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Submitted By TomW
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Measuring Value from Social Media
Steve Latham
Spur Digital
January 2008

Outline
Industry Trends
Digital media landscape
Why Social Media
Barriers to Online Investment
Metrics
ROI analysis
Case study

2

© 2007 Spur Digital LP. All rights reserved.

Industry Trends
Global online ad spend > $80 billion by 2011(1)
$42 billion to be spent in U.S.
Online = 11.4% of U.S. ad budget (up from 6.6% in 2006)

2007 online video ad spending to exceed $650mm(2)
$1.7 billion by 2009
Video ads will be 8% of Internet ad spend (2.3% today)

Media fragmentation is proliferating
In 1966 5 mediums dominated
In 1986 there were 12
In 2006, 30+ mediums were defined

“Prime-Time” has been replaced by “My Time”
Consumers determine when and how to engage brands
Advertisers must adapt to changing marketplace
(1) Piper Jaffrey & Co., February 2007“The User Revolution
(2) eMarketer 2006
3

© 2007 Spur Digital LP. All rights reserved.

Media Consumption is Changing
Interactive now accounts for >30% of media time (1)
TV = 35%, Radio = 12%, Print = 9%
Gen Y (50% of Internet usage will be “Communitainment”

Social Media is the platform for communitainment
Networking
Interactive discussions
Community

User Generated Content is the medium
Blogs / Discussions
Photo sharing
Video sharing
(1) Credit Suisse 2006
(2) MultiChannel News 2006
4

© 2007 Spur Digital LP. All rights reserved.

Today’s Media Landscape

TV

Direct Mail

Radio

Print

$$$
5

© 2007 Spur Digital LP. All rights reserved.

Mobile

Digital

Digital Media Landscape
E-Mail

Video
Display

Search

House & 3rd
Party email

Display and
Pre-roll

Paid +
Natural

Rich, Flash and
Static Ads

Social
Networks, Blogs,
Photos, Videos

Portals

Search

Content
Ad Networks
Social Networks
Affiliate

$$$
6

© 2007 Spur Digital LP. All rights reserved.

Co-Reg

Social Media Has Gone Mainstream
Internet Usage Increasingly Favors Social Media
34%
31%
29%
27%
26%
20%

Watch Internet (streaming video)
Buy or sell products from other consumers
Read a blog
Comment or forward online ad to someone
Submit a rating or review of a product or service.
Use social networking sites
Publish a blog or personal journal

10%
7%

Upload video you created to Internet
% reflects all online users

Source: Forrester’s NACTAS Q3 2006 Media & Marketing Online Survey

$2.5bn

Social networking revenue

Social Networking is here to stay:
• 34% watching video
• 31% buying and selling online
• 26% submitting a rating
• 7% uploading a video

$350mm
2006

2010

*Source: emarketer.com August 2006

7

© 2007 Spur Digital LP. All rights reserved.

Trust in Peers Trumps All Other Sources
Online Consumers Turn to Friends or Acquaintances for Information
Opinion of friend or acquaintance using product or service

83%
75%

Review in newspaper, in a magazine, or on TV

69%

Information on the manufacturer’s Web site

63%

A review by a known expert

60%

Consumer reviews on a retailer’s site

52%

Consumer reviews by users of a content site

50%

Information at online consumer opinion sites

49%

Online reviews by editors of content sites
Information in chat rooms discussion boards
An online review by a blogger

37%
30%

Source: Forrester’s NACTAS Q3 2006 Media & Marketing Online Survey. *
8

© 2007 Spur Digital LP. All rights reserved.

User Generated Video is Exploding
User Generated Video
• User-Generated Video made up
47% of the total online video market in the US in 2006
• By 2010, 55% of all online video content will be user-generated (44 billion video streams)
• Video sharing campaigns being utilized to engage customers
Screen Digest January 15, 2007

9

© 2007 Spur Digital LP. All rights reserved.

Users want to be
• Engaged
• Educated
• Entertained

So What’s the Problem???
If Social Media is so great, why aren’t more brands and agencies using it?

(beyond the issue of inappropriate content)

10

© 2007 Spur Digital LP. All rights reserved.

Barriers to Online Investment
2007 McKinsey study of 410 marketing execs found the primary barriers to online investment were:
52% insufficient metrics to measure impact
41% Insufficient in-house capabilities
33% Difficulty of convincing upper management
24% Limited reach of digital tools
18% insufficient capabilities at agency

2 of the top 3 relate to ROI measurement
Metrics
Convincing upper management (Business Case)

…which is why we are here today!
11

© 2007 Spur Digital LP. All rights reserved.

Web 1.0 Metrics (sample dashboard)
D aily Downloads

1,000

Daily Visits

6,000

900

5,000

800
700

4,000

600
500

3,000

400

2,000

300
200

1,000

100
-

7/ 0
5

4/ 0
5

1/ 0
5

8/ 0
5

5/ 0
5

2/ 0
5

0/ 0
5
3/3

3/2

3/2

3/2

3/1

3/1

3/ 9
/05

3/1

3/ 6
/05

8/ 0
5

3/ 3
/05

5/ 0
5

2/2

2/ 0
5

2/2

9/ 0
5

2/2

6/ 0
5

2/1

3/ 0
5

2/1

0/ 0
5

2/1

2/ 7
/05

2/1

2/ 4
/05

2/ 1
/05

0/
05

7/
05

3/
3

3/
2

3/
2

4/
05

1/
05

8/
05

3/
2

5/
05

3/
1

2/
05

3/
1

3/
9/
05

3/
1

3/
6/
05

2/
7/
05
2/
10
/0
5
2/
13
/0
5
2/
16
/0
5
2/
19
/0
5
2/
22
/0
5
2/
25
/0
5
2/
28
/0
5
3/
3/
05

2/
4/
05

2/
1/
05

-

Daily and Cumulative Leads
Cumulative Downloads

20,000

Cumulative Visits

180,000

18,000

160,000

16,000

140,000

14,000

120,000

12,000
100,000
10,000
80,000

8,000

TOTAL TO DATE

Visits
127,942

DLs
1 5,984

Cost
$ 8 7,780

Cost / DL
$
5 .49

$ / DL
This Wk
$ 14.91
$
2.00
$
3.00
$
$
7.08
$
1.90
$
1.24
$
3.80

Total
To Date
1,224
1,889
1,796
2,168
463
2,380
1,314
244

$ / DL
To Date
$
9.56
$
1.61
$
1.65
$
4.61
$
6.09
$
1.90
$
1.24
$
3.80

5,000

Search

4,000

$6.00
$4.00

Banners
Search

$2.00

1,000
-

$-

© 2007 Spur Digital LP. All rights reserved.

/05

/05

/05

/05

/05

/05

$8.00

3,000
2,000

3/ 3
0

3/ 2
7

3/ 2
4

3/ 2
1

3/ 1
8

3/ 1
5

/05
3/ 1
2

3/9
/ 05

3/6
/ 05

Email

$10.00
Banners

Downloads

12

3/3
/ 05

Cost per Download
$12.00

Email

This
W eek
363
48
168
598
104
942
155
41

/05

Cost per Lead by Outlet

Downloads by Outlet
7,000
6,000

ACTIVE CAM PAIGNS
Media
Last
Outlet
Week
List Vendor 1
371
List Vendor 2
88
CPA 1
335
CPA 2
1,570
Ad Vendor
359
Google
999
Overture
206
AskJeeves
71

2/ 2
8

/05
2/ 2
5

/05
2/ 2
2

/05
2/ 1
9

/05
2/ 1
6

/05

/05

2/ 1
3

# Leads by Outlet

2/ 1
0

2/7
/ 05

2/4
/ 05

2/1
/ 05

3/3
0/ 0
5

3/2
7/ 0
5

3/2
4/ 0
5

3/2
1/ 0
5

3/1
8/ 0
5

3/1
5/ 0
5

Campaign Summary

3/1
2/ 0
5

05
3/ 9
/

05

05
3/ 6
/

3/ 3
/

2/2
8/ 0
5

2/2
5/ 0
5

2/2
2/ 0
5

2/1
9/ 0
5

2/ 7
/

2/ 4
/

2/ 1
/

2/1
6/ 0
5

2/1
3/ 0
5

20,000

05
2/1
0/ 0
5

40,000

2,000

05

60,000

4,000

05

6,000

Cost Per Download

What Should We Measure for Web 2.0?
What are the “right” metrics?
Exposure to media and/or web site
Impressions
Clicks / Visits
Page views
Referrers / Sources
New vs. Returning
Frequency

Level of Engagement
Pages viewed per visit
Time on site
Reading blogs / Participating in discussions
Viewing Videos or Photos
Uploading content
Telling friends
Inquiries / Registrations
Transactions
13

© 2007 Spur Digital LP. All rights reserved.

How Do We Value Engagement?
Determine how ACTIONS
Action
Visits
Registrants
Tell A Friend Actions
Coupon downloads
Store locator clicks

INTENT

Value
Shows brand engagment; can adjust based on PVs or Time on Site
People who join email list. Able to reach in future.
Recommendations are strongest indication of intent
Shows interest in a specific offer
Shows interest in finding a store

Determine how INTENT

REVENUE (or value)

W ill vary based on the action

Apply formula across each set of actions
Use common sense to normalize results

14

© 2007 Spur Digital LP. All rights reserved.

ROI Case Study
Client: consumer retailer seeking to drive instore purchases
Insight: target audiences are heavy internet users who are into social networks
Strategy: create a seasonal social networking site and market via online and offline media

15

© 2007 Spur Digital LP. All rights reserved.

ROI Methodology
Define the metrics that indicate intent
Project conversion rates and expected value for each audience (and each action)
Existing customers
New customers

Use rates and values to project expected revenue for each audience
Normalize by averaging expected values
16

© 2007 Spur Digital LP. All rights reserved.

ROI Analysis
Value Impact of Existing Customers
Existing Customers
Visits
Registrants
Tell A Friend Actions
Coupon downloads
Store locator clicks
Average

Total
50,000
20,000
2,500
7,500
2,500

% of Total
100%
40%
10%
15%
5%

Est. Conv
%
Customers
2.5%
1,250
25.0%
5,000
60.0%
1,500
35.0%
2,625
40.0%
1,000

PV per customer $
100
$
100
$
100
$
100
$
100

Conv % Customers
2.5%
625
20.0%
1,000
30.0%
750
28.0%
700
32.0%
800

PV per customer $
500
$
500
$
500
$
500
$
500

$
$
$
$
$
$

NPV
125,000
500,000
150,000
262,500
100,000
227,500

$
$
$
$
$
$

PV
312,500
500,000
375,000
350,000
400,000
387,500

Value Impact of New Customers
New Customers
Visits
Registrants
Tell A Friend Actions
Coupon downloads
Store locator clicks
Average

17

Total
25,000
5,000
2,500
2,500
2,500

% of Total
100%
20%
10%
10%
10%

© 2007 Spur Digital LP. All rights reserved.

Sample ROI Analysis (continued)
Impact of New + Existing Customers
New + Existing
Visits
Contest Registrants
Tell A Friend Actions
Coupon downloads
Store locator clicks

Total
75,000
25,000
5,000
10,000
5,000

Customers
1,875
6,000
2,250
3,325
1,800

PV per customer $
233
$
167
$
233
$
184
$
278

Average NPV
Investment
ROI*
*ROI Calculation does not account for:
- Word of Mouth (Buzz)
- PR value
- Internal recognition and exposure
- Impact on Brand
- Value of User Generated Creative

18

$
$
$
$
$
$
$

While the Direct ROI is compelling, it captures only part of the value

© 2007 Spur Digital LP. All rights reserved.

PV
437,500
1,000,000
525,000
612,500
500,000
615,000
150,000
410%

Now What?
Once you have a ROI model, build the business case Document the assumptions
Show the expected economic impact
Show your manager or client how it works

Communicate your successes
Internally
Externally

Continue to think about “what’s next”

19

© 2007 Spur Digital LP. All rights reserved.

In Closing…
We all know the value is there…
…We just need to be able to show it
There is no silver bullet to building a business case
Success requires…
Analytical rigor
Creativity
Common sense

Today I’ve showed you one approach
Many others exist – feel free to share!
Email me steve@spurdigital.com
20

© 2007 Spur Digital LP. All rights reserved.

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