To adapt Geoffrey Moore’s disruption model, one could argue that “data” is well on its way to crossing the chasm. There’s an explosion of data available to marketers and its use in inspiring better marketing decisions is increasing dramatically.
One recent example of data use is in the area of trying to make sense of social ROI, to help optimize marketing spend and mix. With social spend growing rapidly every year (projected to reach over 20% of marketer budgets within a few years), it’s critically important to ensure there’s concrete value captured from the spend.
Some studies have suggested social has a very small impact on sales. That certainly doesn’t make it as attractive a purely sales-focused investment.
Recently, for example, KLM undertook a “last-click” attribution analysis (as the name suggest, this is based on considering whether or not a user’s last click before a purchase was from social media) and found that social was driving about 25 million euros in sales. Sounds good, but that’s a tiny 0.3% of KLM’s 9.7 billion Euros in 2013 sales. And, in a much discussed analysis, Coca Cola found that that social buzz had no measurable impact on sales. They did, however, point out that social is still crucial to the brand and continue to invest in the channel. And, there’s constant discussion about the decline in Facebook organic reach.
How’s a CMO to make sense of conflicting social ROI data?
If a recent study is correct, the methods we use to go from data to marketing mix insights need to be revisited.
A new WOMMA study conducted by econometric modeling firm Analytic Partners found that word of mouth drove around 13% of sales. Of that, approximately 4%, was attributable to brand social discussion. This is separate from paid social ad sales impact.
The study used a specific type of econometric modeling to look deeper than clicks (and to look at interactions between media types). While the study looked at social mentions (vs. the estimated reach of those mentions), the approach looked at more measures of offline and online social discussion, categorizing social commentary on factors such as sentiment, emotion and intensity. And the study looked at a detailed set of data from a range of brands, from low to high involvement/price.
Sales impacts of word of mouth overall ranged from about 2% to over 25% (average was 13%). Assuming about 1/3 of that is driven by social, that’s about 2-16x higher than previous studies suggest. In general, word of mouth had a more pronounced impact on higher involvement/price purchases. Brand sponsors for the study included AT&T, Discovery Communications, Intuit, PepsiCo, and Weight Watchers.
What are the implications if this level of sales is being driven by word of mouth?
For some categories, they are significant and should prompt a rethink in how spend is allocated – or at the very least prompt a deep look at the category data. For example, the following might be 6 new core marketing pillars to maximize ROI:
- Use new metrics and analytic methods. Add social/viral reach as a complement to paid reach (measure the relative ROI against brand metric and sales shifts), optimize the impact of social content on brand metrics using surveys/panels and consider multichannel attribution to track sales impact. And consider tracking offline word of mouth to look at at a more expansive reach metric.
- Track and drive reach by enabling fans to talk and advocate, online and offline. It’s harder than ever to break through the noise. We use social data to help brands identify the intersection between their brand benefits and consumer passions. The best share-focused creative does just that, in a way that reinforces what’s best about the brand. Adding a focus on enabling brand fans and influencers to share their brand love (advocacy) helps amplify the message. In our study of 22 brands across 4 countries, we found that some of the best brands have 3x the brand social advocacy levels of the lowest advocacy brands.
- Enable social advocacy everywhere (consider owning your social relationships). Viral reach is a particularly important driver of marketing efficiency through social, and it should be enabled everywhere – website, mobile, branded communities and multiple social platforms. Consider owning your brand social relationships (for example, see the recent Sony Playstation branded community that curated over 500,000 pieces of content to help drive the PS4’s launch success). Forrester’s also a proponent of this concept of brand ownership of social, and an expansion beyond one or two social channels.
- Integrate channels and scale with paid to improve brand and sales impact. This study found interactions between paid media and WOM. Our previous work has found that programs are most effective when combined with other types of marketing communications, and reach is scaled up to a meaningful audience. We recommend “surround sound” strategies that are executed across multiple traditional, digital, mobile and social platforms and supported by paid media and event/experiential/sampling to encourage offline word of mouth. New paid tools from social platforms also allow this scale to be targeted to audiences that matter.
- Optimize for funnel stages and the specific consumer decision journey. We’ve found consumer/customer mentions can have impact on brand lift (over 1.5-2x brand attitude shift likelihood in our own restaurant study), and also on sales. However, the impact will vary depending on the content, the audience characteristics and the category. The best brands test and learn. We’ve created new tools that allow for rapid content effectiveness and virality testing – and we use advanced analytics like multichannel attribution to adjust spend where appropriate. While historically these techniques have been prohibitively expensive, newer panel- and survey-based tools allow for an estimation of attribution starting at lower price points.
- Apply (and track) additional social data throughout the marketing and product planning/development process. The directly measurable impact of social and consumer advocacy content is only one part of the revenue value. The full social/content picture should include the value of social data and insights in informing the entire product marketing process. Social insights and data inform product development, marketing, email/CRM, loyalty and media focus. Brands need a structured and rapid process for taking social data and insights and using them, for example, to generate more relevant emails (higher conversions), adaptive web sites, dynamic creative briefs, network value-focused loyalty programs and more impactful paid targeting.
Note: Ogilvy was a sponsor of the referenced WOMMA study.
Image source: WOMMA, http://www.womma.org/returnonwom