Who is in control of your brand?

An ROI (Return on investment) calculator can help you evaluate the performance of your communications spend. Not many of my clients have thought about it, and it’s an important place to start when getting into digital marketing.

The basic premise is that you can add up all of the outcomes from a campaign and compare it to the cost of the communication. This helps you learn & evaluate performance in a more balanced and reasonable manor.

The numbers themselves are not particularly meaningful and are arguable, however, the value is when you COMPARE one campaign to another.

Here’s an example of using an ROI calculator

The Apple Co. ran two campaigns at separate times of the year. The goal of an apple company is to sell apples on their website (who’d have thought).

Campaign 1 achieved 10,000 visitors to the website, 200 orders, 12 enquiries & 500 email sign-ups. It cost $50k to run & delivered $13k of value, which equates to an ROI of $0.27.

Campaign 2 achieved 9,000 visitors, 400 orders, 50 enquiries & 500 email sign-ups. It cost $50k to run & delivered $24k of value, which equates to an ROI of $0.49.

Now you can more easily compare the performance of each campaign. Campaign 1 returned $0.27 and campaign 2 returned $0.49, so campaign 2 was nearly twice as effective.

How to create a digital marketing ROI calculator

Step 1. Create the measures

- Visit to your website
- Subscription to email database
- Enquiry
- Online order (or booking, or request)
- New facebook friends

Step 2. Assign values to the measures

For example, a visitor might be $0.10 and an order might be $50. (Or the value of the order might actually be the sale value, or profit margin. Google Analytics can report on this, read their blog here).

Step 3. Track & add the values

Collect all the data, how many visits, orders, enquiries etc and multiply them by the value you assigned in step 2. For example, 500 orders would be 500 X $50 = $2500. (Based on example above). Then add all of these values together, this is your Outcome Value.

Step 4. Divide that value by the cost

If your final outcome value is $2500, then divide that by the media spend, assume it was $4000, that would be $2500 divided by $4000 = $0.62.

Step 5. Compare campaigns

As I mentioned earlier, the ROI value you come up with is kinda meaningless, unless you compare it to other campaigns.

Step 6. Get sophisticated

If you want to take it to the next level, you should have different calculators for different campaign objectives. For example the above is very sales focused, however, your objective might actually be awareness of a new product or service. Have an ‘awareness’ calculator would put more value on the reach & visitors, less on the orders. Then you can fairly compare awareness campaigns separately to conversion campaigns.

Also, you can apply this methodology to each piece of activity, for example, you could compare the ROI of search to the ROI of banner, EDMs or Social Media.

Here’s a template

This template should get you well on your way:  http://www.box.net/shared/i6x105jfil

As social media analysts and consultants fall off the pages of the AFR and mainstream media, the excitement is rapidly declining.

In 2009 excitement will be replaced with its less glamorous older cousin ‘measurement‘. People and brands around the world have experiemented with all kinds of social media and its been fun, but now its time to count the cookies, and deliver solid a ROI.

Kate over at Social Abacus brings together the predictions of industry leaders, analysts and researchers on social measurement in 2009.

Top 4 predictions for 2009:

* We will substantially advance our understanding of individuals and the meaningful connections they have.

* We will identify methods to tap what people are *really* thinking, feeling, and paying attention to, meanwhile gaining insight on what a measurement is truly capturing.

* We will determine how to measure the value of social interactions and attach financial value, whether we’re monetizing attention or a new medium.

* We will build better tools to manage– analyze and visualize– massive volumes of data, primarily tapping the evolving social graph.

There is a lot of people debating/assuming the definition of what social media really is, and it feels like its being way over complicated.

DEFINITION: Social Media
A place where two or more PEOPLE communicate

Its nothing to do with marketing, but Social (Media) Markeitng can utilise the communications through tools like Social Networking Sites, Word-of-mouth, PR (PR agencies should own social media) and many more.

As a marketer you can use these tools to communicate with your potential customer to increase sales, grow your database, manage your brand perception and all the normal marketing outcomes.

Companies can be involved in the following ways:

1. Get involved in the conversation/communication already taking place

2. Create a new place for people to have a conversation/communication

3. Listen to the conversation/communication for research purposes

4. Stuff it all up

Rules? Well they’re defined by the people having the conversation, and I’m sorry to say there’s no blanket rules for social media, as different people have different ‘rules’.

Attitude! It’s all about the attitude you have and how it effects your approach to utilising social media. People don’t like people who’s attitude is arrogant, or rude, or evil. Think about the attitudes that are important to you, and then think about what is important to your potential customers.

Related articles:

• Social Marketing – Improving Corporate Image
• Your goal for social media marketing and marketing in 2009
• Social Media in 2009 is as simple as this…
• Why Social Media isn’t

Blogs tagged ‘marketing’ with high Technorati authority

In no order – as at 12th Dec 2008

http://www.smallbusinesssem.com/
http://www.gearfuse.com/
http://www.trendhunter.com/
http://socialitelife.celebuzz.com/
http://www.reelseo.com/
http://www.environmentalleader.com/
http://www.ignitesocialmedia.com/
http://www.openmarket.org/
http://www.trendhunter.com/

If you’re getting into, or actively using, social media this is mandatory reading.

The guide gives you detailed directions across a whole range of sites and functions.

“Social media mimics real relationships — in many cases. Would you do the following within real face-to-face relationships?”

Check out the full article from techipedia here

http://www.techipedia.com/2008/social-media-etiquette-handbook/

Delicious wasn’t letting me save this link… using my blog as a bookmarking service, is that wrong?

Great post on ProBlogger on how to generate loads of traffic to your site, long term is the key.
http://www.problogger.net/archives/2008/10/20/how-to-use-forums-to-drive-hundreds-of-thousand-of-readers-to-your-blog/

I’ll write a summary about these stats later…

http://www.ignitesocialmedia.com/2008-social-network-analysis-report/#linkedin

*Source: Forrester

Forrester’s definitions

Creators
Publish a blog, publish your own web pages, upload video you created, upload audio/music, write articles or stories and post them

Critics
Post ratings/reviews of products or services, comment on somone else’s blogs, contribute to online forums, contribute to/edit articles on a wiki

Collectors
Use RSS feeds, add ‘tags’ to web pages or photos, ‘vote’ for websites online

Joiners
Maintain profile on a social netowkring site, visit social networking sites

Spectators 
Read blogs, watch video from other users, listen to podcasts, read online forums, read customer ratings/reviews 

Inactives
Not using any social technologies