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Five golden rules of social media ROI in the travel industryFebruary 16, 2012 By Special Nodes 37 Comments
NB: This is a guest article by Marco Saio , director o f global research and pro jects at EyeforTravel.
Facebook page? Check! Twitter account and dedicated hastags? Check! Competitions, discounts and
giveaways? Check! Any real, measurable and abundant ROI from social media campaigns? Erm, guys?
A recent EyeforTravel survey o f APAC travel brands shows that despite 67% claiming to have deployed
social media initiatives, more than half admitted confusion or inability to effectively rack and measure ROI.
One respondent describes the ROI dilemma faced by travel marketers:
“For all its potential, social media keeps me up at night – it feels a little bit like jumping in at
the deep-end without arm-bands and being expected to swim like Michael Phelps.”
With this in mind, I took three social media experts to task on how travel brands can move beyond
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With this in mind, I took three social media experts to task on how travel brands can move beyond
deploying social media for “engagement” or to “raise awareness” and instead concretely generate
incremental revenue and real ROI.
Each gave me five po ints to consider.
Jo siah Mackenzie , direct o r o f business develo pment at ReviewPro (and a T no o z No de)
1. Ident if y where so cial media will save yo u mo ney
Social techno logy can increase efficiency. Data from SimpliFlying indicates its seven times cheaper to
serve a customer on Twitter than in a call centre.
Using social media and review analytics could also save you substantial amounts o f money in customer
surveys, business intelligence, and market research. Exposure from social campaigns could replace
some of your investments in advertising and PR, saving money from budgets there as well.
2. Co unt inbo und leads f ro m so cial media
Many hotels are using social media listening too ls to pick up on conversations with people looking to buy
what they are selling. Dan Sherman made a $70,000 sale o ff a Facebook referral .
Am m ad Diana Shelbey Al lan Sébas tien Nico le
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There are more sophisticated metrics related to sales – such as time to closing and average order size o f
a socially engaged customer – but begin with counting leads.
Hubspot research showed companies that blog generate 88% more inbound leads than those who do
not blog.
What does this look like for your situation, and on o ther social networks? How is social activity affecting
your lead vo lume?
3. Measure f o r sales co nversio n impro vement
Social media – and online customer reviews in particular – play a key ro le in optimizing sales conversion
rates.
Jo in the conversation
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rates.
PhoCusWright found that OTA shoppers who visit ho tel review pages in OTAs are twice as likely to
convert.
Jennifer Davies from Expedia had more specifics:
“On Expedia, good reviews o f 4.0 or 5.0 generate more than double the conversion o f a
review of 1.0 – 2.9 .”
Brian Ferguson, an EVP at Expedia, quantifying the ADR impact as well, adds:
“A 1 po int increase in a review score equates to a 9% increase in average daily rate (ADR).”
So, measure the increase in revenue directly attributable from using social media in the sales process.
4. Track pro gress t o wards business KPIs and st rat egic o bject ives
Insights from the social web can play a key ro le in reaching strategic business goals such as improving
guest satisfaction or increasing the percentage o f direct bookings.
When you understand the financial impact o f reaching larger business goals such as these, quantifying
the contribution o f social media towards reaching that goal becomes easier.
Luis del Olmo, EVP and CMO of Melia Hotels International, says:
“The online reputation o f each o f our brands is a key success indicator fo r us. Online reviews
not only give us insights into our daily operations, they also directly influence our revenue and
profitability.”
5. Measure campaigns
Driving email newsletter subscriptions? Need to increase the number o f inbound links to your website fo r
SEO purposes? Want to increase visito r time on your website?
Campaign or pro ject-based ROI might ultimately be the best measure o f return on investment. Especially
if you compare the cost associated with reaching a goal with what it cost you in the past using o ther
IN CASE YOU MISSED ITIN CASE YOU MISSED IT
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if you compare the cost associated with reaching a goal with what it cost you in the past using o ther
tactics.
Martin So ler at WIHP wrote a good article if you want to learn more about this.
Mo rris Sim, co -f o under o f Circo s Brand Karma
1. Get yo ur so cial business f ro m Friends o f Fans (Fo Fs)
There are a lo t more o f FoFs than fans, and your fans’ referral will mean a lo t more than if you try to target
them directly.
2. Pay at t ent io n t o user-generat ed co nt ent (UGC)
Monitor what’s being said with text, photos, and videos. Know how your brand is being perceived in real-
time as well as evergreen UGC.
3. Engage int eract ively
Content from meaningful conversation is king, and no one likes to be constantly reminded o f o ffers and
Tnooz-Amadeus FREE Webinar:How to market and sellunbundled travelSuppliers such as airlines and hotels
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Tnooz-PhoCusWright VIDEO:LIVE research with YOU as thesubject2012 – how is it go ing for you? Over
half way through the year, we decided
to find out how the industry is feeling and where it
strategy is on key topics.
Read Mo re »
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discounts.
Imagine if you’re conversing with your date and in every o ther sentence s/he tries to convince you to move
in and help with rent. A big turn-o ff!
4. Have a plan f o r dealing wit h emergencies
These days, crisis could occur at any po int even if you do everything perfectly. So it’s time to update the
emergency response plan and take into account the many-to-many nature o f social media.
Once the staff trained, make sure you do regular practice runs!
5. Develo p a re lat io nship wit h Gen Y and Z s
They are highly influential. More than half o f the world is under 30 and they are the new movers and
shakers.
Everywhere from Cairo to Wall Street they’re banding together to make their vo ices heard, and in some
cases, overthrowing institutions.
Get to know them. They’re your future customers and staff.
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Barbara Pezzi, direct o r o f analyt ics and search o pt imizat io n at Fairmo nt Raf f les Ho t elsInt ernat io nal
1. St art wit h a go al in mind bef o re yo u embark in any act ivit y
If you do not know what it is that you are trying to achieve, it becomes very hard to measure how
successful you have been.
The same applies to ROI. If your social media strategy does not have ROI in mind, it is very unlikely it is
go ing to produce any.
Ultimately, not all social media activities will have an ROI or a financial outcome. However, it is important
that all stakeho lders agree if a financial gain is expected and if so , a relevant strategy put in place.
2. Wit ho ut accurat e benchmarking it is very dif f icult t o est ablish co rrect ROI.
Take records o f your key metrics before, during and after your social media campaign so that you can
correctly establish the impact o f your activities.
Keep a written schedule o f all your activities on the various social sites for correlations and further
analysis. It make historical analysis much easier.
3. Keep wit h t he plan
Philosophical debate aside on whether social media should have an ROI or not, if you are required to
report on it, stick to its financial definition and financial metrics.
Makes sure you take into account savings in your pro fit calculation but do not create or use intangible
“made up” metrics like the ROI o f a Facebook like or a twitter fo llower. It is a simple case o f costs vs
pro fits.
If the investment is in $, then so must be the outcome, not fo llowers, likes or clicks.
4. Have a measurement st rat egy in place
It is almost next to impossible to accurately measure any activity if no tracking has been put in place in
advance.
Ensure you social posts and links are tracked with campaign parameters, as you would do with your PPC
campaign, familiarise yourself with the analytics too ls provided by each social platfo rm when available (ex:
Facebook Insights ), establish your Key Performance Indicators.
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You are not measuring the activity, like how many fo llowers did you gain this week or how many times you
posted, but the outcome.
5. Accurat e measurement t akes t ime and discipline
Start by utilising too ls freely available such as Google Analytics, before you start investing in a proprietary
too l.
Set actual numeric targets against your goals, measure accordingly and act based on targets and results.
Measurement is not the goal.
The goal is to derive actionable insights. If you do not have a so lid analytics strategy in place, and the
human resources to manage it, even the most expensive sophisticated too l will be next to useless.
NB: This is a guest article by Marco Saio , director o f global research and pro jects at EyeforTravel.
NB2: Pezzi, Sim and Mackenzie will be presenting more social media insights at the
upcoming EyeforTravel TDS Asia 2012 in Singapore this May 9 to 10.
NB3: Piggy bank, Hands and Target images via Shutterstock.
Related posts:
1. What one travel industry figure really thinks about social media
2. Socialnomics: Four vital social media tips for the travel industry
3. Behold the anti-social social media strategy in travel
Filed Under: How To Tagged With: circos brand karma, expedia, eyefortravel, facebook, fairmont
raffles, hotel, reviewpro, ROI, social media, social network, twitter
Abo ut Special No des
Special Nodes is the byline under which Tnooz publishes articles by guest
authors from around the industry.
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Comments
Ro bert Gilmo ur says:February 17, 2012 at 12:37 pm
I’ve read all this and ‘m none the wiser, sorry – they’re saying nothing much about stuff we
don’t already know, and even less than that about ROI , in fact hardly any o f these thoughts are really
anything to do with any usable commercial concept o f ROI.
People have talked round this subject till we’re all blue in the face, and clearly are continuing to do so.
We need ‘how to ’ bullet po ints, live examples, case studies proving satisfactory, independently
verifiable ROI calculation/performance. It is abso lutely no surprise to me that there is a problem here,
because social media, particularly Facebook is about engagement, not commerce, and its even hard
to measure engagement. We need to recognise where social media fits into the commercial scheme
of things, rather than trying to convince people that its the be all and end all, and if you don’t do it,
there’s something wrong with your business, even tho ’ you don’t know what social media is
supposed to /can do for it inn the first place
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Jo siah Mackenzie says:February 17, 2012 at 5:08 pm
I appreciate your thoughts, Robert, but when you look at metrics directly related to
sales – such as lead source/vo lume or sales conversion improvement – how is that not about
ROI? Also, cost savings is a very transparent measure as well. These numbers are as close to
quantifying a “return” as you can get. I’m just a little unclear on what you mean…
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Ro bert Gilmo ur says:February 18, 2012 at 7:33 am
Its not the what to do, its how to do it, including an attribution model, and practical
examples o f successful ROi calculations. That’s what i never seem to see. Also as ROI is
dependent on cost, how do you attribute a to tal cost to social media activity, another area that
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is almost without exception never addressed properly by the commentators, and an essential
part o f the ROI calculation, and a recent survey showed that only a minority o f firms actually
identify and attach a budget to it- o r worse still, plunder o ther budgets to fund it, no tably the
search budget.
The o ther issue I’m not clear about is what you identify as attributable to social media activity
alone. Social media experts try to attach it to every positive, successful marketing initiative in
every way, shape or fo rm it can, especially mobile. Mobile is mobile, social media is social
media. My company among o ther things builds successful mobile websites for hotels, The
so lution doesn’t need social,media to be successful, it needs to attract and make conversions
in the real world o f mobile space. I am still waiting on my first mobile booking referral from
social media.
My interest in this is that i have clients who have spent considerable money with social media
companies and marketers, fo r little or no identifiable return
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Fernando Ro dríguez Merino says:February 19, 2012 at 2:18 pm
Hello Robert,
Maybe you can give an example o f what it is a “usable commercial concept o f ROI” and
“successful ROi calculations”, as it is not clear fo r me. If you find one, I would like to check if it
has a separate and independent ROI.
Not only mobile web sites, but call center, ppc, o ffline adverting and many more are together
during the selling process and you cannot po int any o f them as abso lute responsible o f
conversion, despite every one wants to say that it is the so le owner o f the conversion.
As a hotel marketeer, I know what does it mean to be responsible o f budget and how tricky can be
metrics. My final conclusion is that every too l co llaborates on a certain level and has to be
measured separately throughout the marketing funnel.
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Ro bert Gilmo ur says:February 19, 2012 at 3:58 pm
Fernando, that’s exactly what i’m asking for!
Hotels are happy to pay OTA’s commission, no one is disputing they have a part to play in the
conversion – o therwise why pay them.
It is not good enough just to make excuses for social media when the leading Q’s are asked.
this is part o f the problem. Social media is like a house with no foundations. I have named it
elsewhere as a wannabe – rather like a a so lution looking for a problem.
Let me give you some practical examples – - – - – -
Hotel 1, spends £5K with a ‘social media expert’ – has had Facebook 28 referrals, 0
conversions over 3 months.(Google Analytics)
Large city hotel, 2640 Facebook ‘referrals’, 2 bookings (Google Analytics)
I had a call from a prospective new client asking me if I was a social media expert, when I
asked ‘why’ he said he wanted to increase his sales revenues by 20%. We really need to get
real especially with small businesses o f what social media can and can’t do for them and their
business before they plunge in and spend money which has an opportunity costs and might
be better spent elsewhere.
In this particular case, the client’s web site was one o f the worst i’d ever seen yet he wanted to
throw a big budget at social media – Costa Concordia comes to mind.
My po int is simple, until we can have reliable sustainable measures o f ROI we can benchmark,
then encouraging small business to spend budgets on, or worse still, divert budgets to , social
media activity is a potential po isoned chalice.
I’ve made my po ints on blogs and elsewhere re the risks and downsides o f social media,
these are conveniently fo rgotten,or not well enough understood, by – so called ‘social media
experts’
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Fernando Ro dríguez Merino says:February 20, 2012 at 4:55 pm
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Hello Robert,
I agree with you when you say that your client should fix their own website before thinking
in social media, mostly if he wants to increase reservations. However, maybe Google
Analytics is not the best too l fo r measuring social media performance. Regarding OTAs
many people tend to think that working with them is “free”, as they are only paying % per
booking, but the truth is that it could represent a big cost o f opportunity, and what it is sure,
their ROI (or interest on working with you) is directly related with the social media status o f
the hotel product they sell.
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Bruce Sweigert says:February 20, 2012 at 3:27 am
Agree with Robert here. Everyone has been talking about ROI citing huge numbers. Its
not a question o f whether it is there or not (it clearly is in many cases), but to date I’ve not seen
even the most basic attempt at an analysis that shows attribution.
Social media is now quite mature in the market. What is getting tiring is they every time somebody
launches a social media campaign and gets thousands o f “ likes” its just assumed that its a
commercial success.
Its time to move beyond the hype and start looking at it like real business people.
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Ro bert Gilmo ur says:February 20, 2012 at 6:07 am
The all talk and very little action approach to ROI on social media is go ing to be a
big cross to bear especially when in o ther areas o f travel and hotel marketing are being asked
to , and are, tightening up their ROI’s and metrics.
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David Ko lner says:February 20, 2012 at 8:31 pm
Agree with everyone that attribution modeling is the missing link for creating ROI
in Social (or staying on top o f the flood o f data from virtually every o ther digital fo rmat). There
is lo ts o f different trial and error o f these types o f models, but in my experience the leadership
in this area is from outside o f the travel industry – expect to see more innovation at SES and
SMX events where thoughtleaders are sharing actual results o f attribution modeling tests.
Until we get to true attribution modeling in any form, it’s go ing to be conjecture, best tips, and
‘the ROI on Social Media is that you’re still in business in five years’ – this isn’t criticism of the
conjecture, just pressure for innovators to lead on the next world o f analytics and attribution
modelling.
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To ny Champio n says:February 19, 2012 at 6:26 am
There are 15 good po ints here and I agree they should be taken on board when devising
your social media plan. I do understand Robert’s frustration at not having a clear ‘how to ’ guide but in
reality IMO it is just not possible to have a universal, one-size fits all approach.
Here, in brief, is my take on the issue as the former owner o f a small business for which, perhaps by
definition, budgets were tight. Everything had to be done for a reason and measured, no matter how
crudely.
Not enough company’s have adopted Barbara’s first po int as their Golden Rule number 1: start with a
goal – a proper business goal. Note: number o f Facebook fans or Twitter retweets is not (or
shouldn’t be) a business goal.
Once you have your goal, work out the best way to get there – it could be a Facebook page, a Twitter
account, a mobile website, a competition or any number o f o ther options. The too ls used will depend
upon your goal, your business and your customers. You can then work out your KPI’s, metrics and
ultimately discern your ROI.
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For me the key is not to view social media, or any o ther too l o r channel, as silver bullets to be shot
into cyber space without first asking why.
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Pet er Syme says:February 20, 2012 at 7:08 am
If you want to see how a hotel uses social media and measures it go and speak to the
guys at Citizen M. There strategy has SM at it’s core and it paying back in spades. They did have the
advantage o f not having history so came at it from a start up po int o f view.
How many business hotels do you see consistently at number 1 or number 2 on tripadvisor? These
guys, live and breath SM and they to tally understand their target customer, and implement to service
that target customer.
In my own small businesses I engage across many SM routes. Why? My clients past and future are
there, and I cannot see how a service based business can ignore the dynamic changes that are
happening at rapid speed. You have to be part o f the conversation. I just measure two things.
1. Enquires generated
2. Converted business
I could measure a heap o f o ther stuff, but as a small business with no marketing resource and limited
time I like to keep it simple. The only cost is my time.
Last year I generated just under 6 figures directly from social media, so far in 2012 we are on track to
do significantly more, however, figures skewed a fair bit because o f a $60k enquiry. Also had
significant marketing exposure via TV because o f SM.
I am not saying it is easy it is not, and it is not helped by a minefield o f “experts” selling the wares with
often very little hard facts to back up the sales spin. Ignoring it is not an option though in my opinion. A
combination o f great search results and great SM strategies will ensure tourism business thrive, if
they have the product/service to back it up.
In an industry with more and more services and middle men in between the customer and the
business who provides the service, SM is they way to deal direct, however, I do not think there is a laid
down model that fits all businesses, it has to be designed and tested for each individual business and
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Ro bert Gilmo ur says:February 20, 2012 at 11:58 am
Peter, delighted to lean o f your experience, most hotels would give their back teeth for
this, you are certainly the rule rather than the exception – and the fact that you can directly attribute
the conversions &c to social media is a very rare feat.
My contacts tell me Citizen M spend a huge amount o f budget on social media as do Roger
Smith. i’m afraid the bulk o f my clients cannot be convinced enough o f the benefits o f social media
to entertain such spends without concrete ROI predictions for the boardroom, at the very least.
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Jo siah Mackenzie says:February 20, 2012 at 12:06 pm
Robert, I work closely with citizenM Hotels and The Roger Smith Hotel, and the
difference that I see is not that they spend a huge amount on social media, but rather their
approach o f “social hospitality”:
http://www.reviewpro.com/social-hospitality-6746
You may see this approach as less driven by numbers, but I know the owners o f both
companies view this as strategically important fo r their growth.
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Ro bert Gilmo ur says:February 20, 2012 at 12:14 pm
I hear what you say, now i have about my thousandth definition o f social
media to add to my co llection. it gets itself into bed with anything that will hype it up.
These hotels are indeed lucky, to most its a numbers game, commercial viability dictates
that.
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There will always be stars, among huge clouds o f doubters, and small businesses who
hear all the hype and mixed messages from all these experts and feel like they are in no
man’s land with it.
Furthermore they’d love to have a budget like Roger Smith Life to try to be a social media
champion.
We need to get real about this, its about the equivalent o f the ‘main in a street’ ho tel’
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Pet er Syme says:February 20, 2012 at 12:44 pm
Robert
Surely it is the ” man in the street hotel” that has the most to gain as they now have a
way to compete without having the budgets o f the big boys to spend on marketing.
I to tally agree about the hype and the confusion it causes and to many experts do not
help. However, it is here it is not go ing away and it provides opportunity , loads o f it.
Here is another example afraid from my industry rather than hotels,
https://www.facebook.com/WesternRiverExpeditions
There average booking value is in the $3-5k range and I have seen in detail how much
they measure every part o f SM and how it is driving business for them, lo ts o f it!. They
have not thrown money at it they have just sat down and worked out a system that
puts the customer at the heart o f everything they do and then got on and implemented
it. They blow my efforts out the water.
Again not easy to copy or just do , it takes each individual business to work out what it
is really o ffering and then how it is go ing to enhance their customers experience via
SM. Experts have their place but what works for one business will probably not work
for another business and that is why the fog just keeps getting thicker.
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Pet er Syme says:February 20, 2012 at 12:15 pm
Hi Robert
As much as I can gather I think SM is the marketing spend for CitizenM at the expense o f more
traditional marketing routes. Like I said I think they had an advantage o f designing and
implementing from the ground up, due to being a start up. Not many traditional hotels have this
flexibility so it will be much harder fo r them to make the change and fully embrace the
customer. CM pay there staff 30% of their income based on trip advisor reviews using a clever
system! I cannot imagine many Scottish hotel staff teams embracing that!.
We can track it because we are small, but I am convinced any business can track anything they
want in SM if they put the systems in place and more importantly get the staff onside. To me
the whole thing is just part o f normal customer interaction now, yes more confusion, yes more
chaotic but yes more rewarding as well.
The hotel industry especially the small owner managed hotels and small independent groups
are struggling as we can all see, those that embrace customer service on every level possible
to them , as well as finding their niche will have a chance, those that do not will find life harder
go ing forward.
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Ro bert Gilmo ur says:February 20, 2012 at 2:59 pm
I hear all your remarks about CM. I have stayed ion one. it is one o f the most
dehumanising ‘hospitality’ experiences i’ve ever had in my life. it was horrible. it was a disgrace to
the destination with which it had abso lutely no empathy, and the only thing it was missing was a
robot. Its s nonsense to say CM have a customer centric approach – they have a numbers game
approach driven by techies. Mutton dressed as lamb doesn’t even come into it.
I’m not one o f these people that manipulate Trip Advisor, having been an ex (and very successful)
hotelier sufferer o f this lo t. So i would never have posted a review, i would have been insane
before i finished.
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The Scottish market will vo te with its feet, the only way the Glasgow CM is filling is because o f
price, and flash selling – so much for an amazing social media strategy they can accurately
measure ROI on. They are devaluing the already discount laden Glasgow market,. and i hear
about to unleash on Edinburgh apparently, if they haven’t already.
Scottish hotels who value the Scottish hospitality experience – stick to your guns, and don’t
robotise, i’d say…
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To ny Champio n says:February 20, 2012 at 3:51 pm
The Emperor is naked – there, I have said it.
The social media are means to an end and not the end itself: just like telemarketing, email marketing,
direct mail marketing. All can be measured – maybe not with 100% accuracy but respectably close
enough to gauge a ROI.
Social media too ls are shiny and new but they are not infallible.
They are only as good as the business, processes and strategies they are supporting.
Olivier Blanchard likens Social Media to an infrastructure: it is a set o f platforms and techno logies that
allow people to talk with o ther people. It is what sits on that infrastructure that is the real important bit
and perhaps many o f the social media experts that Robert’s clients have encountered know about the
platform but perhaps not so much about the (social) business that happens on top.
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Barbara Pezzi says:February 21, 2012 at 5:24 am
I am a web analyst, and not a social media practitioner. As such, I think, a neutral vo ice in
this whole debate.
To Tony’s po int, nothing can be measured with 100% accuracy, but with some efforts and a decent
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tracking strategy in place, it is possible to get an accurate enough analysis o f ROI. Of course one can
make it really complicated and come up with complex compound metrics, attribution modelling
systems, and so on.. but ultimately, to start with, it is a simple case o f identifying one or 2 main
business goals and stick to that, just like Peter Syrne mentioned in his comment.
Therefore, taking Robert’s example, if ho tel 1 spends 5k on a SM expert and gets 2 bookings out if it,
then the ROI is go ing to be what it is. It is then up to the business owner to decide, whether the
exposure, traffic, etc was enough to justify the cost in the absence o f a positive ROI. This is no
different from a business owner happily spending 10K on a glossing magazine spread or a PPC
campaign with no goal tracking in place apart from number o f impressions and clicks. And on the
same token, the so-called social media “experts” that Robert is so frustrated with, are no different
from SEO “experts” who to these days still promise 1st position in Google for 10k upfront or bad web
designers, dodgy SEM vendors and so on.
The issue is not social media or the complexity o f measuring ROI, but the lack o f knowledge,
incorrect implementation, and bad advice from vendors, which can happen in any o ther online
channel. Not all social media campaigns will work and not all businesses will benefit from it, but I
have analysed enough online data over the years to say that the same applies to PPC, display, email
campaigns, etc.. Ultimately, it is up to us as consultants (I dare not say experts..) to advise our
stakeho lders, clients, co lleagues as best as we can. If they then decide that 5,000 facebook likes are
good enough to justify a 5K spending, as misguided as that is, ultimately, it’s their money, but the
channel should not be the one to be blamed for incorrect business decisions or unscrupulous
vendors.
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Valyn Perini says:February 21, 2012 at 8:53 am
I agree with many here that attribution modeling is the way to prove channel value and ROI
but, especially in the hotel industry, that function is in its infancy. Hotels still don’t truly understand the
impact third party distributors have on their bottom line (the “billboard effect”), and social media
metrics are even less financially quantifiable.
As Barbara po ints out, attribute modeling is complex and expensive, but it may be the only true way to
measure ROI for large-scale online campaigns.
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Ro bert Gilmo ur says:February 21, 2012 at 9:31 am
Ok, all travel techno logy is expensive, and most o f it is over so ld, over hyped, you
name it. travel shoppers and travel suppliers (e.g. hotels)are already way over-marketed and
overso ld to , largely techno logy driven.. Do they all really want all this (techno logy) – o f course not.
Its way too expensive a situation to be in, in an already far too cluttered market,with almost
everyone and their granny o ther than the hotel and the customer co ining in the benefits. For
techno logy ‘creep’ – perhaps ‘race’ is a better description and its time it was stopped. PMS
vendors are a classic case- selling ro lls royces to hotels which only need minis.
ANOTHER attribution model – heavens the mind boggles. Lets get back to basics, fast – no sorry,
that’s impossible.
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Mo rris Sim says:February 22, 2012 at 8:47 pm
I tell my clients ROI should be measured in the traditional sense, which is,
($$ you get – $$ you spend) / $$ you spend.
Why reinvent the wheel on this one? That doesn’t make sense, especially when FC is already
measuring banner ads, PPC, OTA performance, etc. using that fo rmula. The same tracking techno logy,
either promo code, customer mentions, or a parameterized URL all can be used as ways to track
actual conversion from social media. If you’re spending advertising $$s, I simply would not alter from
this fo rmula.
It’s been our experience that social media advertising can return anywhere between 50% – 4000%
ROI using this calculation. For comparison’s sake, depending on your OTA commission percentage,
the ROI is almost always between 300% (for 25% commission) to 900% (for 10% commission)
using the same formula (and with no additional advertising spent on the OTA). So as it relates to ROI
from social, I don’t think the question is if it can be done but how to do it
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For those o f you that aren’t do ing social advertising but have someone on staff posting o ffers on
your Facebook fan page — great. Use a % of that person’s salary, full burdened, as the base for $$
spend.
For non-revenue generating things you do in social media, like monitoring your reputation,
responding to customer inquiries, etc.. That’s just general cost o f do ing business. I don’t think the
right measure o f whether you should do this or not is ROI, just as you don’t use ROI as the
justification to send guest satisfaction surveys or have a Guest Relations Manager in the hotel lobby.
One final thing: attribution models is an interesting approach but I personally think there have been a
lo t things wrong with it. For example, a popular practice is to set the ‘time to decay’ on the cookie
dropped to 30 days. This means that the first touchpoint from up to 30 days ago would get the credit
fo r the sale — Wow! This attribution gives a lo t o f credit to SEM. However, if I do last session
conversion on SEM campaigns, the ROI is abysmal; in the majority o f cases you lose money on SEM
campaigns. So I think that can’t be right either.
Google Analytics Premium has provided some too ls fo r you to customize your own attribution model
so you can better credit all the customer touch po ints. But this is complex and requires expertise —
which is lacking even today. Wrong attribution is worse than no attribution! So I think the attribution
model, while interesting and probably the way to go eventually, isn’t yet practical enough to replace the
simple ROI formula that someone very smart once figured out. It does a fine job o f evaluating the
efficacy o f your investment in most cases.
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Ro bert Gilmo ur says:February 23, 2012 at 6:09 am
Morris, are you able to share with us a social media campaign that got you an ROI o f
say 1000%?
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Mo rris Sim says:February 23, 2012 at 6:42 am
Sure — here’s one example.
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2 years ago during the time o f the Bangkok rio ts a client in Phuket was having difficulty with
occupancy. I worked with them, a 5-star resort on the beach, by looking at its seasonal
business during that time (it was low season), analyzing their social media perception
(contemporary, good getaway for adults), and constructed a complimentary upgrade o ffer that
we then advertised on Facebook.
The advertisings targeted singles/couples pink, Eastern Europeans, and regional travelers.
With $1,000 spent over about 4 days, the hotel received about $20,000 in booking specifically
for this o ffer. Further, the on resort spend from these guests were an additional $0.75 for every
$1 received in room revenue. It was the most pro fitable customers they had ever had.
Since then, they have been able to successfully replicate the results using the same
methodology we developed for the first campaign.
The people we worked with have since moved on to open new hotels in the region with better
pay. We all still keep in touch. Now that’s pretty good ROI for the individuals as well!
In any case, if I were to use my ROI formula, the campaign delivered:
($20,000 – $1,000) / $1,000 which gave them a 1900% ROI.
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Ro bert Gilmo ur says:February 23, 2012 at 12:14 pm
Morris, very well done you.
We need more success stories like this
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Bruce Sweigert says:February 24, 2012 at 12:34 am
Morris: This is as good example as I’ve seen, but herein lies the danger o f
taking distressed inventory examples as case studies. In these case, ROI is assuming that
any incremental revenue is 100% earnings. Since in your case, could have o therwise gone
unso ld, it makes a good case for using SM to clear out unso ld rooms.
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I know this article is focused on hospitality, but from an airline perspective applying such
ROI numbers would be problematic. Airlines continually suffer from yield dilution as
customers purchase patterns have adapted to anticipate distressed pricing.
For more steady-state examples, assumptions need to be made on channel shift (simply
moving the sale from one channel to another), cost o f goods so ld and dilution from other
o fferings.
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Ro bert Gilmo ur says:February 24, 2012 at 6:35 am
Bruce, great po int, but this is not unique to social media is it?
Mo rris Sim says:February 24, 2012 at 10:49 am
Hi Bruce, I think you’re right in terms o f taking yield management into
account. I’ll just add a coda to complete the hotel story. In the case o f the client, they ran
a campaign for the ho liday season (which is high season in Phuket as you know) and
the ROI was best on the FB channel fo r them. They to ld me that they achieved even
better ROI on that, which I wouldn’t be surprised given the higher room rates during the
high season.
This property does practice online parity, so it wasn’t a fenced-in o ffer. It was just that
through the FB distribution channel they were able to get a greater yield because the
business garnered was direct as opposed to go ing through commissionable 3rd
parties. In fact, higher room rates meant higher commissions, whereas the cost o f
placing an FB ad remained relatively the same during that period; hence the room rate
increase had no material impact on what they paid to advertise.
If they can replicate the results, this would actually argue for them to sell distressed
inventories on OTAs and go direct via Facebook advertising during the high season!
Anyway, your po int about airlines is interesting. Southwest, Jet Blue, and Air Asia all
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seem to be using social media to sell inventories all the time. Even a traditional carrier
like Delta and Lufthansa are fairly active selling on social media.
So there must be a reason why they’re do ing this — it doesn’t appear to be just
distressed inventories — although I would not know that fo r sure. Perhaps they’ve
figured out how to allocate inventories through the various channels to optimize on
yield and social is one o f the channels that yields well?
If they’ve figured this out, good for them! As Robert po inted out, this is really no
different than what you’d do for general revenue management anyway. Social just
became the nth channel that you’d consider in your channel mix — and if you do it
right, it could be a higher yield channel than what’s available traditionally online. If you
don’t do it right, you could end up disappo inted.
But then again, that’d be the same for any channel.
Ro bert Gilmo ur says:February 24, 2012 at 11:27 am
Guys, this has been a really useful and insightful discussion on a very
critical topic
Pet er Syme says:February 23, 2012 at 6:43 am
Always remember that the ROI % will be significantly higher if you have a product/service
that is suited to this means.
I would argue that all products/services are but some are much more suited than o thers. If you are a
hotel , you cannot be just be another hotel you have to have something special worth talking about if
you are go ing to make decent ROI.
In the last 2 weeks I have had over $70k worth o f enquiries and over £10k o f bookings via SM. ( PDFmyURL.com
In the last 2 weeks I have had over $70k worth o f enquiries and over £10k o f bookings via SM. (
different money signs due to location o f enquires) Twitter alone is a regular revenue stream now ,
month in month out. Facebook less so, but still pays. Other niche online groups much better returns.
Spend? my time and not a lo t o f it, zero cash spend. Last year I was on a expedition which recruited
every member at $6.5k per time via SM.
Now I am playing in the niches, so much more suited to this means, but on the o ther hand I am not
especially adept at what I am do ing so those with pro fessional resource should do better if they have
a product/service worth taking about. The only effect I am seeing over the last few years o f playing and
experimenting in this area is a reducing cost o f client acquisition. Now under £0.50 a client. The one
time I hired pro fessional help for 6 months on a FT basis the numbers did not look nearly so good,
but if we had scaled it would have worked.
I really think it is very difficult fo r business owners to get their head round this because their is no
system that has been designed that will work for all business. It is not like SEO where if you do the
right things you will get results. This needs to be uniquely tailo red for each business and I would
argue by the business. It takes lo ts o f trial and error to find what works, therefore, it does come down
to how much you believe in this being a future sustainable revenue stream.
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Ro bert Gilmo ur says:February 23, 2012 at 12:40 pm
Peter, all interesting, you’re so right about differentiation and proper channel
management, its amazing how many hotels don’t ‘get it’
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Fernando Ro dríguez Merino says:February 24, 2012 at 11:46 am
It is actually quite common that new channels need to o ffer better rates in order to get
clients. E-commerce web sites went through this process when they started, when buying online was
considered risky to put your credit card in. It is happening again, I think that it is a matter o f time
Business consultant Booz & Co. predicted in January 2011 that physical goods so ld through social
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commerce would balloon to $30 billion from $5 billion by 2015, with Facebook contributing a majority
o f sales.
While it is true that today buyers prefer to close their buy on a common channel, social Media and
channels like Facebook are playing a fundamental ro le during the entire selling process. Well
integrated facebook apps would use the best customer information to create a complete social entity
around each product or service.
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Bruce Sweigert says:February 24, 2012 at 8:13 pm
Again, attributing 100% of the revenue as “earnings” is why you can get such high
numbers. To say I can get 1000% ROI on an SM investment, if I were American Airlines all I would
have to do is come up with $1M and put it into twitter and Facebook campaigns and all o f a
sudden I’m pro fitable again. Would anybody believe this? If a travel agent or ad agency to ld you
that they could get 1000% ROI would you believe it?
Yes, SM is a very cost effective channel fo r both advertising, corporate comms and customer
engagement. Where we tend to loose sense o f reality in terms o f ROI is when we look at it as
something o ther than a new channel.
True ROI should be measured against its effectiveness vs. o ther traditional channels in terms o f
cost, reach, response, yield, etc. net o f any channel shift. The ability to target specific audiences
and drive direct sales will no doubt have significant ROI, but it won’t’ be 1000%.
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Calvin says:March 8, 2012 at 5:27 pm
Im not sure this is any more than thin link bait IMO agree that it just skirts the issues and
problems with no clear so lutions or methods for measuring this. This article itself and these
comments just show me we are still no t understanding how it works exactly. I didn’t find it very helpful
in saying you need to do x y and z apart from the obvious.
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Kevin May says:March 9, 2012 at 7:57 am
@calvin
Everyone entitled to a fair comment.
And, presumably, blog posts titled…
“Things To Do In Winter Or Summer In Australia” or…
“Great Places to Get Dressed Up in Melbourne”…
… would never be considered so-called link-baiting?
I’m happy to share where I found the headlines
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4 So cial Media Benchmarks Yo u Can Use | Unmet ric Blo g says:February 17, 2012 at 10:47 am
[...] Twitter is fast becoming the inbound call center o f the 21st century and brands like @DellCares and
@XBoxSupport are embracing it like never before, infact data from SimpliFlying suggests that
providing Twitter support is up to 7 times cheaper than a call center. [...]
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