Understanding Advertising Objectives & KPIs

[unrelated] Gorgeous blanket octopus
[unrelated] Gorgeous blanket octopus
Let’s look at 3 business objectives that apear regularly on advertising KPI dashboards: sales, awareness and community. There are many interdependences between them, however there is a stronger link between Community and Sales than between the two other combinations involving Awareness. Basically with digital, social media and technological ubiquity a potential consumer needs less and less direct awareness.

Consumers increasingly validate their value-based brand judgements though a simple Google search. Google: “best organic non-fat milk brand in New York City” and you’ll find what you are looking for.

Advertising campaigns can no longer simply focus on awareness building. The challenge is now to put the product as fast as possible in the hands of the consumer. This adds more pressure than ever to create exceptional and competitively priced products (recently Microsoft and Blackberry tablets made the mistake of setting non-competitive prices thus creating artificial adoption roadblocks).

On the other hand, building a strong and engaged community (see it as a social CRM), can greatly improve direct sales and keep consumers engaged.

The following basic analysis should always be done when setting up advertising objectives.

INCREASE SALES

This is usually the hardest and one of the most important business KPIs.

KPI: number of sales, in-store conversion rate, drive-to-store conversion rate
Message CTA: Drive to store, promotion, drive to store contest, rewards program, loyalty, etc.

INCREASE AWARENESS

Awareness of a specific product (knowledge of a specific product or brand);
Association with a specific product (e.g. Axe & nerds);

KPI: consumer brand awareness (aided, top of mind)
Message CTA: Emotional, content heavy, product presentation, open, no closure

BUILD COMMUNITY (CRM, Social Media, etc.)

1. Community building: opt-in consumer info (DM, email, Facebook, apps, etc.)

KPI: number of opt-ins, type of opt-ins
Message call-to-action: Join now, join promotion, participate, etc.

2. Community engagement: consumer participation in conversations (over social media, word of mouth, etc.)

KPI: consumer engagement (Likes, comments, etc)
Message CTA: Share, comment!, participate, engage, share contest, etc.

3. Community advocacy: consumer brand advocacy (positive brand support, message sharing)

KPI: consumer conversations, likes, recommends, shares, RT, etc.
Message CTA: Share if you love, Join VIP community, Brand Nation, etc.

Advertisements

Digital Business Planning, A Long and Smarter Road: From your Business Objective to a Tweet

Every Titanic has its iceberg
Every Titanic has her iceberg

Some notes regarding digital strategic planning, data & tactics. Will detail them in the next posts. This might seem complicated. Strategy is about asking the right questions, having the right data and setting the right priorities. Those who take shortcuts on strategy are just lousy tacticians.

STRATEGIC PLANNING

  1. Determine the Business Objective
  2. Build a Business Case
  3. Identify the KPIs
  4. Identify the Necessary Programs
  5. Global Plan & Budget
  6. Strategic Creativity Alignment
  7. Determine the Tactics & Creativity Alignment
  8. Build the Conversion Funnel
  9. Specific Plan, Budget & Resources
  10. Execution, Metrics, Iterations
  11. Review

DATA

  • Program Maturity Audit
  • Media / Audience  / Touchpoint Ecosystem Audit (owned, earned, bought – analytics)
  • Competition Audit
  • Trend Analysis
  • Current Communication Portfolio
  • Social CRM
  • Conversion Funnels
  • Previous Campaigns Metrics & Lessons Learned

TACTICS

  • Contests
  • Email based
  • Display ads
  • SEO/ SEM
  • Blog
  • Social content
  • Microsites
  • Mobile apps / advertising
  • Social advertising
  • Facebook app
  • Point of sale (physical)
  • Event
  • Affiliate
  • PR
  • Stunt
  • Guerrilla
  • etc

How Deep Is Your Love? or About Building Advertising Business Cases

Sometimes communicating is repeating. So here we go again trying to make an argument for building business cases in advertising. (You might know that I’m a big fan of P. Drucker’s down to earth and common sense business approach.)

MEASURE IN ORDER TO MANAGE

Any business operation must be measurable. Including advertising. But I’m not talking about putting numbers on a pretty dashboard.  Those actionable KPIs must always be the result of a specific business case.

A business case is a simple walk-though justification of the business objective that generated the advertising operation.

As a digital business planner you need to learn to help your clients to derive the right KPIs from their business objective. This is why it is imperative that you start by defining the right business case. (You can see an example of a business case here.)

CLEAR BUSINESS OBJECTIVES

Some business objectives are easier to measure than others. (more on business objectives here)

For instance: increasing sales, increasing the customer satisfaction can easily be supported by very simple KPIs (e.g. from 12% to 18%, etc).

However, some advertising objectives sound as if they came from a graduate level social engineering course: e.g. Changing consumer behaviour

Whenever faced with these kinds of demands, we can always translate them into a specific business objective. Exactly how do we want to change the consumer behaviour? By how much? etc.

After analysis, you should be able to define the value to be created by the specific business objective. The business case will present a path to profitability if that business objective is attained.

EXAMPLE: A CLEAR BUSINESS OBJECTIVE

Business objective: Increase from 7% to 14% the use of a smartphone while watching TV.

Reasoning for the business case: By increasing by 100% our customers’ use of smartphones while watching TV we can increase their engagement with the brand by 10% and also the download of our custom TV watching app by 200%.
The 10% engagement increase will generate $X in customer loyalty and decrease in attrition rate by 3%,  +4% social media equity and +5% in customer recommendations, etc. This will result in a cumulative revenue increase of $YM over the next 3 years.

You always need to know why you are doing a specific operation and analyze all the pertinent details.

Once the Business Objective is set up we follow the previously discussed process:

Business Objective -> Business Case -> KPIs / Metrics -> Program Maturity Model -> Prerequisite Programs -> Planning

So the conclusion to take away as an advertising planner is that you should always be able to justify your advertising initiative with a business case. And that business case has to support the business objective.

Next I’ll talk about Data and Digital Strategy.

I’mma Let You Finish: A Digital Business Planner Sequence

Magic mirror on the wall who's the digital plannerest of them all
Magic mirror on the wall who’s the digital plannerest of them all

Digital Business Planning Review

So far I’ve been trying to make the following points:

  1. The digital / social media planner and strategist role must have a very strong business component (metrics, analytics, and general business model understanding).
  2. Any strategy must support a business objective with clear KPIs
  3. Plan for one business objective at a time
  4. The above KPIs must result from a business case
  5. The execution of a business objective is subject to a series of prerequisite strategic programs

Simple Sequence

Business Objective -> Business Case -> KPIs / Metrics -> Program Maturity Model -> Prerequisite Programs -> Planning

Case Study

From the previous example:

Business Objective

Increase the Customer Recommendations by 20% in the next 12 months.

Business Case

Customer base: 600 000
Customer annual value: $1 000 (Annual revenue $600 000 000)
Customer annual net profit: $200 (Annual profit $120 000 000) (20%)
Customer annual churn: 30%
Current recommendation rate: 20%
Recommendation conversion rate: 50%
On average a customer recommends 2 people.

A 20% increase in recommendations (from 20% to 24%) = 4% increase in total recommendations at a 30% churn rate, both cumulative over 3 years = 53.5K customer years

So the increase program will generate in net profit of $10.7M over 3 years.

Determine a budget based on previous programs. Say $1.7M over one year.

KPI / Metrics

Increase by 24K new consumer recommendations for a $1.7M budget.

Program Maturity Model

Determine the maturity level by assessing the quality of current digital programs.

Let’s assume the client program review reveals the following programs maturity:

Digital business model and objectives – Level Advanced (needed Advanced)
Digital analytics & monitoring – Level Basic (needed Advanced)
Digital and social media framework strategy and implementation – Level Advanced (needed Advanced)
Social media policies & governance – Level Advanced (needed Advanced)
Community building and engagement – Level Basic 8% (needed Advanced 12-15%)
Social CRM – Level None (needed Basic)

Prerequisite Programs

Based on previous analysis here are the necessary programs needed to execute the business objective in a single strategy.

  • Implement a more advanced digital analytics & monitoring solution
  • Increase the community engagement from 8% to 12%.
  • Implement a Social CRM

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Now you’re ready to do the planning. And you have 3 new programs to implement…. And only $1.7M… Get ready to build more business cases and negotiate.

You cannot commit to the required business objective with deficient prerequisite programs. 

More soon. Would love to hear from you, does this make sense to you?

A Case-Study in Building A Digital Strategy :: Business Objectives + Data & Insights + Programs

Saying it doesn't make it so. Results do.
Saying it doesn’t make it so. Results do.

This is a post about the importance of numbers and data when doing strategic planning.

We’ll look into :
– How to Calculate the Investment in your Business Objective Based Marketing Program
– What data we need to gather in order to create a successful digital plan and strategy
– The Programs that could be associated with this business objective

A FICTIVE CASE STUDY

Say the board of a mobile company decides that one of the business objectives is to Increase the Customer Recommendations by 20% in the next 12 months.

Assume the we are talking about direct and influent recommendations (for instance as a response to a personal query “Do you like your phone? Should I buy one?”; a mere Facebook like won’t be considered a recommendation). Also this is not an exercise in online ads (ppc, etc.). We stay focused on the business objective.

SOME BASIC FICTIVE DATA

Gather all the  necessary business data. 

Customer base: 600 000
Customer annual value: $1 000 (Annual revenue $600 000 000)
Customer annual net profit: $200 (Annual profit $120 000 000) (20%)
Customer annual churn: 30%
Current recommendation rate: 20%
Business objective recommendation rate: 24%
Recommendation conversion rate: 50%
On average a customer recommends 2 people.
4% increase in recommendations results in 2×2% increase in new clients (24K).
At a 30% churn rate over 3 years we end up with 24K+16.8K+11.8 = 52K

Calculate for the new Customer recommendations + respective churn, cca 1.5K

So the increase program will generate in net profit about 53.5K consumer years or $10.7M over 3 years.

Say invest 20% of the potential profitability. That will generate an additional investment of 1.7M/year in the Recommendation program for a $9M profit. (I would keep this number for now and adjust it once the exact operations are determined. see Programs).

KPIS

Determine the KPIs

20% increase, from 20% to 24%
12 000 more customers to recommend the product to an average of 2 people
24 000 new customers

Investment $1.7M
Estimated net profit: 9M.

Of course assuming that profitability, consumer churn, recommendation rate and conversion stay the same.

REVIEW

In conclusion: 
We have 600K consumers
120K will already recommend the product
We need to get 12K more existing consumers to recommend and we have $1.7M ($142 per recommending customer or $71 per recommendation).

OWNED MEDIA CHANNELS

Gather more data by listing all the current owned eco-system.

Facebook page 100K fans (98% customers) with 8% engagement (8K fans interact every month)
Customer newsletter 20K subscribers with 20% open rate (4K customers)
400K print invoices / month + 200K electronic invoices
300K website visits from existing customers over the year (50% will come to the website)
50K Twitter followers with 2% engagement rate (1K)
40K have the mobile app
20K in store visit from existing customers.

EXISTING MARKETING CALENDAR

Analyse the existing marketing calendar and media plan.

Q1 & Q3 Digital & Social media engagement campaigns
Q2 Digital notoriety campaign
Q4 Global all platforms new product launch
Monthly social media contests / campaigns (by topics: Customer care, Client recommendations incentives, FB community building, etc)

IT’S ALL ABOUT DATA

Ask the right questions. Get more data.

Having the right data is crucial. Any answer the following questions has the power to change the digital strategy.

Do we know who are the customers who already recommend?
Do we know what the customers who make recommendations have in common? (product, service, customer experience?)
Do we know to whom they are recommending the product? (friends, family, etc?)
Are the customers who make recommendations proportionally represented over social media?
Can we assume that 20% of the 8K who interact on Facebook already made a recommendation? Or are they more around 40%?

STRATEGIC CONSIDERATIONS

Once the right data is gathered the strategy writes itself.

Understand the target audience (the consumers who haven’t recommended the product yet, but are very disposed to do so)?
On what channels are they most active?
Create the tools / mechanisms for them to quickly recommend should they want to
Develop a value proposition
Tailor a creative advertising solution
Determine the types of operations  / campaigns
Integrate them in the existing marketing calendar
Set up a monitoring solution
Plan for at least one or two cycles (to have an opportunity for improvement)
Execute, monitor, optimize

PROGRAMS

Determine if you have all the prerequisite programs in place.

I have started the post by defining the business objective to Increase the Customer Recommendations by 20% in the next 12 months. Now we want to attach some of the previous programs to the business objective.

What are the prerequisite programs that the client needs to have in place before tackling this objective? It all depends on what digital properties will play a role. However some of them are pretty essential.

Digital business model and objectives 101 – having a digital business model, objectives, business cases
Digital analytics & monitoring 101 – determine the reporting format, and the necessary data to collect and analyse
Digital and social media framework strategy and implementation 101 – determine and implement the optimal digital eco-system
Social media policies & governance – produce, legally approve and publicize the policies, terms and rules
Community building and engagement 101 – develop monitoring, operations and content plans to build the social media community and its engagement
Social CRM 101 –
have implemented a social CRM solution that along with the digital analytics and monitoring system will provide the proper strategic insights and support the campaigns 

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This post went a bit too long and I hope you were able to follow. I have left out a bunch of small details and consideration, however I hope it was insightful.  Looking forward to your comments.

The NeverEnding Story: Digital & Social Media Programs

Fostering creativity, $2K at a time
Fostering creativity, $2K at a time

This is the second set of note regarding the social media framework I’m building with Rock&Social.

In the previous post we have defined Business Objectives, now we want to define a set of digital and social media Programs that will be used to answer specific objectives. In a subsequent posts I will link specific business objective with a series of tracks, and later on detail each track from a planning perspective (timelines, budgets, strategic impact, etc.).

Following is a list of digital programs (in no particular order). The 201, is a more advanced version of the 101 and usually has several other programs as prerequisites. Essentially, the goal of this framework is to create an easy model of detecting digital planning solutions to business objectives.

See the programs as iterative projects (or operations), in need of regular monitoring and update in order to attain the business objectives.

DIGITAL AND SOCIAL MEDIA PROGRAMS

Digital business model and objectives 101, 201
Optimize the business model to include the digital and social opportunities. Determine the business objectives, metrics, success business cases and acquire business leaders’ approval. Approve the budget and the roadmap to attain the determined business objectives.

Social business culture 101, 201
Determine the roadmap for creating a social business culture

Digital planning and social operations 101
Determine how the digital and social objective will be accomplished – internal operations, external operations, budgets, planning, etc.

Social media policies & governance 101
Create the social media policies and regulations, legal approvals, determine the stakeholders, etc.

Digital analytics & monitoring 101
Get the right tools and procedures in place – determine the reporting format, create a crisis plan, stakeholder analysis

Digital and social media framework strategy and implementation 101, 201
Ensure all the digital is strategically connected and optimized

Sales funnel 101
Set up sales funnel strategy and tools, include the digital and social to the existing sales funnel.

Build community 101, 201
Determine the community platform (FB, forum, subreddit), community building tactics, promotional, newsletters, convert current consumers, community value proposition (push&pull)

Build community engagement 101, 201
Content planning, community management, tactics and metrics

Advanced sales based operations 201
POS, Event, Mobile, FB, e-commerce tactics

Likeliness to recommend 101, 201
Determine the factors that influence the likeliness to recommend, implement the proper tools, and develop the communication program to increase L2R.

Social brand awareness building 101
Determine the factors that influence the brand awareness, benchmark against competition, monitor and implement the necessary advertising campaigns to build awareness.

Customer social support 101, 201
Build the customer support processes and implement a technological solution, provide a training program.

Social CRM 101
Create customer relationship objectives, procure and implement a technological solution, provide a training program.

Create a social media department
Validate the business needs, plan, fund, build a social media department.

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The previous programs are examples meat to create a better understanding of what it takes to attain a specific business objective. More in the following post.

Keeping It Classy: Business Objectives For Digital Planners

Keeping it classy
Keeping it classy

The rapid evolution of digital and social media technologies over the past 10 years generated a dilution of goal of strategic planning in this space. Very often communication and technology professionals take the role of what should be a business discipline. For the past year we have made a conscious shift at Rock&Social to focus almost exclusively on business services and less on basic communication.

I am currently preparing a detailed framework of digital planning. The goal is to present a formalized top-down approach; from the business objectives to the communication tactics. Over the next couple weeks I will post bits and pieces of my research and work-in-progress.

Following is a list of business objectives that should guide the business digital planning. (in no particular order)

WHAT IS YOUR BUSINESS OBJECTIVE?

Optimize the digital business model
Metrics: build several business cases that prove the viability of using digital opportunities

Build a targeted social media community
Metrics: increase the size of the bull’s eye community (specific number, benchmark on competition, etc).

Increase the social community engagement
Metrics: increase in the community engagement (a series of KPIs like: mentions, interactions with the brand over the social space, call-to-action conversions, etc)

Increase my business’ social awareness
Metrics: increase the number of positive mentions (specific number, benchmark on competition, etc).

Develop a social customer support solution
Metrics: Successfully implement a customer support solution, optimise the operations, train the team, etc.

Increase sales
Metrics: Increase the sales using the new and existing sales funnels (specific number or interval)

Create a social media department
Metrics: Successfully create the departments’ business model, recruit, train, and operate until becoming independent the said department.

Implement a social CRM
Metrics: Successfully implement a social CRM that takes into account the existing customers and the social community. Use this CRM to drive other business objective as to increase sales, return sales, customer engagement, likeliness to recommend, etc.

Increase the likeliness to recommend
Metrics: Increase the likeliness to recommend (over a specific period of time to a specific number, benchmark on competition, etc).

Become a social brand
Metrics: Successfully build an engaged community, strong brand equity and be overall recognized as a social brand (specific KPIs for several variables including mentions, community engagement, likeliness to recommend, benchmarks against competitors, social sales improvements, etc).

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These are only a couple of business objectives that should guide the thinking of any business leader and digital planner before any communication tactic is deployed. Looking forward to your comments.