Return on investment (ROI) is the benefit to the investor resulting from an investment of some resource. A high ROI means the investment gains compare favourably to investment cost. As a performance measure, ROI is used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. In purely economic terms, it is one way of considering profits in relation to capital invested
In the past, most marketing involved one-to-one communication. Traveling salespeople knew their audience well, and went door-to-door to deliver custom personal messages about their products to willing buyers.
Nowadays, Brand marketers are using many approaches in an effort to be part of the conversation, and are leveraging multiple social channels to do so. These programs are far more complex than the one-to-one and one-to-many paradigms. It’s very easy to just start measuring your ROI by counting how many Twitter followers and Facebook friends you have. Or you could be a bit more advanced and measure retweets and likes.
On the 28th October 2013 Starbucks partnered with twitter to launch their ‘Tweet-a-Coffee’ campaign across the US. The initial idea was all about buying anyone, anywhere (within the US) a coffee as a small gesture of kindness, and according to Adam Brotman, the chief digital officer at Starbucks, Twitter had the strength to help them achieve this.
In order for the campaign to work users had to link their Starbucks and credit card account to their twitter profile, then by tweeting @tweetacoffee with a twitter friends tag, an eGift worth $5 was sent to their desired recipient.
Almost half of Starbucks’ total business comes from its primary target market of men and women aged 25 to 40, it’s this group alone that account for almost half (49 percent) of the brands total business. I believe for this campaign especially this target market was Starbucks most desired as people of this age are more likely to be cardholders and active on social media.
Twitter and Starbucks have worked together to help bridge the gap between our online and offline worlds, this is something beneficial for both brands. It’s a great opportunity for Twitter to become a direct response marketing channel while Starbucks now has information for all their gifters and recipients in their system, which could have massive longer-term impact on the ROI of this campaign. For this campaign, they aim:
- An engaging campaign that customers wanted to interact with.
- Enticing new and existing customers to be more active or to set up an online account with their brand.
- Bridging the gap between our online and offline lifestyles meanwhile connecting multiple people across the US.
Research firm Keyhole tracked all the instances in which someone used “@tweetacoffee” in conjunction with a friend’s Twitter handle and found that
- More than 27,348 twitter users with 36,711 posts and US$183,555
- Some 34% of users bought multiple gift cards
- 32% of the purchases occurred on the first day.
The tangible benefit
It’s a validation of the idea that social media can have a very direct ROI. While most campaigns that organizations run are brand-building campaigns, there is certainly a great opportunity for Twitter to become a direct response marketing channel as well.
The intangible benefit
Starbucks now has information for all these gifters and recipients in their system, and this can have massive longer-term impact on the ROI of this campaign.
As these users continue to be customers, Starbucks now has a tie-in between the Twitter accounts, credit cards, mobile devices and their customer list (and they have it for 54,000 people gifters and recipients) which is something to be excited about! Even tech companies have struggled so far with creating a link between these different IDs for their customers, let alone consumer brands.
The strength and weaknesses of the ROI approach.
In 2013 Starbucks spent $11 million on digital advertising and a whopping $93 million on advertising as a whole. It’s clear to see that the ROI for this campaign alone wasn’t a huge success for Starbucks, with their total of $11million spent on digital media and a return of only $180, 000 from the Tweet-a-Coffee campaign, it seems that a few pockets have been left empty.
However it hasn’t all been for nothing, this Starbucks campaign was about a lot more than just $180k in eGift sales. Starbucks gave their audience a simple but strong motive to tweet, the idea of gifting a friend and receiving a little something for themselves in the process, the incentive that if you buy one, you get one free. The brand now has strong links with twitter, access to its online customer list plus access to their customer’s card details and mobile devices, a huge achievement that will provide them with knowledge they never had before. The campaign has also given Starbucks exposure online and enabled them to create a community and engagement centre for not only themselves but new and existing customers.
It was about customer understanding, identification and targeting that will help them for a very long time!