Social Media ROI Examples & Video

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by Erik Qualman

[tweetmeme source=”equalman” only_single=false http://socialnomics.net/%5D

A big question out there these days is: What is the ROI of Social Media? Or the ever popular how do I measure the ROI of social media?  Often when I get this question it’s appropriate for me to retort: “What’s the ROI of your phone?”  Other times it’s not appropriate to respond with this answer, which, if done in the wrong tone, or place, can win you a free punch in the face.  Then there are the naysayers that adamantly proclaim, “We aren’t doing social media because there isn’t any ROI.”

To borrow from the Conductor of the Boston Philharmonic Orchestra, Benjamin Zander, there are those in life that sit in the back row with their arms folded, judging, and complaining.  Then there are those that sit in the front row with a vision and they are spending their energy on making that vision a reality.  This article and video have been put together with the hopes of it being a viable tool for those with a vision to get those seated in the back row to stand up and see the social media light.

Drafting off the success of the Socialnomics: Social Media Revolution Video – over 1.2 million views and counting – thanks for the support!  This newest video Socialnomics: Social Media ROI showcases that social media can help you achieve success on almost any front.  While the video uses familiar nomenclature like ROI, many pieces of social media behave so differently than anything we have ever seen, that I prefer to use “What does or will success look like?” rather than “What’s the ROI?”

After all, why are we trying to measure social media like a traditional channel?  Social media touches every facet of business and it should be viewed more as an extension of good business ethics.  Which, if done properly, will harvest sales down the line.  Co-Chairman Alex Bogusky of Crispin Porter & Bogusky puts it best when he states:

“You can’t buy attention anymore. Having a huge budget doesn’t mean anything in social media…The old media paradigm was PAY to play. Now you get back what you authentically put in. You’ve got to be willing to PLAY to play.” – Alex Bogusky, Co-Chairman of Crispin Porter + Bogusky

However to speak in a business vernacular that is more readily understood today please find below some salient examples and data points which are found in the video:

1.  Over 300,000 businesses have a presence on Facebook and roughly a 1/3 of these are small businesses.

wine-library-tv2.  Gary Vaynerchuk grew his family business from $4 million to $50 million using social media.  Gary’s eccentric personality and offbeat oenophile knowledge have proven a natural path to success with his Wine TV Library.

3.  Vaynerchuk found first hand that $15,000 in Direct Mail = 200 new customers, $7,500 Billboard = 300 new customers, $0 Twitter = 1,800 new customers.

4-5.  Wetpaint/Altimeter Study found companies that are both deeply and widely engaged in social media significantly surpass their peers in both revenue$ and profit$.  The study also found the company sales with the highest levels of social media activity grew on average by +18%, while those companies with the least amount of social activity saw their sales decline -6%.

6.  Lenovo was able to achieve cost savings by a 20% reduction in call center activity as customers go to community website for answers

7-8.  Burger King’s Whopper Sacrifice Facebook program incented users to give up ten of their Facebook friends in return for a free Whopper.  The estimated investment forwhopper-sacrifice this program was less than $50,000 yet they received 32 million media impressions which roughly estimated equals greater than $400,000 in press/media value.  Which to put in context is somewhat like reaching the entire populations of 19 states (understanding this doesn’t account for unique vs. repeat visitors, etc.)

9.  BlendTec increased its sales 5x by running the often humorous “Will it Blend” Videos on YouTube blending everything from an iPhone to a sneaker.

10.  Dell sold $3,000,000 worth of computers on Twitter

11.  To put things into perspective, only 18% of traditional TV campaigns generate a positive return on investment.  This is where the majority of media dollars reside today.  I don’t believe the majority of media dollars will reside there tomorrow.

12-14:  “You can’t just say it. You have to get the people to say it to each other,” says James Farley, CMO Ford.  Ford seems to know what they are doing, especially with Scott Monty leading the social media charge.  By giving away 100 Ford Fiestas to influential bloggers, 37% of Generation Y were aware of the Ford Fiesta before its launch in the United States.  Is it any wonder why 25% of Ford’s marketing ford-fiesta-social-mediaspend has been shifted to digital/social media initiatives?  Ford is the only US auto company that didn’t take a government loan.

15.  Naked Pizza, a New Orleans Pizzeria that specializes in healthy pies, set a one day sales record using social media.  In fact 68% of their sales came from people “calling in from Twitter.”  On top of that (no pun intended) 85% of their new customers were from Twitter.  So, yes, social media does work for small businesses.  Feel free to have a bottle of Vaynerchuk wine with your pizza.

16.  Volkswagen goes 100% Mobile for launch of GTI.  The reason that I mention this is that mobile drives social media usage and social media usage drives mobile.  More and more we will see most social media usage on the phone.

17.  Tweets for a Cause sent out a tweet from Atlanta to encourage support of Susan G. Komen for the Cure.  As a result of retweets from such notables as @mashable, @G_man, @zaibatsu and others, the Atlanta Chapter site received 11,000 visitors in 24 hours as a result of this initiative by ResponseMine Interactive.

18.  Intuit introduced “Live Community” into their TurboTax® products 2 years ago.  Due in part to the resulting word-of-mouth, they have seen unit sales increase +30% each year and have now integrated “Live Community” into their other products like QuickBooks, Quicken, etc.  “Live Community” allows customers to ask other customers questions which has proved both beneficial to the customer and to Intuit.  In some instances, the customer can answer questions that Intuit isn’t allowed to answer because of regulatory restrictions.

19.  Software company Genius.com reports that 24% of its social media leads convert to sales opportunities

20-23.  During Barack Obama’s rise to the White House, he garnered 5 million fans on social media and 5.4 million clicked on an “I voted for Obama” Facebook button.  Most importantly this resulted in three million online shepard-fairey-obama-hope-imagedonors contributing $500 million in fundraising. An astounding 92% of the donations were in increments of less than $100.

24.  The University of Texas MD Anderson Cancer Center witnessed a 9.5% increase in registrations by using social media.

25-28.  Web host provider Moonfruit more than recouped its $15,000 social media investment as their Website Traffic soared +300% while correspondingly sales increased +20%.  They also saw a huge lift in their organic search engine rankings getting on the first page for the term “free website builder.”

29.  eBay found participants in online communities spend 54% more money

30.  Co-Chairman Alex Bogusky of Crispin Porter & Bogusky puts it best when he states: “You can’t buy attention anymore. Having a huge budget doesn’t mean anything in social media…The old media paradigm was PAY to play. Now you get back what you authentically put in. You’ve got to be willing to PLAY to play.”

31.  “Think of Twitter as the canary in the coal mine.” – Morgan Johnston, JetBlue

32.  71% of companies plan to increase investments in social media by an average of 40% because: a) Low Cost Marketing b) Getting Traction c) We Have To Do It

33.  “Our head of Social Media is the customer” – McDonald’s

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A tremendous thanks to all the below social media luminaries! [if anything is incorrect please let me know]

1.   Jon Swartz, “More marketers use social networking to reach customers,” USA Today, 8/28/09

2.  Lee Oden, “Book Review: Crush It by Gary Vaynerchuk,” Online Marketing Blog

3.  Jan M. Rosen, “Be It Twittering or Blogging, It’s All About Marketing,” New York Times, 3/11/2009

4-5.  Wetpaint/Altimeter Group Engagement db study, 2009 http://www.marketingcharts.com/interactive/social-media-engagement-directly-linked-to-financial-success-9858/ & http://www.altimetergroup.com/2009/07/engagementdb.html

6.  Jon Swartz,  “More marketers use social networking to reach customers,” USA Today,  8/28/09

7.  http://www.advertolog.com/burger-king/print-outdoor/whopper-sacrifice-316211/

Estimate based on taking 32 million impressions at an average CPM of $13 based on eMarketer estimate found here. http://www.emarketer.com/Article.aspx?R=1007053  Less than $50,000 is a very conservative estimate (probably cost much less) to actually build the application + the cost to Burger King to give out less than 20,000 coupons/whoppers.  Please note these are estimates, but they error on the conservative side.

8.  Based on state populations of Arkansas, Kansas, Utah, Nevada, West Virginia, Nebraska, Idaho, Mississippi, Maine, New Hampshire, New Mexico, Hawaii, Rhode Island, Montana, Delaware, South Dakota, Alaska, North Dakota, Vermont http://en.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_population

9.  Kristen Nicole, “Will It Blend” Videos Boost Sales 5x,” Mashable, 9/27/2007

10.  Claire Baldwin, “Twitter helps Dell rake in sales,” Reuters, 6/12/2009

11.  “Marketing to the Social Web,” Larry Weber, Wiley Publishing  2007

12-14.  David Kiley, “Ford Spending 25% of Marketing on Digital and Social Media,” BusinessWeek, 10/16/2009 http://www.businessweek.com/autos/autobeat/archives/2009/10/ford_spending_2.html

15.  Jacob Morgan, “Two Examples of Companies Measuring Social Media ROI,” Social Media Globetrotter, 10/12/2009http://www.jmorganmarketing.com/two-examples-of-companies-measuring-social-media-roi/

16.  Karl Greenber, “VW Goes All Mobile For Launch Of GTI,” MarketingDaily, 10/22/2009 http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=115919

17.  Interactive Agency (Atlanta, GA)

18.  Intuit Inc. (Mountain View, CA)

19.  “Increase B2B Lead Generation Using Social Media,” Social Media B2B, 7/14/2009 http://socialmediab2b.com/2009/07/b2b-lead-generation-social-media/

20-23:  Jose Antonio Vargas, “Obama Raised Half a Billion Online,” Washington Post http://voices.washingtonpost.com/44/2008/11/20/obama_raised_half_a_billion_on.html

24.   Ed Bennett, “Hospitals and Social Media,” SlideShare http://www.slideshare.net/edbennett/hospitals-social-media

25-28.  Daniel Adler, “Twenty-One Top Twitter Tips,” Forbes, 7/31/2009 http://www.forbes.com/2009/07/31/top-twitter-tips-entrepreneurs-technology-twitter.html

29.  Marshall Kirkpatrick, “Social Media ROI: Dell’s $3m on Twitter and Four Better Examples,” ReadWriteWeb, 6/12/2009 http://www.readwriteweb.com/archives/social_media_roi_dells_3m_on_twitter_and_four_bett.php

30.  Alex Bogusky, Co-Chairman, Cripin + Poter & Bogusky

31.  Daniel Adler, “Twenty-One Top Twitter Tips,” Forbes, 7/31/2009 http://www.forbes.com/2009/07/31/top-twitter-tips-entrepreneurs-technology-twitter.html

32.  Social Media in the Enterprise White Paper by Vignette Software, 2/2009 http://www.vignette.com/dafiles/docs/Downloads/Social-Media-in-the-Enterprise.pdf

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42 responses to “Social Media ROI Examples & Video

  1. Hey… It looks like there is a problem together with the layout on the page. For some explanation the text block is running to the edge. I don’t know if it is just me or are other folks reporting precisely the same factor? Just desired to allow you to know in situation you’ve been updating the webpage.

  2. However, the benefits are there: if it’s not from sales in the long term, it’s from allowing people to just talk to, or talk about, your organization.

  3. Looking forward to some more awesome videos!

  4. great a site, thanks..

  5. It is hard to measure like most forms of marketing. Any brand awareness type marketing is difficult to estimate an ROI.

    The big boys obviously think it is a good ROI.

  6. very good article thanks admin for the post

  7. Fantastic video, i think by having good social media activities we will have positive ROI, but it is not something to be measured individually as it affects the whole business.

    • Armen J:

      I like your take on the ROI of Social Media that it needs to be review Holistically rather than individually since it touches every aspect of the business.

  8. Often the unwillingness to utilize social media is tied to an unwillingness to simply interact with other people. Having something “in-between” the company and the customer, i.e. a billboard, a TV commercial, a direct mail piece, etc. is more confrontable than simply talking and establishing relationships with your customers and would-be customers.

    People who succeed in social media marketing are usually eager (or at least able) to look you in the eye and are genuinely interested in how YOU are doing.

    Fast suggest Erik: you mention your earlier video in this post. Make it a link…might as well add more easily to the 1.2 million viewers!

  9. What a great video! Short and extremely informative.

  10. With due respect, you obscure the real successes by including them with “successes” that aren’t. Dell’s 3million sales is an example. If a small business succeeded as well as Dell on Twitter, and given a base of 100k in sales per year, they would sell $2.45 more a year.

    You make logical errors, and go way beyond the data you cite, which calls into question your motivation, and veracity.

    Your citing of the businesses on facebook is irrelevant to your point. Your inclusion of Burger King is just plain silly, since what you describe is branding for a company that doesn’t require it.

    You do not address the input costs in time, salary, etc. Neither do you address opportunity costs, which has to do with ROI.

    Like many who cannot easily show ROI, you obscure the problem by making some excuse for not doing so. (ie. let’s talk success)

    And, the killer is that you don’t address the huge graveyard of failed attempts, and their costs.

    It comes to this. SOME businesses will succeed but it will be a very small percentage.

    If you have an open mind, take a look at twitter and identify the thousands of small businesses (or any businesses) that start, try it out with substantial effort and tweets, and then quit. The percentage is HUGE.

    …and if you don’t know how to get that data, I’d suggest that you are not competent to write what you wrote.

    • Robert:

      Thanks for taking the time to comment. As Gary Vaynerchuk mentions – smart companies will get it and win and dumb companies will not get it and lose. I’m obviously hopping on the social media train full steam ahead, but many will not as you mention. One thing that is often not asked is “What is the cost of doing nothing?” I’m personally not going to take that chance, but some might and to them I wish them GOOD LUCK!

      As for Burger King not requiring additional brand awareness – I’m not sure of many CEO’s that wouldn’t want inexpensive additional brand exposure.

  11. First of all I would like to thank you for a very very good book 🙂

    I am working for at concervativ company that just starting to look at social media.
    Something it is easier for high level managers to accept something, if it is delivered but somebody the socially accepts as a reliable source of information, so I am looking for a quote by a well respected CEO saying something good about social media – can you help me with that?

    • JB:

      Thanks for the kind words! I was recently at a meeting where Alan Mullaly (CEO of Ford) indicated that much of their success (they haven’t taken a government loan) can be attributed to Social Media. They’ve shifted their marketing budgets so that now 25% is digital (most of their competitors historically below 10%). This is a tribute to the great work that James Farley (CMO) and Scott Monty (Head of Social) are doing. Farley states: “You can’t just say it, you have to have others say it to each other.”

      What may help your cause the most is to show this ROI video: http://socialnomics.net/video/

      Thanks!

  12. Very interesting article.
    I would consider that social media are appropriate if they are used by the consumers of the brands. They are still a lot of brands being on Facebook just because it is trendy or because competitors are there but without a clear objective and engagement strategy. ROI is a complex equation and it is easy to define a correlation which doesn’t mean necessarily a explanatory factor 😉
    By the way, VW used differents marketing channels in their key markets in Europe for the launch of the new Golf GTI (viral, TV advertising, Press advertising, advergame..) and results are not promoting the exclusive usage of digital tools vs traditional recipes (for more details http://bit.ly/3QL3ju).

    Thanks

    Frederic

    • Frederic: Thanks for the insight into VW in the European market. Always interesting the differences market to market globally.

  13. EXCELLENT video, Eric! This is something that all businesses need to see — and I’m going to do my part in helping to spread the good word! This video also just helped you sell another book — I’m off to the bookstore to get my copy today! 🙂

  14. if i were into award etc. 🙂 the #1 on this list would be StageCoach Island for Wells Fargo. That social media project began over 4 years ago and is bigger, badder and stronger today. IT has bmore impressions and media impressions that all of these combined. Just a quick stroke:) hahahahahah enjoy your holiday
    E

  15. An excellent post which of course I found via Twitter 😉

    All I’d say to the brands that are still wringing their hands worrying about ROI – come on in the water’s lovely!

    @tlittleton

  16. the only problem is that as with many things, for every success story, there are a gazillion failures. most of the examples are success stories that have become poster childs but people didn’t know very well before they tried what was going to happen.

    so I’m bit careful with the whole ROI story because when you are talking ROI, lots of companies/people expect from you to have a well-thought framework where you can nearly-exactly predict with proven methods what the ROI will be BEFORE you do the investment. and many of the above mentioned examples didn’t have that…

    but i like the extensive coverage of the article. well done!

    (btw I’m not a nay-sayer. actually working in this business as well. i’m just bit careful with ROI statements…)

  17. Hi Erik,

    Fantastic post!
    I found it thanks to a mention on the digitalbuzzblog. After reading that post and yours I was inspired to write about the tools I’m familiar with that DO enable one to measure Social Media ROI. The result is here: http://bit.ly/SocialROI

    Interestingly about an hour after publishing my post I ran into an excellent compiled by David Berkowitz of no less than 100 Ways To Measure Social Media (linked to from the end of my post).

    Cheers,
    Mike
    @treepodia

  18. Excellent video, Eric – As this will undoubtedly spread virally via social media, I can unequivocally say that now this represents THE BEST of social media.

    I was harsh with my criticism of your first video due to its statistical anomalies and derivative creative. However, here you certainly applied the first rule of social media by listening to your community and modified your approach to address the issues. As a result, you turned critics into fans.

    I can imagine this video can easily pass 2 million views on YouTube and will provide you with an additional ROI stat – increased sales of your Socialnomics book.

    Congrats on winning me over… I am publishing an update to my original blog post http://www.rockcheetah.com/blog/social-media/socialnomics-should-not-be-voodoo-economics/prominently referencing the new video.

    You are now a welcome comrade in the social media revolution.

    • Robert:

      Thanks for the kind words and most importantly thanks for your original feedback a few months back; as a result everyone benefits. Cheers to you!

  19. You’ve hit another one out of the park!

  20. Bringing back good business practices!

  21. Great movie and stats again. More, more, more….!

  22. Great stuff Eric! As always your information and videos are very insightful and bang on. I had a chance to read your book as well, it’s really changed the way I envision the future of social media. Thanks R.

  23. Love the stats! I will be referring to it often I suspect

  24. This is a GREAT video that is only brought down by one thing, and that is the de-valuing of the question of ROI, after presenting a solid case of tidbits of real information that prove the validity of social media. My friend Olivier Blanchard talks a lot about social media ROI at http://smroi.net, because real companies need to know there’s some method to the madness and social media marketing, customer care and more will have a positive result on the bottom line and not just be a timesuck. You’ve given some great reasons here about “why social media” – but it doesn’t compare to a phone or even email. I easily spend MUCH more time interacting on social networks (because it helps my business) than I do on the phone. Embrace the ROI conversation! You obviously see it clearly. Love, love the video! 🙂

  25. This is simply a wonderful post which underscores the importance and true value of the social media and how to answer the tough questions we all in social media marketing are likely to get from prospective clients before engaging in any social media initiative.

  26. Thanks for the mention. It’s just 100 Fiestas, though.

    • Thanks Scott – I made the correction! Keep you the great work and I’ll swing by the “Glass House” the next time I’m visiting my family!

  27. This is fantastic. I think you’ve nailed it. Often the easiest place to prove RETURN is through REDUCTION of systems that finely-tuned Social Media Engagement make redundant. Did a blog post on a big possible reduction: http://bit.ly/x7FoE Cheers and thanks again for a great presentation!

  28. Your article just popped into my reader and I had to check it out. Excellent article on Social Media and ROI!

    Social Media isn’t something that marketers could (or should) measure.

    Yes, you do have to “PLAY to play” and yes, it is time consuming to participate in the social sphere and yes, you cannot explicitly measure the ROI.

    However, the benefits are there: if it’s not from sales in the long term, it’s from allowing people to just talk to, or talk about, your organization.

    Looking forward to some more awesome videos!

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