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U.S. International Media Los Angeles, United States | | What is the ROI of social media? How do I measure the ROI of social media? Often, when receiving these questions, it's appropriate to quip: "What's the ROI of your phone?" Other times it's not appropriate to respond with such a glib retort. Rather, it's more appropriate to point to a few salient examples of social media success. With that in mind, I put together a four-minute video showcasing such examples. While the video uses familiar nomenclature like ROI, I believe in most social media instances, it's better to use the standard of: What does success look like? After all, why are we trying to measure all aspects of 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." Fourteen of the most pressing points from the video are listed below. A full list of the data points and sources can be found at my blog: Example 14, below, highlighting case-mate, isn't in the video, but it showcases that an intrepid spirit and creativity can garner huge returns in social media. Gary Vaynerchuk says, "Smart companies will do this (social media) and win, dumb ones won't and they will lose." It's as simple as that.  Social Media ROI Examples - 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.
- Vaynerchuk found first hand: $15,000 in direct mail = 200 new customers; $7,500 billboard = 300 new customers; $0 Twitter = 1,800 new customers.
- A 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 percent, while those companies with the least amount of social activity saw their sales decline -6 percent.
- BlendTec increased its sales 5x by running the often humorous "Will it Blend" Videos on YouTube, blending everything from an iPhone to a sneaker.
- "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 percent of Generation Y were aware of the Ford Fiesta before its launch in the United States. Is it any wonder why 25 percent of Ford's marketing spend has been shifted to digital/social media initiatives? Ford is the only U.S. auto company that didn't take a government loan.
- Intuit introduced "Live Community" into its TurboTax products two years ago. Due in part to the resulting word-of-mouth, it has seen unit sales increase +30 percent each year and has now integrated "Live Community" into its 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.
- Naked Pizza, a New Orleans Pizzeria that specializes in healthy pies, set a one day sales record using social media. In fact, 68 percent of its sales came from people "calling in from Twitter." On top of that (no pun intended), 85 percent of their new customers were from Twitter. So, yes, social media does work for small businesses.
- Also, social media works for B2B, non-profit, and more. Consider these examples. "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.
- Software company Genius.com reports that 24 percent of its social media leads convert to sales opportunities.
- 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 donors contributing $500 million in fundraising. An astounding 92 percent of the donations were in increments of less than $100.
- The University of Texas MD Anderson Cancer Center witnessed a 9.5 percent increase in registrations by using social media.
- Web host provider Moonfruit more than recouped its $15,000 social media investment as their Web site Traffic soared +300 percent while correspondingly sales increased +20 percent. They also saw a huge lift in their organic search engine rankings getting on the first page for the term "free website builder."
- "Our head of Social Media is the customer." -- McDonald's.
- Case-mate "Recession Case" drives record sales. Andrew Knight, VP of e-commerce, readily admits he was skeptical when a 22 year old on the marketing staff brought him the idea of selling a cardboard case for the iPhone (see image, above). Appropriately dubbed the recession case, this would retail for 99 cents.
"My initial thought was that this was never going to work. I was thinking we might sell a couple hundred but most of them we would just have to give away. What I underestimated was the power of social media!" said Knight. What happened is that Knight had met blogger Larry Greenberg through Twitter and Greenberg posted an article about the Recession Case. The next day, almost every major tech news site picked up on the recession case: Gizmodo, Engadget, TechCrunch, CNET, Mashable, etc. "We broke our daily site traffic record by five-times and we set an all time revenue record in the same day! Our Facebook & Twitter traffic skyrocketed as the story spread virally and people shared it with friends and family. In four days we had sold over 7,000 recession cases! It was truly unbelievable how fast it took off," said Knight. Case-mate also offered free personalized "Sharpie Script" on the recession case. This sparked a mini-phenomenon of its own, as people were buying cases for each other to simply send a personalized message (aka being social). Knight points out another added bonus of the social propagation, "Our search rankings have improved nicely. Our two most important terms are 'iPhone case' and 'iPhone cases.' We are currently #1 for both of them on Google!" These examples showcase that, yes, there is indeed a healthy return for companies properly utilizing social media. But, what about the companies that are still suspect of social media? What is the cost of doing nothing? My guess is pretty high. Perhaps, another way to look at social media ROI is: what is the Risk Of Inactivity? » Print this article » E-mail a colleague » Post a comment » Share    Biography
Erik Qualman is the Global Vice President of Online Marketing for EF Education, headquartered in Lucerne, Switzerland. With more than 26,000 employees in 53 countries, EF Education is the world's largest private educator. His book "Socialnomics: How Social Media has changed the way we live and do business" was released from Wiley Publishing in August 2009. Qualman is a frequently requested speaker within the Internet and marketing community and also maintains a social media blog at www.socialnomics.net. Qualman has been highlighted in numerous publications, including: BusinessWeek, AdvertisingAge, USA Today, Forbes, PR Week, Investor's Business Daily, eWeek, Media Life, Direct Marketing News and Direct Response Magazine. He has also been interviewed on various radio and television outlets. Qualman is also a published fiction author. Prior to joining EF Education, Qualman helped grow the online marketing and eBusiness functions of Cadillac & Pontiac (1994-97), AT&T (1998-2000), Yahoo (2000-03), EarthLink (2003-05) and Travelzoo (2005-08). Qualman holds a BA from Michigan State University and an MBA from The University of Texas at Austin. He was also first team Academic All-Big Ten in basketball at Michigan State and still finds time to follow his beloved Spartans. Article Archives by Erik Qualman:
Social Media Success Stories - November 16, 2009
Banning Social Media Is Counterproductive - November 2, 2009
Four Steps to Social Media Marketing Success - October 19, 2009
Is Google a Social Media Company? - October 5, 2009
Will Social Media Drive a Web Without Walls? - September 21, 2009
Social Media for B2B - September 7, 2009
» More Articles by Erik Qualman
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