Social Media = Cash Cow?

Hey guys and welcome back.

So in the past few weeks I have covered how social technologies play a massive role for companies to boost productivity as well as profits. This week I wanted to talk about how these profits come about, and how companies should be evaluating their social media campaigns to evaluate whether or not their social presence is succeeding or failing, by looking at the impact on their customers.

Enter return on investment (ROI)

You might be thinking, what is the ROI of social media, and how is it measured?

Firstly with the help of social media monitoring tools, such as Topsy or Google Analytics (discussed last week), companies are able to track and understand how customers engage their products via likes, shares, re-tweets, etc. Tools like these become important as companies are able to determine the visitor flow (usually via URL tracking) from social media sites, to eCommerce websites, through to actual purchase (therefore enabling companies to track the traffic driven through any marketing campaign).

Therefore by looking at these statistics, companies are able to calculate the ROI. ROI is simply calculated by the following formula:

screen-shot-2013-10-09-at-11-04-09-am(Source: Watson, 2013, QUT)

In simple terms, by dividing the profit of the social campaign (Gain of investment – cost of the investment) and then dividing this by the cost of the investment one is able to calculate the percentage ROI.

Lets bring this to a real life context, and after doing some research, I was able to come up with a small list of amazing examples of social media ROI at work:

1. Jimmy Choo

  • Channel used: Twitter
  • Geo-located and featured upscale stores that sell their sneakers
  • Sneaker sales increased 33%
  • 40% increase in positive tweets and messages

(source: business2community)

2. Old Spice

  • Channel used: Youtube
  • Ex-NFL player Isaiah Mustafa starred in various humerous youtube commercials that generated a huge response.
  • On Day 1, the campaign received 5.9 million YouTube views, more than Obama’s victory speech after 24 hours (source: Visible Measures)
  • On Day 2, Old Spice had 8 out of the top 11 most popular videos on the web (source: Visible Measures)
  • By Day 3, the campaign eclipsed 20 million YouTube views
  • One week post-launch, the work had been seen more than 40 million times.
  • Twitter followers increased 2700%.
  • Facebook fan interactions went up 800%
  • Facebook fans increased 60% (from 500,000 to 800,000)
  • Increase in web traffic by 300%
  • YouTube subscribers for the brand more than doubled, increasing from 65,000 to 150,000
  • And Old Spice also became the #1 All-Time Most Viewed and #2 Most Subscribed Branded Channel on YouTube
  • Contributed to a 106% sales increase

(source: marketingweek)

3. Kraft/Toblerone

  • Channels used: Company website and multiple social networks used in the Philipines
  • Established October 20th as the country’s “National Thank You Day”
  • Drove 500,000 website visits
  • Sales of Toblerone increased 132%

(source: business2community)

4. Blendtec

  • Channels used: YouTube and Twitter
  • Blender maker produced videos blending a variety of items
  • Some were viewed more than 100 million times
  • Sales increased 700% within a year

(source: business2community)

5. Kotex

  • Channels used: Facebook, YouTube and Twitter
  • 1.7 million Web site visits
  • 17,500 tweets about Kotex
  • 25,000 Kotex discussions in the social space generating 88.5 million impressions
  • a million girls “activated” on the brand site,
  • 93,000 Likes, and 640 million impressions in major print, broadcast, and online channels.
  • 750,000 people requested samples and these converted at a 42% rate.

(source: Peter Kim)

6. Foiled Cupcakes

  • Channels used: Twitter and Facebook
  • Implemented a relationship-building program
  • Received an order for 40,000 cupcakes
  • 97% of customers now come from social media
  • Sales are still exceeding forecasts by 600%

(source: business2community)

7. Cadbury Wispa

  • Channels used: Twitter and Facebook
  • Petitioned by customers to bring back the Wispa bar
  • Sent 40 million bars to market
  • 18 weeks after responding to the petition, all of them were sold
  • Added 30% to annual profits

(source: business2community)

It is important to note that although companies such as the ones listed above made profitable (tangible, or measurable) sales as a result as their social media campaigns, a company’s return on investment can also be broken up into intangible (non-measurable) benefits. Examples of these benefits include:

  • An increase in brand awareness, and increase in customer engagement
  • An increase in sharing through social communication
  • Gaining customer insights through product valuations and feedback
  • Testing new markets, and market analysis
  • Building an online voice, a more ‘relaxed and casual demeanor’ of the brand

It is clear that social media plays an important part in modern day organizations. Through the many techniques I have described over the last few weeks, it is clear   that through these social technologies, these companies are able to capitalize on the inexpensive (or very expensive depending on organizational budgets) nature of social media to increase their ROI as well as their brand.

If you enjoyed this post please feel free to drop a comment below or you can also add me on Facebook 🙂

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16 thoughts on “Social Media = Cash Cow?

  1. Hi Xavier, nice and complete mash-up of famous return on investment, really straight to the point, good job! For the example of Blendtec and Old Spice, do you think that a striking ad such as destroying an iPad or humorous one can be a long term investment? Because these videos created a big fuss but in this competitive environment, people will soon focus on another brand with another funny ad.. Although it’s really important to catch people attention with such ads, do you think about another way to generate more ROI and become more durable in people’s mind?

    • xavier1610 says:

      hey Gautier, certainly, by Blentec making more and more videos and blending more and more recent gadgets or mainstream goods, they can certainly increase their sales by creating these humorous videos. However you may have a point in saying that just by blending goods over and over again, may have reduced effect in later years. Blendtec should consider making different ads to encapsulate their market but still keeping their social followers amused and wanting to buy their goods.

  2. Alex says:

    I hadn’t seen Topsy before. I checked it out and really liked it!

  3. Hi Xavier,

    Again well done on producing an excellent post!
    I like the fact that you have explored a few cases in which social media was able to influence the return on investment in a positive manner. What do you think is the chance of these companies being able to repeat such viral campaigns? The ability to top the last campaign would be a difficult task after all.

    • xavier1610 says:

      Good point there Dillen,
      Companies definitely need to do alot of market research to find out what the consumer wants and needs, which is why social monitoring tools and other analysis of social profiles becomes important in making repeat viral campaigns 🙂

  4. seanmelis says:

    Xavier, excellent post! Lots of great examples there. That ‘will it blend’ campaign is hilarious. I think it’s always neat when someone owns a product that is used in a viral campaign online, kind of like Old Spice. It makes it almost a novelty to own the product and a point of conversation to even tell your friends. An interesting marketing technique but one that works extremely well!

  5. julianlow13 says:

    Xavier, this is a really impressive post. I liked that you did the comparisons against numerous companies as it really does help in offering a better insight of what’s going on.

  6. Hello Xavier, nice post!
    It is great that you have shown so many examples of large revenues from companies social media campaigns. It would be interesting to see how much each of the companies actually spent on them though. Do you think any of your examples may have spent anywhere close to what they made?

    • xavier1610 says:

      Hey! It would certainly be interesting, unfortunately not many of them disclosed their costs, but based on using free social media tools you can assume that the costs were relatively low. 🙂

  7. Hey, mate. This is a really detailed blog with much convincing examples, nice job~
    My doubt about calculating ROI by metrics like brand recognition (increase views, likes and mentions) might be tricky since they are tangible values but don’t contribute to the business revenues directly.
    For example, I liked both ASUS and HP channel on Facebook just for tracking on their news on new product lines, but when I buy computers, I tend to choose the one who can offer decent hardware at a relatively low price. In this case, there is a significant uncertainty on calculating ROI by referencing the social media metrics.

    • xavier1610 says:

      That’s a really good point, I would have I agree with you there, just because I like several brands doesn’t mean ultimately mean that I will buy their products. This is why social monitoring becomes so important in actually tracking real sales. 🙂

  8. Sarun Y. says:

    Hi Wong,
    I think that you have a nice wrapped up details for the ROI cases’ examples. Through my findings, I found that it was difficult to find the actual tangible benefit in terms of the monetary value. Do you think the term ‘tangible’ mainly focus on the benefit from monetary part? or Do you think it also covers other numeric results that present the increase of the organisation’s performances?

    Note: As a blogger, I really learn a lot from your posts and comments. It is really a pleasure to know you :).

    Great ROI’s post, Wong 🙂

    • xavier1610 says:

      Thanks Sarun, I think tangible benefits could also be measured by other numerical stats such as number of followers gained through a social campaign. Although at the end of the day a lot of companies will look past this and primarily focus on ROI. :p

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