who is already linking to you by tracking your inbound links.

In addition, “figure out what has worked so far in terms of social media marketing,” he said, “what hasn’t and what sites have the most potential for growth.”

2. Decide. “Once you figure out where your audience hang outs and what the demographics of these people are,” Winfield said, “decide if you should continue focusing on these areas. Also decide which specific media sites are right for your content and focus on those as well.”

3. Get your content up to snuff. “Make sure your content is easy for consumers to consume,” Winfield said. “Make it easy for people to share your content.”

But, Winfield warned publishers not to go overboard with social media buttons that users can click on to share content. “It’s a turnoff and people are not going to use them,” he said. He also suggested looking out for evergreen content that can be “easily updated and prettied up.”

4. Make internal changes. “Get key employees and stakeholders on board with your social media marketing plan,” Winfield said. “Get your existing readers on board. You’ll want to educate them and explain to them how your strategy works and how it can help them.”

While it’s important to make internal changes, Winfield cautioned attendees not to alienate their existing audiences.

5. Open up. Once your strategy is up and running, Winfield advised to maintain it by continually adding fresh content to your blogs, while also having a good RSS strategy.

“Many companies are not really sure what they are doing now when it comes to RSS feeds,” he said, “and they don’t understand how important a good RSS strategy can be.”

When working with microblog sites, such as Twitter, “don’t just be a feed,” he noted. “This can be boring. You want to be more than that — to gain new followers.”

Crafts 2.0

I had a short e-mail exchange recently with Rob Kalin, founder of Brooklyn-based Etsy, which may be the first true Web 2.0 company.

Etsy is an online marketplace for handmade goods. It also offers a host of ways for its customers to connect with Etsy and each other. For example, the site offers user profiles, forums, blogs, and a rating and feedback system for the site’s registered users, including crafters and artisans who sell their wares on the site.

I had a short e-mail exchange recently with Rob Kalin, founder of Brooklyn-based Etsy, which may be the first true Web 2.0 company.

Etsy is an online marketplace for handmade goods. It also offers a host of ways for its customers to connect with Etsy and each other. For example, the site offers user profiles, forums, blogs, and a rating and feedback system for the site’s registered users, including crafters and artisans who sell their wares on the site.

Etsy was conceived by Kalin in early 2005. A painter, carpenter, and photographer, Kalin believed there was no viable marketplace to exhibit and sell his creations online. In his opinion, other e-commerce sites had become “too inundated with overstock electronics and broken appliances,” according to Etsy’s Web site.

As a result, he, along with Chris Maguire and Haim Schoppik designed the site, wrote the code, assembled the servers, spliced the cables and launched Etsy in June 2005.

Today, Etsy has more than 1 million registered members, 185,000 of whom are individual artists selling more than 1.9 million of their handmade creations. In 2007, Etsy’s revenues were $26 million; this year, to date, they are $35 million.

While Kalin says he would recommend that any company create a Web 2.0 site with similar community-oriented features to his, he admits “technically, much of what we do is difficult,” adding that “on the Web, we are conducting our education in public, [so] there’s no downtime.”

Kalin also says that Etsy does not really engage in any digital marketing programs, opting instead for an internal advertising system called Showcase, “wherein our sellers purchase spots to reach buyers’ eyes,” he says.

When asked if he has any Web 2.0 tips, Kalin replies, “Avoid buzzwords. Web 2.0 is simply a name older folks give to newer technologies they either don’t fully grasp and seem novel to them.“Do honest, hard work, be open to your community, be a good listener. It’s no longer possible to censor or manipulate the discussions your customers have about your company. The Web is an inherently open platform, and I hope it stays that way.”

True words indeed.