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SNHU Return on Investment in Social Media Marketing Discussion Questions

Southern New Hampshire University

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Read the case study "Meteor Solutions: Measuring the Value of Social Media Marketing" in your course pack and answer the following questions: What is the ROI in social media? How is it measured?

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KEL548 MARK JEFFERY Meteor Solutions: Measuring the Value of Social Media Marketing Steve Fowler scanned the notes on his desk and reflected on the results of his latest advertising campaign. It was March 2009, and Fowler was vice president of strategy and client service at Ayzenberg, a Pasadena-based, full-service advertising agency. Over a period of four months, Fowler had completed what he considered one of the most innovative campaigns ever handled for a video gaming client. Capcom, a leader in the gaming industry and an important client of Ayzenberg, had just launched Resident Evil® 5 (RE5), the latest release of one of the industry’s most valuable game franchises. Video game players, or “gamers,” were known to be highly involved with certain franchises, including Resident Evil®, communicating extensively with each other, sharing ideas and information about products, and bragging about personal scores and accomplishments. For this reason RE5, a powerful asset with a passionate fan base, had warranted the use of an online viral, or word-of-mouth (WOM), campaign for its worldwide game launch. Online WOM campaigns sought to build excitement around a product by motivating individuals, especially key opinion leaders, to share news about the product with their friends and personal networks through online media such as e-mail, blog postings, and special online forums. Mike Webster, director of brand marketing for Capcom USA, expressed the logic behind an online WOM campaign for RE5: The objective of the campaign was to mobilize the core fan base by providing exclusive content and getting them to share that with other people to grow the franchise.1 Although the creative work and appropriate media for the RE5 launch had been meticulously planned, Fowler was also interested in measuring the effectiveness of the campaign to better serve his client. In the past, measuring WOM was practically impossible. However, a software company named Meteor Solutions had found a way to do exactly that. Fowler and his team had worked with Meteor to execute several campaigns for other clients, but he had never applied Meteor tools on such a large scale. Fowler was about to speak with Webster to report on the results and tangible value that Ayzenberg had created for Capcom. 1 Mike Webster, in interview with the authors. ©2011 by the Kellogg School of Management, Northwestern University. This case was prepared by Zev Kleinhaus ’09, Twinkle Ling ’09, Itaru Matsuyama ’09, Thien Nguyen-Trung ’09, and Keita Suzuki ’09 under the supervision of Professor Mark Jeffery. Cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. To order copies or request permission to reproduce materials, call 800-545-7685 (or 617-783-7600 outside the United States or Canada) or e-mail custserv@hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Kellogg School of Management. This document is authorized for use only by Megan Marshall (meganwenner3@gmail.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. METEOR SOLUTIONS KEL548 Though he considered the campaign to be incredibly successful, Fowler knew Webster would want to hear specific WOM figures. What was the return on investment (ROI) for the RE5 campaign and the implications for future campaigns? Had the Meteor tools provided comprehensive and actionable information, or was more work needed before these solutions could be widely used in advertising? Fowler had to decide what to tell Webster. Overview of Social Media Historical Rise of New Communication Channels In the wake of mainstream adoption of the Internet as a means of communication, the use of so-called “social media” had gained widespread popularity among the general public. Social media, broadly defined, referred to essentially any online content that was created and shared by individuals. The most common forms of social media were text, images, videos, and sounds. This information was transmitted with software application tools such as blogs (e.g., Blogger, LiveJournal), Internet forums (e.g., vBulletin, phpBB), social networking services (e.g., Facebook, Twitter), discussion groups (e.g., Google Groups, Yahoo! Groups), multimedia sharing services (e.g., Flicker, YouTube), and livecasting (e.g., Skype, Google Chat). Social media surfaced in the late 1990s as a groundbreaking phenomenon. Prior to the emergence of the Internet in the mid-1990s, corporations, governments, and media companies essentially were the only institutions that had the physical capability to transmit information to large audiences in a “one-to-many” relationship, i.e., mass communication or marketing. However, within a few short years the Internet changed everything by allowing virtually any individual with access to various social media tools to communicate at practically zero cost with millions of others instantaneously. Beginning with high adoption of e-mail, people began sharing more and more information via WOM through an increasingly rich variety of media developed specifically for the Internet. The impact of social media on WOM, in the words of Clara Shih, author of The Facebook Era, was tremendous: Social media lowered the entry barriers and cost of word of mouth for individuals. Before, people had to expend a lot of effort to generate word of mouth through picking up the phone or writing an e-mail. With the creation of social networks, word of mouth marketing became automated; a sentence on one’s profile or blog was immediately broadcasted to one’s entire social network with the individual expending effort mostly on content creation and little on distribution. Social media makes word of mouth less invasive by broadcasting to all, rather than targeting a few individuals.2 Exhibit 1 shows the historical launch dates of major social websites. Exhibit 2 illustrates the increase in the total number of unique visitors to major social websites and tripling of traffic on Facebook in just one year, from April 2007 through June 2008. The use of social media began to grow rapidly, to the point where it was no longer just a tool for the technically savvy but rather an acceptable means of communication for many different 2 Clara Shih, The Facebook Era (Boston: Pearson Education, 2009). 2 KELLOGG SCHOOL OF MANAGEMENT This document is authorized for use only by Megan Marshall (meganwenner3@gmail.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. KEL548 METEOR SOLUTIONS demographic groups. As social media tools became abundant, so did their users, who varied in age. Exhibit 3 shows the increase in usage of social media compared to traditional media from 2006 to 2008. Exhibit 4 lists the utilization of social media and type of involvement by age group from 2008 to 2009. It is worth noting that while certain social media solutions catered to specific interests, others competed for similar audiences. Twitter, a micro-blogging service, was one of the most talkedabout recent startups. In December 2008 it garnered 4.43 million unique visitors, a 752 percent leap from the previous year. Exhibit 5 shows the growth in Twitter’s unique visitors between December 2007 and December 2008. In order to compete with Twitter, Facebook, the worldleading social networking site at the time, introduced a revamped home page in March 2009 so its users could exchange thoughts in a more timely fashion. Marketing through Social Media Noticing the widespread growth of social media, marketers everywhere began searching for new, efficient ways to leverage the Internet’s potential to reach large target audiences. In an attempt to conduct more effective promotional campaigns, marketers initially focused on generating, amplifying, and controlling references and hyperlinks to their products and services on the web, in order to align online messaging with their existing print or other offline campaigns. However, this was not an easy task. Measuring the ROI for online social media marketing campaigns was even more complex than evaluating advertising effectiveness in traditional offline mass-market channels such as radio and television. On the positive side, the Internet had expanded marketers’ potential domain overnight from regional to global audiences. Unfortunately, marketers could not yet observe with whom these millions or billions of consumers worldwide shared information, over what medium, and how often. Over time, more and more software applications and tools allowing some form of measurement of this behavior began to emerge. For example, most companies began using web analytics to measure, collect, analyze, and report Internet-based data related to their own websites (Exhibit 6). Although these tools gave users a clear idea of where the viewers of their web pages came from, they were not helpful in understanding how such viewers had originally become aware of the website. Marketers usually gave visitors an option to fill out surveys to explain how they had heard about their websites, but most people would not take the time to fill out the surveys unless compensated, which introduced biases in the information collected through surveys. Another set of tools identified “network maps” within social networking sites, pinpointing the so-called “influencers” within a community of related users. However, even with these tools it was difficult to determine how many people were really influenced by any specific individual, whether they passed along information to other people, and how many “pass-alongs” had actually taken place. Underlying the question of how to track pass-along was a fundamentally important one: how to monetize social media marketing? This billion-dollar question resulted from the fact that although membership numbers for many social networking and media sites such as Facebook, YouTube, and Bebo were extremely large and growing, only a very small number of people actually intended to purchase anything on or through these websites. This inability of social media sites to generate revenues had garnered widespread criticism that financial market valuations for these firms were unjustifiably high and bound for a correction if no viable monetization opportunity soon emerged. For example, in May KELLOGG SCHOOL OF MANAGEMENT 3 This document is authorized for use only by Megan Marshall (meganwenner3@gmail.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. METEOR SOLUTIONS KEL548 2009 Facebook, which had more than 200 million registered users, rejected a venture capital round that would have pegged the firm’s valuation at $8 billion.3 In other words, many industry observers were concerned that although impressions in social media sites were highly valued, these sites were actually losing money. This demonstrated a clear contrast between social networking/media sites and search engines such as Google. While Google was earning 98 percent revenue from advertising (Exhibit 7), social media companies were unable to monetize the asset of millions of users with a similar business model. Considering these economic dynamics, Isaac “Biz” Stone, Twitter’s co-founder and creative director, stated in May 2009 that his company would not bother pursuing an advertising model.4 In summary, although marketers were improving their understanding of the opportunities of social media, few had been able to effectively capitalize on these opportunities. Meteor Solutions In December 2008 Seattle-based software research firms Fyreball and Reach Machines merged to create Meteor Solutions. Cofounded by Ben Straley, Pete Parsons, and Jordan Weisman, Meteor Solutions was an Internet software company that enabled advertisers, publishers, and agencies to gauge and optimize WOM. Meteor technology was designed to “measure, buy, and optimize WOM traffic with the precision of paid media.”5 The Meteor platform was a data-driven web service built upon open-source software and commodity hardware. The system consisted of a lightweight tracking service, a data-gathering infrastructure, and a web user interface featuring detailed analytics. The platform was composed of two products: Meteor Tracker, the core tracking technology and analytics application, and Meteor Ignite, which consisted of WOM optimization tools built on the Tracker technology (Exhibit 8).6 To understand the value proposition of Meteor Tracker, a basic familiarity with website addressing conventions is required. Each website on the Internet is identified by a unique web address known as a uniform resource locator (URL), which is the Internet “address” that tells Internet browsing programs (so-called “browsers”) where on the Internet a website can be found. Using high-performance Javascript on a web page, Meteor Tracker created unique URL “identifiers” that tagged each website visitor, the content they shared, the recipients that responded, and the site or media (e.g., e-mail) through which responses came. Exhibit 9 is an illustration of the process by which Media Tracker provided a unique user identifier to determine the source that directed subsequent visitors to the web page. Exhibit 10 is an example dashboard available to users of Meteor Tracker that summarizes the aggregate data, including total traffic from online sharing and the sites driving the most sharing. Meteor Ignite, on the other hand, provided advertisers and publishers with tools to accelerate content-sharing by visitors through e-mail, instant messaging (IM), and social sites such as Facebook. 3 “Report: Facebook Rejects $8B Valuation,” Atlanta Business Chronicle, May 19, 2009, http://www.bizjournals.com/atlanta/stories/ 2009/05/18/daily41.html. 4 Meghan Keane, “Is App Revenue Sharing the Secret to Facebook’s Future Profitability?” May 19, 2009, http://econsultancy.com/blog/3844-is-app-revenue-sharing-the-secret-to-facebooks-profitability. 5 “Meteor for Agencies,” http://mdbworks.net/meteor/new_sales_site/for_ad_agencies.html. 6 “Meteor: How It Works,” http://www.meteorsolutions.com/howitworks.php. 4 KELLOGG SCHOOL OF MANAGEMENT This document is authorized for use only by Megan Marshall (meganwenner3@gmail.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. KEL548 METEOR SOLUTIONS Michel Bastien, vice president of product development at Meteor Solutions, described the added value of the company’s products: Meteor Solutions proves that a viral campaign is just as measurable and actionable as other forms of advertising. We make it easy for brand managers to see how sharing happens and discover new places that they need to be at. WOM sustains energy through a campaign. It is a great way to complement one’s media buy strategy and increase ROI.7 Ayzenberg Founded in 1993 and employing just over fifty-five people in a closely held corporation with estimated revenues of $55 million, Ayzenberg (www.ayzenberg.com) was one of the ten largest independent advertising agencies on the West Coast. Ayzenberg offered full-service advertising solutions, from strategy, creative, and media to production, for clients focused on selling to young adults—the so-called “Generation Now” that was considered the most advertising-averse target audience for bringing ad-avoidance to the level of high art. Approximately 95 percent of Ayzenberg’s clients were engaged in the video gaming industry. Such clients included industry giants such as Capcom, EA Games, Sony, Microsoft, Ubisoft, Konami, Sega, and Atari. The Video Gaming Industry The video gaming industry itself was only about thirty years old. In 2006 the Entertainment Software Association estimated video game revenues in the United States at $3.8 billion. During this time, the gaming market continued to expand while other major entertainment businesses, such as music and film, struggled to grow (Exhibit 11). The average age for a video game player was about thirty. The gender distribution of gamers was reaching equilibrium, according to a 2005 study showing that 57 percent of gamers were male and 43 percent female. Although traditional game consoles were still the main devices used for gaming, online gaming had drastically increased in scope and size. Capcom Capcom (www.capcom.com) was founded in Japan in 1979 as a manufacturer and distributor of electronic game machines. In 1983 Capcom Co., Ltd., was founded and soon built a reputation for introducing cutting-edge technology and software to the video game market. Capcom attained industry leadership and became involved in all areas of the video game industry, creating some of the most iconic characters and franchises in gaming. Famous releases by Capcom included the ubiquitous Mega Man® and Street Fighter® franchises, as well as the genre-defining Resident Evil® and Devil May Cry® series. Capcom Entertainment, Inc., a wholly owned subsidiary of Capcom USA, Inc., marketed, developed, and distributed interactive entertainment software for leading game consoles and handheld systems. 7 Michel Bastien, in interview with the authors. KELLOGG SCHOOL OF MANAGEMENT 5 This document is authorized for use only by Megan Marshall (meganwenner3@gmail.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. METEOR SOLUTIONS KEL548 The Resident Evil® Franchise The release of Resident Evil® in 1996 marked a watershed moment in the video game industry. Resident Evil® instantly established a whole new category of gaming—the survival horror genre—and inspired a new wave of imitators. The U.S. release of Resident Evil® 2 in 1998 broke industry records by selling more than 380,000 units in its debut weekend and grossing more than $19 million. Capcom followed up with Resident Evil® 2, Resident Evil® 3 Nemesis, and Resident Evil® Outbreak, all of which continued the dramatic story of a viral outbreak in the small Midwestern town of Raccoon City. The franchise hit a high-water mark with the release of Resident Evil® 4 for the GameCube™ in January 2005 and the PlayStation® 2 in October 2005. It quickly achieved critical acclaim around the world and garnered multiple “Game of the Year” accolades from esteemed outlets. As of May 2009, the Resident Evil® series of products had sold more than 27 million units and the franchise was valued at more than $600 million. Capcom expanded the franchise to include several Resident Evil® movies, a line of action figures, and a series of comic books. The RE5 “Kijuju” Marketing Campaign The story of Resident Evil® 5 (RE5), a survival horror third-person shooter video game, revolved around innocent inhabitants of the fictional African village of Kijuju being mysteriously transformed into zombie-like monsters, and two elite agents tasked with investigating and stopping the epidemic. Knowing that RE5 was part of a beloved franchise with millions of followers hungry for anything new, Ayzenberg’s Steve Fowler was hoping to provide exclusive content (such as game screenshots and trailers filmed with live actors) to core fans, who would then influence casual consumers. Using Meteor technology, Ayzenberg and Capcom hoped to obtain the data needed to incentivize core fans ...
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Final Answer

Attached.

Running head: SOCIAL MARKETING

1

Return on Investment
Name
Institution
Course
Date

SOCIAL MARKETING

2
ROI in Social Media Marketing

Every advertising agency or individuals involved in social media marketing needs to
review the advertising results from their launched campaigns. Social media marketing involves
sharing created content via social media in the form of video, audio, images, or text. Such
content is designed towards some results and can be transmitted via social networks like Twitter,
Facebook, YouTube, discussion groups, emails, or blogs. Therefore, the success of a strategy
will be based on a positive return on investment (ROI), whatever the objective a business has.
For example, a business may be concerned with building a brand, and therefore the marketing
campaign would be focused on the brand. As such, the business would set specific key
perfo...

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