Recently in Marketing ROI Category

I recently mentioned that I attended the Gravity Summit one-day seminar on social media marketing.

Here are slide presentations from representatives of three large brands on how they have used social media marketing:

In addition, here are slide presentations from two social media consultants who presented examples of clients they've helped:

These presentations show what's possible by using social media to raise awareness of brands.

Gravity Summit

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Social media marketing is the current "hot" marketing technique that marketers are turning to.

I recently attended the one-day Gravity Summit seminar on social media marketing.

The speakers from Sony, Sprint, and Yahoo presented excellent examples on how major brands can generate attention for a product by using social media. And, representatives from social media marketing agencies described how they help clients plan, implement, and monitor a social media marketing campaign.

One of the challenges facing management when considering a social media campaign is the amount of time required either by the company's marketing team or an outsourced social media agency. In general, the social media marketing process typically used is to:

  1. Create a Web site for the product or the promotional campaign.
  2. Create social media profiles on sites such as Facebook, MySpace, Twitter, and others.
  3. Contact individuals on those social media services and invite then to be friends, followers, contacts, etc.
  4. Then, broadcast status updates that include a link to the product's or promotion's Web site.

There are other steps in the process, such as interacting with individuals, friends, followers, etc. And it’s important to create a fresh flow of new content for the social media team to promote.
So, how can management decide if a social media marketing campaign will be worthwhile? The best way is to estimate the ROI of the campaign the same way that other marketing campaigns are evaluated.
It can be hard to estimate the cost of a social media marketing campaign, but a speaker at the conference from a social media agency suggested a budget of at least $50 thousand.

If the gross profit on a product is 50%, then a company would need to sell $100 thousand to break even on a $50 thousand social media marketing campaign. Any revenue over $100 thousand would generate additional gross profit at the rate of about 50% that could be applied to G&A expenses.
By using a company's traditional traffic-to-revenue metrics, it would be easy to estimate the minimum amount of traffic to the product Web site needed to break even. It's the minimum amount of Web traffic needed because visitors from a social media marketing campaign are primarily looking for entertainment, and will secondarily be exposed to the brand.

This means that your traffic-to-revenue metrics for direct marketing campaigns, such as search engine marketing, will produce a minimum traffic figure that’s too low.
Instead, you'll need to use metrics on how well a branding campaign typically generates revenue to estimate how much traffic will actually be needed.
In other words, if your Web site normally serves 1,000 page views per sale from a direct marketing campaign, a social media branding campaign may need to generate 3-10 times that much traffic to generate a sale.

By using this approach to estimating the amount of Web traffic needed to break even, your social media marketing consultant can decide if they can generate sufficient traffic to make the project pay for itself.

Update: Here are the Gravity Summit slide presentations.

The election of President Obama was significant in many ways to many people. As marketers, it represented a continuing evolution of the use of market research data at the individual level.

Political consultants have used survey statistics for a long time to help their candidate tailor campaign messages. However, small survey samples resulted in imprecise analysis, and messages that were not always on target.

Today, marketers can obtain access to comprehensive databases about what people have bought, which gives some insight into how they make decisions.

Stephen Baker's article What Data Crunchers Did for Obama highlights how the Obama campaign used a consulting firm that helps politicians understand the core values of individual voters.

Marketers have used similar differentiation and segmentation services services, such as PRIZM from Claritas, which creates 66 demographically and behaviorally distinct segments of consumers based on Census and other types of data.

However, the firm Obama's team used "grouped nearly every American of voting age—175 million of us—into 10 'values' tribes."

Obama's use of the market segmentation techniques at the voter level is key to successful one-to-one marketing. By grouping individual people by behavioral traits -- instead of relying just on demographics -- marketers can better understand what people in each group are feeling, thinking, and doing. And once you know that, it's easier to explain why they should buy your product (or candidate) in terms that they will understand.

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