Social media value attribution...
By Felix Velarde, Managing Director at Underwired Amaze
EVERYBODY’s talking about how social media is the new big thing. Yesterday it was the next big thing. According to Facebook, the next big thing is, well, unknown so who knows what tomorrow will bring. So they have a marketing world set alight by the potential of social media, queuing up to use it, setting up plans to get into social media. But there's no real rationale. It's being done because it looks like it is important. People live there, so our world has changed. But as for value - well, who knows? KPIs all seem to surround the number of fans and Likes, sentiment (no matter how vague this is) and hope. Accountability - attribution - is the elephant in the room.
I've grown up with digital. In 1994 I set up a digital agency, building communities around websites for brands like Snickers and Hewlett-Packard. As digital took off and moving beyond websites, marketers added channels as they went along - search engines, ads, interactive television, mobile. Around ten years ago the digital world looked full of colour, sexy as hell, with big brands piling in to spend money on visitors and eyeballs and sales. Ten years ago, with digital in full swing, the first steps were taken towards something brand new in the world of digital marketing: accountability. Marketers wanted to prove that digital could have tangible, measurable and commercial value. They got into eCRM big time.
Brands like Virgin, VSO and News International started creating digitally-delivered campaigns built around individual customers. What they learned about them - and from them - they used to better engage them. They used insights derived from demography and behaviour to inform targeting strategies that delivered relevant content when it was most likely to work. They used segmentation principles originated by the direct mail companies and facilitated by the cheapest of media, email, to improve response rates and sales revenues. They used Recency, Frequency and Value to benchmark customer segments, applied campaigns bespoked to each segment's needs, and measured the changes. All this gave marketers what they wanted: proof that what they were doing produced specific financial returns.
Today this is what they do, still. Sure, the channels have changed. Brands now use mobile, SMS and email, but they also use websites. What was once called personalisation has been adapted; for instance, McCain Foods extended its eCRM strategy from email onto its website, so that visitors see content based on the specific segment they belong to and where they are in a planned nudge-based customer journey. The technology platform tracks individuals through their entire web experience, bringing behavioural data back into the eCRM programme. It means they can attribute changes in their value over time directly back to their on-site experience. By increasing engagement through the programme, one of the McCain segments increased its average purchase frequency by 3% a year - leading to an increase in sales of around £1million.
This level of attribution means a client can justify spending part of its valuable marketing budget on this eCRM activity. If the incremental revenue a programme generates, and in particular the incremental margin it generates, is greater than the cost of generating it, then it's a no-brainer. Likewise, one would think that if you could prove that the incremental margin was less than the cost of generating it, you'd close down the programme very quickly indeed.
And yet, social media defies this superbly clean logic. Because you cannot cast attribution, because you can't tell whether it's a positive or negative ROI, the hope that it's the next big thing and it will be worth it seems to justify investment in it. Where's the return? I read a stat the other day that some Facebook campaign had generated an ROI of 4:1 (actually, they said "400%!!"). I'd love to know what that means... at a guess, this company isn't making 25% margin, and unless it's making 25% plus, that "ROI" is actually a loss.
So this is where brands find themselves, running fantastic, highly auditable campaigns, leveraging customer data for all its worth, using email, mobile and the web... Then this groundswell of social media marketing buzz has arrived and is started seriously distracting marketers. The next logical step will be to create specific calls to action to customer segments, and watch precisely what they do in response once they've stepped off into social media.
By making this leap, joining eCRM with Social CRM - sCRM - the elephant in the room gets addressed. By joining up the dots you get the ability to score individuals according to what social actions they take in response to your engagement programmes. It means you can add an advocacy dimension to your standard demographic, behavioural and motivation-based segmentation, and this means you can identify people who have value as recruiters and word-spreaders. You can even attribute new customers to an individual's referrals, which gives you real power to tap into social behaviour and account for the results. This joined up thinking, the blurring of lines between eCRM and sCRM, is the new big thing.