How to Estimate Your Social Media Return on Investment

The real problem for any manager, owner or executive when trying to quantify the return on investment from any social media investment is that the results are highly dependent on the assumptions. Change the assumptions and you change the "return" on any campaign or channel.

That can be especially tricky when trying to figure out the value of "avoided" activities. Any customer support group can estimate the cost of an average call simply by dividing wages or contract costs with the total number of "completed" calls. None of that will measure the effectiveness of call handling, though.

A firm might rationally want to process more calls per hour. What isn't so clear is how the value of those calls might change if the metric is simply "calls per hour." Handling calls faster might mean higher rates at which customers depart, fewer "account saves" or less "incremental new sales."

In the U.S., the average support call cost is approximately $10 to $25 per call, depending on the product, services and the vertical. So one way to create a metric is to forecast the number of support calls a firm believes it will get in the future, implement a social media program to circumvent those calls, and then measure the difference between the number of calls the firm actually received, versus the number it expected.

You see the conundrum. "Success" depends on the assumptions about future call rates. Set a high-enough expected future rate and a firm can "succeed" with or without a social media program. Set a low-enough rate and a firm will "fail," no matter how good its performance at avoiding calls in the first place.

It's a good thing, and often necessary, to measure social media effectiveness. The problem is simply that success or failure mostly is determined by the assumptions one makes.

How to Estimate Your Social Media Return on Investmen

VoIP Will Cannibalize Mobile Voice

VoIP always has been a troublesome issue for established voice providers. On one hand, it has promised the ability to create and deliver new and richer services. On the other hand VoIP has had the potential to essentially cannibalize the single most important revenue stream a telco or mobile service provider possesses. VoIP will cannibalize existing voice

O2's plans to offer VoIP technology are an example. O2 Connect is a new mobile service that allows smart phone users to use voice and text services over Wi-Fi networks from their mobile number. Users can call or text to any U.K. mobile or landline number using the service.

O2 Connect will initially be available on iOS and Android smart phones and will subsequently roll out to other devices. O2 Trials VoIP Service


The trial will commence in October 2011 by invitation only and will include O2 consumer and business customers. All of the traditional challenges are present in the test. O2 hopes to provide higher value and greater flexibility for its customers. But O2 Connect also can displace some of the revenue O2 otherwise might earn from voice and text messaging services.

"Internet of Things" has Same Attraction as SMS, for Mobile Service Providers

The "Internet of things" has gotten attention recently for several reasons. 


One reason is that analysts, academics and journalists, not to mention mobile service provider executives, need something new to talk about. 


Another reason is that machines and sensors represent the clearest way for mobile revenue and services to grow. Most people who want a mobile device now have one.

Mobile broadband for smart phones and tablets will be an important source of revenue growth for some time. Beyond that, to keep the business growing, service providers must tap a whole new class of services and devices other than "phones" or other devices people use. That means sensors, security cameras and other telemetry devices. 

But there are some other benefits as well. Many telemetry applications do not use much bandwidth. So the attraction is similar to that of short message service: high margins and low bandwidth consumption. Industrial and other specialized applications also will be more churn resistant.


“A machine is not going to churn as fast as a consumer,” said Robert Mesirow, CTIA vice president. In part, that is because specific sensor applications typically will be embedded in some larger business process with scale implications. One consumer can swap a phone or a service provider without hassle. That will not be true for large sensor networks.


There are challenges, to be sure. Many sensor applications will feature low gross revenue, which has significant implications for the design of such services. Sensors often will have to be very low cost, very easy to deploy and support, while the recurring service costs also will have to be optimized. 


Still, when an industry runs out of customers, finding new customers is highly significant. That's why much attention will be paid to sensor networks and applications. 

Why M2M is important

Enterprises Don't Generally Track Social Data

Of the 1,700 chief marketing officers that took part in face-to-face interviews for an IBM study, the vast majority (80 percent) said they rely on traditional market research channels and techniques or sales campaign analysis (68 percent) to guide marketing strategies.

About 26 percent also track blogs and 40 percent track "any online communications."

And yet, despite being unable to use the tidal waves of consumer data generated by social media, 82 percent of CMOs said they plan to increase their use of the channel over the course of the next three to five years.

More than half of the respondents report they are not prepared to to manage social media or the shift to customer influence over reputation and branding processes.

Marketers suffering data overload

Square Targets Larger Retailers

Up to this point, Square has had most success with smaller and independent retailers. But it now is looking at larger retailers. One indication is a change in its policy of delaying retailer payments exceeding $1,000 per week, a policy Square originally implemented to prevent fraud, according to company CEO Keith Rabois. "Now that we've been commercially available for a year, we can now spot statistical anomalies."

Such an improvement stands to lure larger stores into Square's fold, since they won't have to wait up to one month to receive their money. At the moment, Square's base is mainly small businesses, 70 percent of which did not previously accept credit cards because of associated fees.


The San Francisco, Calif.-based company now boasts 800,000 merchants and processes $2 billion in payments, according to Rabois.

Square Aims to Attract Bigger Merchants

North American Social Games To Total $2.4 Billion By 2014

SuperData estimates the North American social games market to grow 35 percent in 2011, reaching $1.4 billion, and projects total consumer spending on social games to total $2.4 billion by 2014.

North American Social Games To Total $2.4 Billion By 2014

Zynga Is Launching Its Own Social Network

People who weren't so keen on Google+ now will have "Zynga Direct" as one more social network to contend with.

The first component of Zynga Direct is a sign-in platform codenamed Project Z. It will launch later this year, Business Insider reports. It's quite a rational move, though. Zynga now is completely dependent on Facebook, and Zynga Direct should reduce that reliance.

Zynga Direct is a more general name describing Zynga's new direct-to-consumer strategy. The idea is that you can play Zynga games outside of Facebook, and across multiple platforms.

Zynga Is Launching Its Own Social Network

A Clock Only for "Geeks"!

Googlers would think up something like this, wouldn't they?

Sprint Details LTE Plans As Clearwire’s Decline Accelerates | mocoNews

To say there is a bit of instability in much of the U.S. mobile backhaul market would be an understatement. After announcing it would buy about $20 billion worth of Apple iPhones, whether it can sell them or not, Sprint announced that it would expedite the building of its new Long Term Evolution network this summer, with completion by the end of 2013, a breath-taking time table. $20 billion worth of iPhones


Sprint also said it would no longer sell WiMAX devices after 2012, a clear indication Sprint intends to wean its customers off the Clearwire network. Clearwire and Sprint equities both tanked on the news. 

Sprint executives say LTE devices would be available for its network in the summer of 2012. Sprint LTE plans


Clearwire insisted it wasn’t dead, and remains essential to Sprint's 4G plans. Investors clearly aren't so sure. But with LightSquared still facing serious objections to its own LTE launch plans, that means three national networks now face a bit of uncertainty about how much capacity they will be needing, and perhaps none of the three companies can provide complete assurance of financial success in the future, as independent entities. 


Nor, for that matter, can any of the three completely shake concerns about bankruptcy. Three national networks that might not exist in the future is quite a lot of potential backhaul business that could evaporate. 


Of course, Dish Network also says it wants to build a national LTE network, so add a fourth element to the dynamic situation. 

What is gigabit broadband good for?

“If you put a gigabit in people’s homes they will be inspired to find new ways to use it," says Kevin Lo, Head of Google’s fiber access program. "We have no idea why you need a gigabit today, but when we all had dial up you could not possibly imagine watching video over them."

"It’s not about doing email faster, it’s about doing those new things that you don’t do today," he says. Video is the obvious practical application that could use bandwidth of that sort. Some of us might question whether new ways to watch TV is really such a huge innovation, though.

Unicast entertainment video, especially the same sorts of content you can watch on a subscription TV service, is a pretty dumb way to use bandwidth, some of us would argue. As any engineer will tell you, there always are multiple ways to solve any computing problem. You can process locally, or process remotely, substitute local processing for bandwidth, or bandwidth for local processing power.

If what a user wants to do is watch professional video on demand, then local storage such as provided by Tivo is a reasonable solution. Unicast is better suited to relatively low-volume types of content, or interactive content.

What also remains to be seen, as Google builds out its fiber to the home test markets, is whether Google really will try to build symmetrical 1-Gbps networks, as it has said, or will, for cost reasons, do something a bit less grandiose. The other angle is whether Google really will try to offer such bandwidth at prices roughly comparable to what telcos and cable companies might charge for 10 Mbps to 20 Mbps services.

It always has seemed unreasonable to think that Google has any magic answer to the costs of building such infrastructure. Sure, it will always make sense to choose test beds where aerial plant can be built, because that is cheaper than underground construction, unless there is universal duct space available, allowing any new provider to simply pull a new set of cables into the existing conduit.

So if construction cost is not amenable to significant cost reductions, one would have to look to revenue to make the business case. But here again, it has seemed unlikely that a sustainable business case can be built solely on "broadband access," in competitive markets, where the other contenders might have multiple services to sell.

Sure, Google is running science experiments, not trying to create a self-sustaining business. But you also have to wonder how much actual application innovation can happen if such isolated test cases.

What is gigabit broadband good for?

Wireless Broadband Incremental or a Substitute?

A recent analysis suggests more people are getting their broadband from wireless providers in the Twin Cities and fewer are using traditional services like cable and DSL, according to a new study by St. Paul-based ID Insight, which found that wireless broadband (both from mobile companies and the Minneapolis Wi-Fi network operated by US Internet rose 7.5 percent in the 12 months ending in March. Wireless broadband taking bigger slice of local market

To be careful, it actually isn't so clear whether what the data shows is simply that more people are buying mobile broadband plans, which is largely additive to the universe of broadband connections, or that people are starting to substitute wireless for fixed connections (which some of us do). 


To see what was going on with wireless Internet access, compared to fixed-line access, ID Insight used "Broadband Scout" to look at access trends over the last couple of quarters. "What we found was that internet transactions through a wireless device increased by a factor of over 200 percent, whereas Cable and DSL diminished by a few percentage points." Wireless access grows fast

In and of itself, that simply means people are using their smart phones to do things on the Internet more than they used to do. The reported decrease in fixed network access would be expected to dropk as a percentage of total, if wireless usage is growing so fast. 

The study shows transactions on Comcast's network was 37.6 percent of total and CenturyLink represented 27.8 percent of total. Both of those providers saw their share decline slightly, but again, it might be expected if wireless has grown so fast. 


Wireless broadband, which includes the cellular providers and the Minneapolis Wi-Fi network, ranked third (16.6 percent, or about 152,000 households). The number for wireless customers does not include Wi-Fi networks inside homes.

Among Twin Cities wireless customers, about 131,000 appear to be smartphone, laptop or tablet computers users with data plans. The other 21,000 wireless customers belong to the Minneapolis Wi-Fi network, said Joe Caldwell, the CEO of USI Wireless of Minnetonka, which runs the network. Wireless grows

"Over the past few months and quarters the notion of where my broadband connection resides has shifted, at least for me," says ID Insight's Adam Elliott, company president. "A few short months ago, I would have told you that my broadband provider was Comcast, as that was who provided internet access to my home."

"A few short months later, I am not so sure," says Elliott. "A few months ago, I bought one of those funky new Android smart phones on Sprint's 4G network. I am now seeing download speeds of 3 Mbps to 6 Mbps that exceeded my basic Comcast cable connection that was coming in around 3 Mbps." http://factactsolutions.blogspot.com/

Still, it is not possible to say with certainty that users are dropping fixed connections and relying solely on wireless broadband. 


Other studies likewise have shown growing use of mobile broadband, but that does not, in and of itself, suggest anything definite about whether the usage is complementary to fixed line access, or a substitute. 

Early data from YouGov’s new “DongleTrack” study shows that 10 percent of respondents have used a dongle (USB modem) or a datacard to access the Internet outside the home or work. A mobile phone has been used as an Internet access device by more than one fifth of the online population (21 percent). 

As often is the case, marketers will be looking at younger users for an indication that end user preferences could be changing. In that regard, younger users seem more willing to use wireless broadband services. U.K. trends


The study suggests that 69 percent of respondents under 25 have used wireless broadband access, about 67 percent of those 25 to 34, and 65 percent of those who live in London. 


For almost one in seven users of mobile broadband (14 percent), the use of a dongle or datacard is their only Internet access method. This figure rises to 21 percent of males, 31 percent of 18 to 24 year olds and over one third of Londoners (34 percent).

The study suggests that although much wireless broadband is complementary and supplemental to fixed broadband access, there is a significant adoption of wireless broadband as a substitute for fixed services. 

Why T-Mobile is Going Over the Top for Voice

It might be seen as a harbinger of things to come, but T-Mobile USA, lagging behind the leaders in the U.S. mobile market, wants to make its Bobsled voice application something users can engage with on any device or carrier, something that would have been a "problem" in earlier days.

Bobsled, originally supporting VoIP conversations between Facebook users, now also supports VoIP calling to telephone numbers.

If you wonder why T-Mobile USA is taking an action that will cannibalize its voice revenues, the answer probably is that T-Mobile USA sees that as an inevitability.

Informa Telecom & Media predicts that North American consumer use of services such as Skype and Google Talk already accounts for 20 percent of all voice activity in 2011.

By 2014, that figure is expected to rise to 40 percent. Messaging also is moving to over the top mechanisms. Some three trillion messages will be sent using over the top apps in 2011, growing to nine trillion messages in three years. By 2015, IP messaging will surpass traditional cellular messaging, Informa predicts.

T-Mobile USA likely assumes that it has less to lose from cannibalizing its voice minutes of use, than it has to gain by becoming an application provider relevant on iPhones and other smart phone devices.

Why T-Mobile is expanding Bobsled

In-Store Mobile Marketing Works, Mall Owner Says

General Growth Properties operates 166 shopping malls in 43 states and has found conversion rates from location-based email at its sites to range from 30 percent to 60 percent, says Jeff Cloud, director of customer relationships and mobile marketing at General Growth.

He cited the example of a program that sends text promotions, with a shopper’s permission, to customers when they’re at a General Growth mall; the shopper texts back a code to receive a discount at a mall store or restaurant. E-mail marketing using location

A survey in the first quarter showed 50 percent of General Growth mall shoppers owned smart phones, compared to 41 percent of U.S. consumers. The survey also revealed that six in 10 moms that shop General Growth malls check e-mail on a mobile device, 53 percent search for coupons and offers via mobile and one in four purchases on mobile phones or tablet computers.

Cloud also reported that 17 percent of the e-mail General Growth sends its customers is opened on mobile devices, with about two-thirds being opened on Apple iPhones. He says General Growth uses a tool called Litmus to track customer response to marketing programs and finds that 46 percent of consumers who open an e-mail on an iPhone read it, 17 percent skim it and 37 percent just glance at it or delete it; comparable figures for Android phones are 57 percent reading, 13 percent skimming and 30 percent glancing or deleting.

He says General Growth has narrowed the size of its e-mail messages to 600 pixels from 750 or more pixels so that they will fit on the small screen of mobile phones. The company also has concluded mobile e-mails are most effective when they are 60 percent text and only 40 percent images.

What’s the future of mobile banking in Europe? - McKinsey Quarterly - Financial Services - Banking

Bankers across Europe believe that mobile devices will transform the retail-banking landscape in the next three to five years, but also believe they are not investing sufficiently to take advantage of the opportunities. They also think mobile service providers and other nonbanks are leading the way. That might come as a surprise to some, but banking applications and services are among the few new businesses tier-one telcos can get into that offer enough incremental revenue to justify the effort.

The study by McKinsey and the European Financial Management and Marketing Association also suggests that mobile devices’ overall economic impact on the banking industry may be neutral at best.

Individual banks should be able to increase their revenues and cut costs if they successfully exploit the convenience of mobile, its potential to drive digital commerce, and the opportunity it represents to target the unbanked in emerging markets, researchers at McKinsey say.

Some banks, however, may find that mobile adds to costs and erodes prices unless they offer a truly differentiated product or service. Mobile banking in Europe

Some 87 percent of banks aim to have a mobile site, and 84 percent are planning to launch some sort of mobile-banking “app” within the next 12 months, compared with 59 percent and 47 percent, respectively, that have them now. The mobile features these institutions currently offer are traditional banking services, such as the ability to check account balances and recent transactions and to conduct simple transactions. But 70 percent of banks said they plan to add more advanced functionality within the next 12 months.

Worldwide Social Media Revenue $14.9 Billion in 2012

Worldwide social media revenue is on track to reach $10.3 billion in 2011, a 41.4 percent increase from 2010 revenue of $7.3 billion, according to Gartner, Inc. Worldwide social media revenue is forecast for consistent growth with 2012 revenue totaling $14.9 billion, and the market is projected to reach $29.1 billion in 2015.

Advertising revenue is, and will remain, the largest contributor to overall social media revenue. Social media advertising revenue is forecast to total $5.5 billion in 2011, and grow to $8.2 billion in 2012. Advertising revenue includes display advertising and digital video commercials on any device including PCs, mobile and media tablets.

Social Media Revenue $14.9 Billion in 2012

Hollywood Tries One More Way to Embrace Streaming Without Cannibalizing Legacy Business

Lots of people are hoping that streaming and over the top delivery of professional content will somehow lead not only to more "on demand" access, but somehow lead to lower prices. That might happen, but not if content owners and distributors have success creating "sell through" requirements that link streaming to purchase of legacy products.

The "Ultraviolet" initiative is one more example. Some have dubbed the streaming service the “Giant Media DRM Cloud Coalition Featuring Everyone Except Apple and Disney and Amazon."

The service allows users to buy movies first on DVD or Blu-Ray, providing a code that will let users stream or download the film on other devices, like iPads, Android phones and laptops. Hollywood Hopes "Ultraviolet" Will Save DVDs

Nearly 7 Percent of U.S. Content is Consumed on Mobile Devices

U.S. consumers are increasingly connecting to digital content using a variety of devices such as smart phones, tablets and other mobile devices. In August 2011, the share of non-computer traffic for the U.S. increased to 6.8 percent from just 6.2 percent at the end of the previous quarter.

The largest percentage from this share came from mobile devices, which drove 4.4 percent of total digital traffic in the U.S.

The second largest driver of non-computer traffic was the tablet category, contributing nearly two percent of total traffic. Nearly 7 Percent of U.S. digital content now consumed on mobiles

Marketing is Business Driver for Mobile Wallets

Possibly the most meaningful impact that Google Wallet will have is on the advertising and marketing communities. Google offers will be Google’s application for deals, coupons, and offers that will inform you of promotions based on your location.

In that sense, the business case for mobile wallet apps will be location based advertising, the ability to view and compare the deals of local vendors, and coupons that do not have to be cut out of magazines or newspapers.

Local-targeted advertising will sound like Living Social and Groupon, and that's essentially correct.

Google shows mobile "payment" is about marketing

Is Information Technology Like Railroads? If So, What Does That Mean?

For those of you who believe the Internet will be a transforming technology, it might also be helpful to keep in mind that such transformations can be hugely unsettling, and take quite a long time to become obvious.

Still, there is something out of character with job growth coming out of the last handful of recoveries from recessions.

What we historically expect to see is a sort of "shark fin" pattern of job growth. Since 2000, though the fin was almost non-existent after the early 2000s recession.

It is an inverse fin after the "recovery" from the 2008 recession. Does that relate to a broader economic transformation? If so, we are in for a jarring, unpleasant ride, in the medium term.

In 1850, a decade before the Civil War, the United States’ economy was small, in fact not much bigger than Italy’s. Forty years later, it was the largest economy in the world. What happened in-between was the railroads.

Deep changes like this are not unusual. Every so often—every 60 years or so—a body of technology comes along and over several decades, quietly, almost unnoticeably, transforms the economy and creates a different world for business. So the issue is whether mobility, applications and the Internet might be such a wave. The second economy

If so, the changes will take decades to play out.

If something that big is going on with information technology, something that goes well beyond the use of computers, social media, and commerce on the Internet, a second economy is being built. But there will be casualties. When the shift of developed economies "from farm to factory" occurred, there was widespread dislocation. Think of the United Kingdom in the mid-1980s, "A Christmas Carol" and all that.

In the early 20th century, U.S. farm jobs became mechanized and there was less need for farm labor, and some decades later manufacturing jobs became mechanized and there was less need for factory labor.

Now business processes—many in the service sector—are becoming “mechanized” and fewer people are needed, and this is exerting systematic downward pressure on jobs. We don’t have paralegals in the numbers we used to. Or draftsmen, telephone operators, typists, or bookkeeping people.

A lot of that work is now done digitally. We do have police and teachers and doctors; where there’s a need for human judgment and human interaction, we still have that. But the primary cause of all of the downsizing we’ve had since the mid-1990s is that a lot of human jobs are disappearing into the second economy. Not to reappear.

Perhaps that is why recoveries from recessions starting in 2000 have been so different.

What Kindle Fire Means for Telcos

The Amazon Kindle Fire launch, with the simultaneous release of three new versions of the Kindle designed more as e-readers, likely illustrates a fundamental change in consumer electronics ecosystems, just as the application ecosystem also has changed around smart phones.

Needless to say, network access providers also face the need to create entirely new businesses based on partners of various types, all working within a larger context where devices, applications, commerce, advertising and cloud-based applications all are essential parts of the value consumers and businesses pay for.

The content and communications businesses these days are fundamentally different from those same businesses of 30 years ago in one fundamental way. Unlike the situation several decades ago, when value almost completely could be controlled by vertically-integrated providers, value now is derived from loosely coupled ecosystems.

In other words, where a telco in the past could control and vertically integrate every part of the “voice delivery” business, these days network-delivered applications with high value can be delivered to end users (both business and consumer) without any formal business relationship with an access provider. Razorsight | Corporate Blog