Miscalculating the ROI of Social Media

May 7, 2010

In Ed Schipul’s Personal Brand Era presentation to the PRSA Georgia crowd yesterday, he cited stats about the of success of small business owner Gary V’s venture into social media marketing as highlighted in popular Social Media ROI: Socialnomics video. The issue I discussed with Schipul afterwards is how the example perpetuates the idea that social media is free. Here’s the mathematical flaw:

$15,000 in Direct Mail = 200 new customers

$7500 for a billboard = 300 new customers

$0 on Twitter = 1800 new customers

Wow! Who wouldn’t jump to twitter with that math? But we have to recalculate the costs here to find the dose of reality.

While $15,000 probably includes design, production, list rental and postage not to mention possible test marketing efforts, it is still a lot, especially if the value of a new client is only $25/each. 

$7500 for a billboard could be a one month rental in a prime area or design, skins and a multi-month rental in a lower rent market (I currently have a client spending just $500/mo for a board in a suburban market). New customer value at that same $25 and you’re breaking even.

1800 new customers with no cost? 18000 of those $25 clients is a fabulous return. But wait a minute.

How did you get the content on twitter? Who wrote it? How many tweets were involved? What did you tweet? Where did your tweets send them? To a website where you had to develop content? Who recorded or wrote that content? What was the cost of the person monitoring your tweets or tweetdeck? What was the cost of the developer creating landing pages for your tweets? And for the copywriter writing your content?

The idea that social media is free is a bit of a smoke-and-mirrors proposal. Social Media has great potential to promote your company, especially with the right offer and to the right audience. But don’t kid yourself into thinking it is free. Budget and plan for it accordingly and you will reap far greater ROI than if you treat it as a “free” medium. And remember, sometimes direct mail and outdoor still have a place in your mix.


Considerations for Attorneys Using Social Media

March 23, 2010

Paul Arne’s ViewPoint in last week’s Atlanta Business Chronicle goes straight to the point of a sore issue I’ve been hearing from our attorney clients of late: exactly what should and shouldn’t I do with social media. In his article, he cites an example where the glowing praises of a client submitted as LinkedIn Recommendation put his partner at risk of violating the ethics rules of the bar association. Before you run to dig up the comment to see if it is something really steamy, I’ll save you the steps. The recommendation read,

“He is as smart as they come in the world… and a tireless worker.”

You and I both understand that it’s not possible for the recommender to know whether this guy is the smartest in the world and would let this pass but for those attorneys who are very precise about everything they put in print, this was a problem.

So say you’re not an attorney, how does this point help you with your planning? Well, consider whether you have any professional memberships or employment obligations that require you to follow certain guidelines about the advice you provide or the accolades you receive. It’s a slippery slope here and while I think the example of Paul Arne’s partner was a bit extreme, it’s a valid concern and one that you need to consider where you’re an individual contributor or a business owner looking to set standards for your team.

BTW, if you’re not an ABC subscriber and want but can’t download the full text of the article, ping me and I’ll share my copy.

Planning to Use Social Media is Not the Same as Planning Your Social Media Strategy

July 29, 2009

Back when everyone read Kotler’s marketing textbook and set about defining an approach to the 4 P’s, businesses had marketing plans. The plans specified the who and the what of the business before getting into the sexier issues of how we’re going to do it.

Lately folks seem to have that engine backwards. They’re skipping past the planning stages — where we identify our audience, the value of our product, the competition and our competitive advantage — and running right along to a marketing strategy which sounds suspiciously like quick throw up a web site (no pun intended) and start tweeting about our biz and see who comes runnning.

Tweeting about your beer special may have brought 6 customers in for free pint glass night at Taco Mac (see article in this morning’s AJC), but it certainly isn’t a big enough marketing success to make a difference in your quarterly revenues.

David Armano took the time to draw parallels between application design and social media planning in a witty post that draws humorous analogies to watching MacGyver. He makes an extremely valid point about social media being more than a tool but an entire approach to your business while endorsing the idea that before you dive head first into this new universe and start pontificating about the transparent and customer-centered approach of your business that you take the time to make sure your reality aligns with your on-line identity.

While being honest is important (albeit critical), the other really important issue to address here is one of consistency. If twitter is something you do in your free time, blogging happens occasionally when your PR firm reminds you and facebook has been relegated to your summer intern, you should stop now. It’s not a strategy if you just do it once. That’s called dabbling. If you’re serious about using social media to promote your business, make sure your plan not only identifies which platforms you plan to use and what you plan to use them for but includes a budget (time and money and resource allocation) to keep it going far past the next quarterly sales meeting.

Twitter Tally: 7.4% of U.S. Adult Internet Users

May 1, 2009

Although everywhere I turn people want to tell me about how mainstream Twitter use has become, I still beg to differ. While some really neat business applications have been uncovered, it’s still kind of like a hurricane or Swine Flu: getting all of the headlines because it’s such great media fodder. The question becomes, what happens to Twitter when it drops from the headlines and people are no longer interested in Ashton Kutcher? Will it ever reach the adoption rates of say blogging? Will the CDC be able to hold the attention of the 6000+ followers currently signing up by the hour to follow H1N1?

Twitter not as rampant as media would have you believe.

Twitter not as rampant as media would have you believe.