The Homa Files

Excerpted from Ad Age, “Study: ROI May Be Measurable in Facebook, MySpace After All” By Jack Neff, Apr 13, 2009

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Package-goods brands are still cautious about social media, figuring that the return on investment can’t be accurately measured. After all, marketing on Facebook or MySpace might generate a conversation but not necessarily a sale. Now, however, a method is emerging to relate one to the other, potentially eliminating a major impediment.

Recent research from ComScore, MySpace and Dunnhumby … suggests that even relatively small outlays on social networks by package-goods brands can result in offline sales impact and deliver positive return on investment.

Generally, the ROI tool of choice for consumer package goods — marketing-mix models that rely on econometric analysis of changes in retail scanner data — can’t pick up the impact of the relatively small five- and six-figure outlays package-goods brands make on digital media.

To overcome that, MySpace teamed with ComScore, which uses a panel of more than 1 million people in the U.S. to track internet usage, and Dunnhumby, which runs loyalty programs for supermarket retailers and has access to loyalty-card purchase data from 59 million people in the U.S. …

One of the first studies was for an unnamed personal-care brand that ran a $1 million campaign on MySpace last year, including a contest in which members submitted videos of themselves and friends for others in the network to vote on … The program also included online couponing.

By the standards marketers sometimes use to measure digital-ad effectiveness, the MySpace effort wasn’t overwhelming. Of 76.9 million people exposed to the campaign … fewer than 1%, visited an advertiser page on MySpace, though roughly half who did (358,000) visited the advertiser’s website.

But by the measure that matters most, sales, the campaign appeared to pay off nicely. It produced $1.28 million in offline sales, as measured by Dunnhumby, which compared purchases among shoppers not exposed to the campaign with purchases among those who were. That amounted to a 28% return on investment, not counting returns from repeat sales among consumers the brand won via the campaign …

Particularly by package-goods standards, that $1 million digital outlay with one site was large … While a campaign that reaches nearly 77 million people is certainly large enough to generate a read in marketing-mix models, the combination of the ComScore and Dunnhumby panels into a single-source database … holds promise for more-accurately measuring many smaller efforts …

The bigger question is whether the ROI will hold up for bigger efforts, he said, justifying budgets similar to what consumer-package-goods brands spend on TV and magazines.

Digital is “incredibly efficient, because the cost per thousand is low … But it’s just not moving a lot of volume yet. And, of course, what you always grapple with is if they suddenly went [from $1 million] to $10 million in digital, would the return stay where it is? … I think the answer is no.” But it’s also a question he said no CPG brand appears to have tried to answer yet.

Edit by SAC

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Full Article:
http://adage.com/digital/article?article_id=135940

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