A measly eight percent of companies claim they can determine the ROI of social media spend.
They’re probably lying.
Taking a traditional approach to measuring the ROI of social media isn’t based on reality. How can you track the sales revenue from a Facebook post or a tweet? You can’t do it any more than tracking the direct sales from TV or print advertising, and coming up with a definitive cost-of-sale calculation.
Yet many companies are hung up on the question ‘What is the ROI of social media?’
It’s the wrong question.
As Gary Vaynerchuk has said, it is the equivalent of asking ‘what is the ROI of your mom?’ The impact of your mom on the outcome of your life is everything. But you can’t show the data to prove it.
So, what is the best way to measure the business impact of your digital marketing?
That is the topic of this episode of The Heart of Marketing podcast.
In this “open mic” show, Jayme Soulati and I look at some statistics recently published in CMO on the state of marketing ROI. We leave the analytics to the data scientists. Instead we get to the heart of the matter, which is how businesses should think about marketing ROI in the multichannel/omnichannel/social media landscape we navigate today. In the process you will learn:
- The power of serendipity to make profitable business connections
- The core driver of your social marketing strategy
- Which metrics you should focus on to measure marketing success
- How the omnichannel consumer affects ROI measurement
- Which digital channel gets the best marketing ROI
- How message mapping impacts your bottom line
- And more
003: Straight talk on marketing ROI in a world gone social
The return on subscribing
The official launch of The Heart of Marketing podcast coincides with Heart Month. You can help us raise money for the American Heart Association by simply subscribing to our podcast. Here’s how: We will give $1 to the American Heart Association for the first 500 subscribers in February. Help us raise $500 to support heart disease awareness with just a click. You subscribe. We give. Everybody wins.
John: Hey, thanks for joining us today for another episode of The Heart of Marketing. I'm John with my host, Jayme. Jayme, are you ready to rock hot tonight?
Jayme: You have no idea. I sit here like, chortling whenever you play that "Quiet, numbskulls, I'm broadcasting!" and I'm trying not to laugh. I'm not supposed to and I just have to like, woo, blurt it out, man. Hey, everybody, what's up?
John: All right, just getting to the end of a long day today.
Jayme: No kidding. So what's new in your world though, John? There has to be something really cool and clever you can say tonight to our audience.
John: Well, no. Actually we're going to do something a little different with the format tonight. That's what Jayme has been advocating for here, what she calls "open mic night". That's where we're going to take a look at an article that both of us have kind of found to be interesting and we're going to riff on it for a while. It probably won't be as long of an episode as some of our others, but I think it will be equally entertaining and informative.
Jayme: We always are though, John.
John: In our own mind ... On that, I guess what I was going to share is that we're going to be talking about an article from CMO called 15 Mind-Blowing Stats About Marketing ROI, which is, yeah, I know, I know what you're thinking. You're doing back flips, because everybody likes to talk about numbers especially Jayme and I.
Jayme: My gosh. We're big data guys. We're geeks.
John: Mm-hmm, but I was gonna share that for much of my ten years… More than ten years of my professional career has been in the corporate side of the world and a lot of that has been in the direct marketing world. That's where I come up from. There's a heavy focus on numbers with direct response marketing and ROI. I've lived through the rigors of the corporate world where there's a real demand and scrutiny on the ROI of marketing. So I know what the challenges are and the frustrations are as a marketer. And so it touches my heart, if you will.
Jayme: That's funny. Well, as you were talking there, John, I just left a six-month stint with Thomson Reuters, and as I was leaving, a new team was coming in and they were doing KPIs, key performance indicators. So not only is this ROI thing a great acronym that we all hate and love, KPI is also another one for everybody is held close to the barrel. You've got to prove yourself, prove your value.
John: I know. I neglected to say in my section that that ten years was at Thomson Reuters, so I know that culture.
Jayme: Absolutely, and, John, before we dive in a little deeper , I want talk about our wonderful promotion in February. This month, we are officially launching our Heart of Marketing podcast, and it is heart month, it is Valentine's Day, it is Jayme Soulati's birthday. There's a heartbeat. Oh, my gosh. And we are of course The Heart of Marketing. So anybody who subscribes in February up to 500 subscribers, John and I are going to donate money to the American Heart Association.
Jayme: He's becoming the most amazing sounds effects guy. I love it.
John: I was trying to see if you can keep your focus.
Jayme: I can't and that's why I got off track there.
Jayme: Yeah, so you're hired. John you're hired or actually you were hired a long time ago. So nonetheless, subscribe on iTunes, please, and we will send our money to the American Heart Association. Goodness, thank you. Well, and we're excited to launch.
Jayme: So, John, lets jump into our future segment.
John: Okay, I found some interesting data points from this article. It was, as the title suggests, 15 mind-blowing stats about marketing ROI. So it was a list post, right?
John: So I found a few that jumped out at me and, Jayme, you did too. I will pick one and we'll start with that, and then maybe you can pick one, and we'll just kind of tag team it.
Jayme: Sounds good, I like that.
John: One of the ones that jumped out at me was, "Only 8% of companies say they can determine the ROI from their social media spend."
Jayme: That's a loaded piece of data there, and 8% is so miniscule. What's your view on that?
John: Well, I talked a little bit about this in our first episode about how I think measuring the ROI of social media is the wrong question or the wrong approach, 'cause in my view, social is not a marketing channel. It shouldn't be used as a marketing channel. It shouldn't be measured as a marketing channel. It's a channel for building relationships. It's not a channel like a direct marketing channel is in my view.
Jayme: Well, let's look at it differently though. Back in the day when people were launching social media like Twitter and Facebook, the way to gauge success was the number of likes and retweets, etc. So that's old school, right?
Jayme: Now it's more the quality of conversation, but that takes technology. So maybe like in our episode two, John, where we talked about disruption and how technology is enabling change and new opportunities… In fact, I just read this and I can't tell you where. There is a tool to gauge the effectiveness of the message.
John: Well, I do agree that there are metrics that you can be looking at for social, it's just that return on investment, it's a sales-oriented metric. It is, "How many dollars did we generate from this message?" And I think, social, it really needs to be viewed as more of a long game strategy. It's like, "How do you measure customer experience? How do you measure customer loyalty?" There are ways to do that but they don't break down into a neat, clean, "Here's what I spent on this campaign. Here's how much revenue came in," kind of an equation.
Jayme: Right. And of course social media has turned net promoter scores on their head. So where a company used to thrive on an NPS score, now they can't because social media has come along and changed that whole approach. But what are we saying then? What are we saying?
John: Well, I'm saying that there's a really good reason that only 8% of companies say they can determine ROI from social media. And that's because it's not a sales driving channel. It's not a revenue-driving channel.
Jayme: They're trying to make it so.
John: They are, and I think it's a mistake.
John: I think it can be part of a nurturing campaign, building customer loyalty, all of those kind of more soft activities that don't line up directly with the end of sale. Yes, and that's what building relationships comes down to. It's not a, "I pull this lever and the customer does this and I get revenue coming in," type of activity.
Jayme: It's very fascinating how you're thinking about this, because when you look at Twitter and Facebook having gone public, they are being forced… Well, Twitter especially is being forced to earn revenue and make money off of its channel. How is Pinterest gonna make money? What's its revenue model?
John: It all seems to be advertising.
Jayme: Yeah, exactly right, and advertising has changed so much too and when you look at the ways consumers have to engage these days you can't just look at social media, and how do you define social media these days? Is it the big four? Where is social media? What channels are you including in that? Is it Instagram, too? Is it Foursquare, and Gowalla, and Groupon? How do you define it? So I think it's been so diluted. The word social media is so diluted because of the numerous channels that people have to engage.
John: I agree.
Jayme: Okay. Moving on, I'm gonna pick one.
John: Yep, you pick one.
Jayme: I'm going to pick number on the list of fifteen… I'm scrolling down just a moment. Number 11 is my favorite one. Blogging makes marketers 13 times more likely to get positive ROI. Well, I am a blogger. I have been a blogger for four years running. I've taken a bit of a hiatus in the last 6 to 8 months, but I still own a blog and I still do put up the occasional post. Point is this. Had I not blogged back in the day, 2010 is when I began, on a 3 to 4 times a week, or sometimes even 5 times a week basis, no one would have known who I am and I attribute blogging to the creation of my brand and my identity essentially. I had a big identity beforehand, but not the extent of what the blog did for me as a brand.
John: If you hadn't had a blog and I hadn't had a blog, we never would've met.
Jayme: You are right. What is the story about that, John? How'd we meet?
John: Oh, this is a fun story. One day, I was out on Twitter and I had some time. I was doing a couple things I don't typically do. I don't typically look at my Twitter stream. I usually look at lists or whatever. I don't have time to look at the big stream. But on this particular day, I did and I saw a tweet that you shared, and it was about a post that you had just written on your blog. And it caught my eye because I had just written on that same topic on my blog a couple different times, and it was on the topic of… Do you remember this?
Jayme: No, keep talking.
John: You asked the question in your post, "Is there a place for love in business?"
Jayme: Oh, my goodness. I remember the post.
John: Okay, so I thought that's an interesting topic and I had just been writing it about myself. So I went and checked it out, and I read the post, and I did another thing that I don't ordinarily do is I took some time to leave a comment.
What happened next was a whole chain of events that we had a discussion on your comments and I mentioned that I had been writing on this topic. You wanted to read what I had written so you went to my blog, you read some of my stuff, and then from there, we just became mutual fans and buds.
Jayme: Yeah, and that was called serendipity, but all over social media back in the day, this is how things used to be and I miss those days terribly. I know a lot of my peers do too; those of us who were early adopters of social media back in 2009. Seriously we used to party. People were off. It was the recession. Nobody had jobs. All they did was get on Twitter at 10 p.m. at night and all we did was party and banter. It was amazing, it saved my life. Twitter literally saved my life from a dark, deep gloomy depression, living in a dark basement where I lived currently, and I missed Chicago terribly.
So the engagement factor of social media really created friends. And, John, you and I have never met.
John: Not in real life.
Jayme: IRL, we have not met, but I had the pleasure of meeting so many cool cats from all these conferences I used to hit a year or two years ago, and they've become my close friends. So anyway we digressed a moment telling a little personal story. However blogging to me… So you're a mid-tier business, do you need a blog? Yes, yes you do. I had a conversation today with a client. I said well, "Are you ready for a blog?" "No, no, no, we're not ready for a blog." Well, I didn't feel that I could fight harder for that blog on their new website, although I really wanted to because truthfully blogging is the core of your social marketing. Without it, you cannot own your message or control your message. You have nothing to share on a social channel except for other people's stuff.
Jayme: It differentiates you as a brand, and it also helps you create thought leaders in your own company, so that's really why. We'll talk more about blogging and how it's changed, John, on another show, but I'm a huge proponent for any company and you know the barrier to entry for a blog is like zero. If you've got a website already that's in WordPress and you've got a tech guy who can help you with the plug-ins or an I.T. person who can help with the plug-ins, essentially you can start. You can write a blog and have it up overnight, which is really cool.
John: I wouldn't say the barrier to entry is zero, because I built my own website and I'm not a techie person. So I had a little bit of a learning curve, but if I can do it, anybody can.
Jayme: Well, and I'm hoping that you as an individual… We are solos, you and I, and we have virtual companies. We draw in people who could help fill gaps of people we don't have on our team, but my point is if you're a mid-tiered company, you must have an IT person you engage with or someone on staff.
John: Yeah, that's true, and if you do, you're golden because they're a great resource to have. You get through some of the stuff that the rest of us have to figure out on our own.
Jayme: You're doing a great job too, John.
John: Thank you, thank you so much. It wouldn't win any awards, but it's a very durable, serviceable site and I'm very happy with it.
Jayme: Now where can people find your site, John?
John: Oh, well thank you for asking. I'm at JGODigital.com. Stop by and visit. It's a blog.
Jayme: Let me just say John's being very gracious here, but he is the consummate writer. I think he's extraordinary and that's why I asked him one day, "Hey, John, why not do a podcast with me?" And so, yeah, here we are. John, what's your second point that you wanted to pull from that article that you thought was interesting?
John: The other point that I found interesting was that 75% of brands say they measure their campaign results by sales and conversion rates, which is a pretty high number, but also that the same study said that advertisers also include brand lift, 51% of them, and reach (23%) among their top metrics. And what's interesting for me is that I think this shows some of the complexity of measuring ROI in our digital world right now. And that's because of how the channels are really blending. We're getting away from a channel-specific orientation with businesses, and they've gone from being multichannel to being omnichannel. The smart ones are getting to be more omnichannel, and I think I need to give some definitions there, because some of the listeners may not know what the heck all that is.
Jayme: I don't even know. What are you talking about?
John: Oh, well, let me school you a little bit here, Jayme. Well, multichannel is just – take this company over here that's (You have to imagine I'm gesturing to my left-hand side here as I'm saying this) – Take this company over here and they are active in a certain number of channels that they choose to interact with their customers in. So they push messages to their customers across those touch points. Omnichannel is multichannel done right, basically.
Jayme: That's just crazy. Why confuse everybody?
John: There is a distinction and it's an important one. Okay, with omnichannel, you interact with customers at the touch points they choose to connect with companies on. So the difference is multichannel is company-centric. Omnichannel is customer centric.
Jayme: You better give examples, John. So omnichannel would be me as a consumer on Twitter and Google+ versus Facebook or Foursquare.
John: Well, yeah, and in more channels than that. It would be you engaging with the company on social, on mobile, and brick-and-mortar. Those are the kinds of channels, right?
Jayme: Well, wait a minute. Let me ask you a question. You just said social and mobile. I think social is mobile. Is that what you meant to say that mobile…?
John: Well, they're blended. Mobile is a separate channel.
Jayme: Isn't that a platform?
John: Social is kind of a platform that can be desktop or mobile.
Jayme: And what's brand lift? When you have those advertisers… What's a brand lift?
John: That's a fancy advertising metric for awareness, basically.
Jayme: This is fascinating.
John: It's like, "Oh, we did an ad campaign and the awareness factor for your brand name rose X percent as a result." It's a soft metric. Awareness is important for branding, but you can't tie it to driving revenue necessarily.
Jayme: So this is interesting. For one second here, let's just dissect this a little bit more, because it's very concerning to me. Is that an old metric from traditional advertising?
John: It is, sure. They used to use that in print advertising.
Jayme: Wow, so here's my question. Why on earth is that still relevant in today's marketplace when… If you had a brand that had a gazillion dollars and was everywhere, then I could see a brand lift measurement tool or metric. But when you have a consumer who is so disjointed in how they consume a brand, an advertisement, how do you use such an archaic measurement in today's world?
John: You just walked right in to where I was going with all of this.
Jayme: Take me there.
John: Basically we've got an omnichannel world that's becoming more and more prevalent that the consumers don't care about channels. They just want to be able to get to the company, communicate with them the way that they prefer, that's most convenient to them. They don't care about your channel strategy and what you're trying to do on social, and what you're trying to do on mobile, and all of that. They just want a seamless experience, and technology is enabling them to do that, getting back to disruption again from our last episode.
So what happens is businesses have to deliver that. It makes it really, really complicated to track ROI because channels are not all blended. You don't have the control that you once had to drive sales activities by the specific channels because they are all kind of blended together. So it just gets too complicated for purity. And it's not to say that it can't be done, because I know there are data geeks that just live and breathe spreadsheets, and they are looking for ways to pull data from all over the place to try to make connections from the different actions that a customer might go through before they get to the final purchase and they'll be able to make calculations on which pieces of marketing messages they were exposed to and which channels that resulted in a sale down the road.
And see, it gets really crazy. This is the kind of stuff that we were trying to figure out back in the days when I was at Thomson Reuters.
Jayme: It's craziness. So can we cut to the basics here? So based on everything you said here, a mid-tier market company, even a small start-up company, I don't care what size company you are. If you're not a good Fortune 100 brand with, as I mentioned, a gazillion dollars in your marketing budget, then what are you supposed to do? And I think that we know the basics are you've got to have social media channels. You've got to do it. If you don't, oh, my gosh, I don't know how you're going to begin to engage now at this late juncture, but the basic core marketing elements are social media channels, a blog, and what else, John?
John: Yeah, I think you'd probably want to have email in there too. It's going to depend on where your customers are and that's where you want to be. And so I don't know that there's going to be a formula that fits for every business, but I'm sure there are social channels where you will see your customers are. Probably Facebook 'cause the whole world is there. But, yes, you want a website. You want owned media. You want a place that's not rented property. It's a website. It's a blog. You're creating content on there. People find you through search. You definitely got to have that. And I think that the other component that people don't talk about email much anymore 'cause it's not really sexy but it's very powerful still. It's one of the most powerful channels. And if you want to talk ROI, that is one channel where you can get really strong ROI metrics.
Jayme: Hey, John, get this, number 4 on the list, "More than half of marketers increased their spending on email in 2014 as email ROI reached 2,500%."
John: Okay. Great, the data backs me up.
Jayme: It does, and I think back in the day, two years ago, I invested a gazillion dollars in HubSpot and I failed at HubSpot, but HubSpot is winning. HubSpot's one of those brands that's everywhere. It's ubiquitous. I thought that technology would launch me into the digital marketing world, the inbound marketing world. Because I knew that as a brand, I had to take my company to the next level and I knew I needed to market differently. In fact, I needed to market somehow. I had a website, I had a blog, I had social media, I had content, but I did not have that other component of email marketing and inbound marketing and the funnel and lead generation, etc.
So why did I fail? And this is a great discussion for a mid-tier business or even a small business wanting to grow. I failed because I lacked the time to do it all as a solo. And I got waylaid by the salesman doing a great job selling me and I took all the training classes they gave me to try to learn all this stuff. And at the end of the day, I integrated HubSpot into my website and it worked and I just couldn't keep up. But I didn't have the team to support me to keep up.
So I think that when you are in your marketer and you try to do it all yourself and you're solo or you have a small team, do hire out because it will take consistent content to fuel your pipeline with leads and attention. So everyone is so caught up in so many… Everybody is ignoring the clutter right now. So if you're not there, they're not going to miss you. If you are there, they'll notice you eventually. It just takes consistent effort.
John: I agree. Good point.
Jayme: So one point that I would like to end with on my side, John, is about video. And let me tell you which content marketing tactics get the best ROI. More than half of the marketers surveyed say video, and everywhere I look, video is the hot tamale. It still is. It's becoming more so. Everything is pretty cluttered.
Podcasting is becoming a cluttered jungle, and really the solution for all this, John, blogging and video marketing, email marketing, inbound marketing, and podcasting is just consistency. Stay the course. You can't expect to launch something new, and in three months, end it and say, "This failed." You've got to give it a year. And I gave John my lofty goal of the first 100 podcasts. So if we get through 100 podcast together, I'll celebrate. We'll do a big event. We'll have a party. Yeah, but you have to set your sights on a goal and try to stay the course.
John: You do. I think that consistency is definitely a key and I would add to that something that I've been reading recently on Mark Shaffer's blog. He's been talking about the whole area of content shock. The volume of content that we're gonna hit critical mass in terms of how much we can actually look at, consume. He's been writing about recently that the key to breaking through the noise that you're talking about in his mind is amplification. You have to be consistent, you have to have quality content, and you have to have a plan to amplify your content in order for it to be seen.
I think that's an interesting insight and I think it makes a lot of sense if you look at the situation today that we have with everybody wanting to jump in and create their own original content, get out there and be part of the noise.
Jayme: Well, this is interesting, what you just said about amplification. I think that what we found a couple years ago or a year and a half ago or so is that the era of the solo practitioner who can survive is pretty much over. You have to partner up to grow because nobody can do it all. Nobody. And it's still difficult.
Even a major company that is seeking the ability to do more in social may not have the skills. So you do have to hire out and you do have to find trusted advisers to help you with a strategy and to just stay the course essentially. And blogging communities became all the rage.
I was writing for SteamFeed and a couple of other blogging communities the last 2-3 years and guest posting was huge because Google had… What did they have, John? Google authentication, they took it away. Google...
Jayme: Google Authorship. Everybody went crazy writing content because of that. Now that's gone and essentially we're all at the mercy of Google, which is another discussion for another day. Yeah, I think this is all interesting stuff, and if you aren't measuring well right now, pick out ten metrics and attempt to put numbers to those metrics and track something, start somewhere.
John: And pick the metrics that are most important. It comes down to what are your business objectives. Hopefully you've done that in your planning process, identify what are the most important objectives for growing my business. Start with them. And what are the metrics that will get you there? Focus on that.
Jayme: And then my final addition to what John just said is the message. I'm a message mapping professional. I was encouraged to read...
Jayme: See why I hired him? So I could giggle, man. Oh, my goodness, how do I get too serious? I have to, I guess, throw in a sound effect to get me off the serious course. I'm starting to fall asleep at the microphone is what's going on here, my gosh.
No, message mapping professional, master, or whatever you want to call it. I was encouraged to re-brand as a message mapping master, but what that means is that I help you find your message and how you want to communicate externally. Not internally, under your own roof, but externally to your audiences. And that transcends to all of your channels. It helps you with your sales efforts and it helps you measure the quality of your content and how you're communicating outside. So that's all I've got, John.
John: I have to say it's a really great process. We should do an episode about it sometime, Jayme, talking about our exercise in using it. I had Jamie go through the message map exercise with me on something that we got so many great ideas out of.
Jayme: We did and I think that's really the beauty of that product is that it's free-thinking really.
John: And unfortunately we don't have time to go any deeper in that. So I think we should throw that out there as a teaser. Coming soon in an episode near you, we'll be talking more about that. So that's our show for today. Jayme, take us home.
Jayme: Hey, everybody, go be rock hot. Thanks for listening. See you soon.
John: Until next time, remember go for the heart. You won't go wrong.
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