Tech-savvy fans of the Georgia Aquarium got a special deal this past spring: a big discount on ticket prices. The aquarium offered 25 per cent to 40 per cent off admission prices from February through May to people who followed it on Twitter or signed on as Facebook or MySpace fans.
The promotion brought in $42,000 in sales, something the Atlanta aquarium could track through a URL it created and used specifically for the promotion, says Dave Santucci, vice president of marketing and communication. Santucci and IT Vice President Beach Clark say the promotion also helped them calculate whether the aquarium’s investment in social media is paying off, and by how much.
The attitude toward social media today is much like the “build it and they will come” approach that companies took to Web site development in the early days of the Internet. Over time, businesses learned how to measure the value of click-throughs, e-mail campaigns and other Web site functions, and today they can calculate the ROI of their online initiatives.
Now, as more companies adopt social media for business dealings, leading organizations are trying to assess the actual value of using these tools. They’re finding that while social media technologies do have business benefits, calculating the hard numbers of ROI is a difficult yet necessary step as they try to decide what actions to take next.
“I’ve been a big proponent of being able to measure and using measurements to drive decisions. And we’re making progress,” Clark says.
Santucci says he and other executives at the five-year-old aquarium knew for several years that they wanted to invest resources in social media. He says a YouTube video helped prove the need. The clip, called “Dancing Otters,” has attracted more than 900,000 viewers since it was posted two years ago. An aquarium visitor shot the video, but the clip doesn’t mention the Georgia Aquarium by name.
Though Santucci recognizes the lost marketing opportunity there, he says the aquarium didn’t have the time or staff to make an effective leap into social media until last summer, when three interns came in to tackle the job. One intern was hired to work on the project full time, and a public relations person became the manager of social media and new communications.
Clark says his IT team works on whatever development projects and IT infrastructure are required to support the initiative. Also, he sometimes works with an interactive agency to develop specialized applications, such as a mashup between Google Earth and the photo-sharing site Flickr that shows where aquarium visitors are traveling from.
So far, the financial investment in social media has been small, Clark says. There is IT staff time involved, though, to ensure that the social media activities are integrated into the organization’s Web site and to deliver support services, such as the special URL for the spring ticket promotion.
The minimal cash investment has helped justify the aquarium’s efforts on this front so far, Clark and Santucci say. The cost to tweet about a new horseshoe crab exhibit, for example, is minimal — in the tens of dollars. A worker can use an aquarium-issued smartphone to snap a photo, upload it and send out the brief message.
But the question then becomes, how much business is generated by a tweet like that? A special URL can be added to such messages to track the number of patrons who visit shortly after seeing the tweet. But it’s harder to measure the degree to which the buzz inspired by that message and similar activities influences things like future sales of tickets and memberships.
Looking ahead, Clark and Santucci say there has to be a clear ROI to justify spending more time and money on social media.
From zero to ‘infinite’
Of course, that special promotion did yield a concrete metric. The staff spent a minimal amount of resources to send out information through Facebook, MySpace and Twitter, but their efforts brought in $42,000 — or 2,500 admission tickets. (Clark and Santucci both say that driving ticket sales is the big goal with these efforts.)
That’s a clear and trackable ROI, Clark says. “We had zero sales through social media last year, so it’s infinite growth,” Santucci says.
However, he and Clark acknowledge that it’s harder to count how many of those visitors would have come without the promotion and how many came because they conveniently received the discount. The tools to assess that part of the ROI equation aren’t in place yet.
Clark says he’s exploring what tools to use to track the number of people who post and share videos or pictures from the aquarium on social media sites, as well as track how many people chat about the aquarium online. What’s lacking, he says, are tools to calculate how those activities translate into ticket sales.
Jeffrey Mann, an analyst at Gartner Inc., says businesses might use social media for communicating internally, for communicating with the public or both.
Leading-edge companies using social media to reach the public are starting to calculate ROI based on lead generation and sales completed, he says.
Companies using it for in-house work are trying to calculate ROI, too. Mann says they often measure activity, such as the number of log-ins or the number of posted documents and comments. But he notes that activity calculations don’t necessarily translate into a hard-core ROI figure or measure the business value generated.
“A lot of people end up measuring activity, but getting from that to value is the hard part. It’s very hard to measure value,” he adds. “So there’s still a bit of a gap.”
He says companies need to calculate how much time and money they spent on certain tasks — e.g., making a decision or designing a new logo — before the introduction of social media and compare that with how much they spend now.
Mann says he expects more companies will have to calculate these costs as they invest more in social media. Having an employee update Twitter every now and then might involve minimal investment, but as a business’s IT department starts to build its own applications or integrate off-the-shelf applications with the company’s CRM system, the costs — and the need for hard ROI calculations — will go up.
Litle & Co. in Lowell, Mass., is now at that point. The company, a payment-processing center for other businesses, has been using social media sites for two years, says John Stevens, director of corporate content and communications. Those tools include a wiki designed for its own developers, and Twitter and LinkedIn for connecting with customers.
“We have begun to look very hard at what the ROI is, what is that value, and how do we actually quantify it,” Stevens says.
The company has had leads on new clients come in through Twitter and LinkedIn, and employees have been able to provide real-time customer service through them too, he says.
“In the softer world, they’ve proven themselves out,” Stevens says. He also says the company has seen “six-figure revenue come in because of the connections made through social media.”
But Litle is now trying to gauge the benefits of communicating with customers through social media channels rather than via e-mail or phone calls.
“If you’re using the available mainstream social media that you don’t have to serve, host or secure, then you’re talking about a number of different value drivers,” Stevens explains. “And when you look at the value of conversations with people, then you can ask whether you can spend less time in a 140-character tweet versus a 15-minute conversation on the phone. So we’re beginning to measure that: Is it a less costly service channel than phone or e-mail, and is it preferred?”
Getting firm ROI figures is key, Steven adds, because the company is deciding whether to continue using public sites such as Twitter or build proprietary systems that meet its own security standards for sensitive financial and corporate information.
The ROI figures will help Litle determine whether it’s worth building propriety systems, which Stevens estimates would cost well over $100,000 in hardware and software.
“But there’s no elixir that tells us how to get our answer,” he says.
Some companies that have built their own social media infrastructures are finding that the ROI is solid.
One of them is IBM, which set up its own versions of popular social media applications because it wanted to be able to authenticate users and ensure security, says Carol Sormilic, vice president of social media at IBM. The company’s internal version of Wikipedia, called Bluepedia, is a global intranet encyclopedia of all things IBM that’s co-authored by employees. Its in-house version of Twitter is called BlueTwit, and its internal version of Facebook is called Beehive.
The sites have a social component, with photo contests and the like running on them, but Sormilic says they have real business value, too. “It starts to make the organization much smaller. It flattens the organization. And we’re exchanging ideas,” she says.
IBM has calculated the ROI for its efforts, but it declines to release specific numbers. Sormilic notes that some of the returns from social media are soft benefits, such as the ability to promote a better exchange of information among a geographically dispersed workforce.
Sormilic says IBM’s social media tools have also delivered work efficiencies that cut costs. She points to the time savings among IBM salespeople, who use the tools to gain real-time access to the technology content they need to close deals and to connect immediately with IBM experts to assist existing and would-be customers.
“We have found that these new collaborative tools have helped reduce non-value-added time,” she says. “The results were very positive.”