Return on Investment and Social Media Marketing

Ta People listen to Tim Atkin. At least wine people and  wine industry people do, if not others who just think him a nice guy. But the reason the winiest among us listen to him is because for many years now he has ranked as one of the foremost wine communicators and educators. A Brit and Master of Wine, Tim has written for numerous VIPs (very important publications) and his talents are sought out by other across the globe.

So I "listened" and thought when I saw Tim write the following at his website:

"As in is so many other fields, the way that wine is sold, described,
criticized and presented is changing for ever. The surprising thing is
that many of the people who work in and around wine haven't noticed or
are in denial about the power and scope of the revolution."

Tim provides good evidence for the notion that many around the wine "haven't noticed or are in denial" about the dramatic scope of change that social media and electronic communications have brought to the wine industry. And in the end, he urges that the wine industry, essentially, get on board or be left behind.

I like to think that I've noticed this revolution. I like to think that I play in the sandbox of that revolution. And yet, I'm here to tell you, and I guess Tim too, that diving in deep to the sandbox of social media and electronic communications is not always the best choice for a wine company. I'm thinking here about Return on Investment.

I've yet to see a real good study that can show me what the solid return is for wineries of different sizes and different product lineups who dive face first into Facebook, Twitter, the multiple other social networks, interactive media and websites, blogging, etc. That's not to say that I've not personally seen a good ROI for doing such things. I have. I've helped bring them about. But in almost every case when a company or organization does find an acceptable ROI for their interactive marketing, it's after putting in considerable work.

It's important to consider what that considerable work amounts to.

Twitter: Significant time building your following and herding them with regular and significant tweets.
Facebook: Significant time building fans and delivering your message to them and interacting with them to build brand ambassadors.
Yelp & other Peer Review Sites: Monitoring them, building them out, interacting with users
Blogging: Posting regular and intriguing articles that build interest and loyalty and interacting with those that comment.
Bloggers: Reaching out to comment on various blogs to assure that your brand is represented in among the influencers that tend to navigate their way around blogs regularly.
Monitoring and Measuring: Regularly monitoring the impact and visibility your work is having within the digital domains.

The beauty of using interactive media to promote and market is that it can be accomplished with relatively few hard costs. But note, the real cost is the time it takes. And time is, in my view, the single most critical commodity in the realm of marketing.

How many smaller wineries have the manpower available to devote the kind of time to these endeavors? Some have the resources. Some don't. If they don't they can hire someone like me. But I don't work cheap and few others that have the chops work cheap either.

Again, I don't wan to give anyone the impression that interactive marketing doesn't provide a decent return on investment. In many cases, disregarding traditional public relations, which works, for a purely interactive and social media-aimed strategy can play a significant role in increasing sales, retaining club members, finding new niche markets and establishing one's brand message in a targeted fashion.

But what I would say to Tim and others who are beginning to believe that "getting on board" is the key to victory is this: There are other ways to spend one's time and money that deliver a GREATER return on that investment. It is not a matter of jumping into the electronic pool and seeing profits mount, even if you make a big splash.

It may be that pursuing great traditional media coverage or focusing on educating on-premise accounts or focusing on visiting markets and riding with a distributor representative or creating a stellar tasting room experience will sell more wine at greater profits. That's not to say that interactive marketing can't help successfully carry out these "old school" tactics. 

The bottom line is this: The toolbox is large and heavy and not every tool is the right one for the job at hand, even the shiny new one. It's critical to put in place a marketing plan that utilizes the most efficient tools that are most likely to deliver the greatest return on investment. Take chances and try new things. But be wary of the the shiny tool. It's pretty and some very smart people want you to wield it with gusto. But will a well executive Twitter Campaign sell more wine at higher margins, faster? You better know before you suit up in your pajamas and forgo the trip to a market for the sake of shooting out a well-crafted 147 character message to your followers.

18 Responses

  1. Thomas Pellechia - August 11, 2010

    Ah Tom,
    You touch on a subject dear to my heart.
    A long time ago, under what can only be construed as a Machiavellian upbringing, I learned a few things: when the crowd is folllowing the parade, the opportunity has already passed; when what’s new is based on what’s old, the only thing that has changed is the surface cover; whoever insists on telling you what it is that’s best for you is traitor to your cause.

  2. Marcia - August 11, 2010

    You’ve definitely hit the nail on the head, Tom. This is what makes designing (and executing!) and well thought out marketing plan the most critical tool in the box.
    There are obvious (and often Swiss cheese-like holes) in large and small wineries’ marketing plans. What good is well-executed PR campaign that directs the target audience to a company’s website or Facebook page if the “Buy” button can’t be found when the audience gets there? What good is the “Find us on Facebook” link if the page has no content? And if the tasting room personnel fail to capture a prospect’s email address, how do you follow up if they haven’t bought that day?
    I think it’s more rare that wineries haven’t noticed the changes around them. Some may be in denial about the value of these new venues. Perhaps a better question is: What does it take to get them to act? And what can we do to prod them into action?
    There’s a sense of “But there’s only 24 hours in a day!” and “There’s no way I can squeeze it all in.” It’s true that we’ve all got the same 24-hours to work with here. It’s how you spend it. Time to re-evaluate how we’re spending each minute of the day to see what’ not working. Then there’s room to implement new programs and new venues….

  3. Thomas Pellechia - August 12, 2010

    It’s likely that most wineries, especially the smaller, privately owned ones, really do not have the time it takes to maintain an Internet presence. So-called social media is an all-day affair.
    In my view, the best plan of attack for PR/marketing companies is to devise a way to bring the wineries into your harem, where they provide you with the information and you operate the daily access machine.

  4. Ed Thralls - August 12, 2010

    Social media need not be an “all day affair.” It only needs to be what you can afford it to be – maybe only a few hours a week. However, by not being there at all you may be missing out on a very valuable tool that can incrementally enhance and help execute your well-thought out marketing plan. Anyone saying that social media should replace traditional marketing and a strategic marketing plan is insane and incorrect and only doomed to fail.
    The conversation about your brand is happening in these social media channels whether you’re there are not. So, by not listening, at the very least, you are missing out on opportunities to be a part of that conversation and bringing valuable information about your brand to it. The simple example of being able to engage an unhappy customer who is spreading negative comments may prevent further attrition and may even boost your reputation. Don’t both of those things translate to dollars and ROI in some way? Yes, they do. The only real hard part about social media ROI is documenting exact metrics that tie a single interaction to a single transaction. But, that same challenge exists in traditional ad placement and other marketing programs. How do I know how many people actually viewed that ad I placed in WE? Furthermore, how do I know that it enticed that reader to go to the store and buy my wine? I don’t and I cannot tie that impression with the resulting transaction.
    So, I agree Tom, social media should only a part of a broader strategic plan, but I also agree with Tim, that it better be part of that plan or opportunities will be missed.

  5. Jon Bjork - August 12, 2010

    I’m finding that I’ve been spending a ridiculous amount of TIME with social networking. There is no doubt it is paying off in establishing relationships with new people and making current relationships deeper, but I haven’t quite tweaked my use of this tool to hit critical mass in arriving at a good ROI.
    One thing I’ve noticed with my work managing a Facebook account for a winery client is that it is very difficult for an outsider like me to authenically interact with Facebook friends that have visited the tasting room. A winery really needs to have a staff member at least supply the touchy-feelie quick interactions, while the marketing-oriented outsider can direct promotions and educate.

  6. Thomas Pellechia - August 12, 2010

    Perhaps, but has anyone come up with a scenario that equates dollar returns for time spent online?
    Put the question another way, aside from the online buzz, does Facebook, et al, create cash sales? Is there a measure for it?
    That’s the question every business person needs to have answered. They see the dollar returns from the tasting room and from the wine clubs, as well as from the retail market. Can they see the returns from social networking or is it mainly a long-term PR solution? If it is a long term PR solution, it is that much harder to persuade small business people of its efficacy, because many have a hard time spending time and money for a return they cannot see right now.

  7. Lisa Mattson, Jordan Winery Vlog - August 12, 2010

    Great post. You are so right about the investment of time. Those of us who are building social currency and engaging in online conversations with new media know it takes uber-tons of time. It just becomes part of your life. And I love my life, my job, the digital tools that enrich both and the people I’ve met through new media.
    Wineries that should be getting on board that are not, as Tim Atkin discussed, must be hesitant due to learning curve and time. Learning how to have a compelling voice and how to use the tools takes time. Maintaining that presence takes more. I spent months learning how to use a HD video camera last winter. Why? I don’t want to be left in the dust.
    And as you mentioned, that could be really tough for a small- to mid-sized winery.
    Lisa Mattson

  8. Tom Wark - August 12, 2010

    If anyone would understand this its you!

  9. Michael Lavenson - August 12, 2010

    Tom: Thanks for posting this article about the fascinating trends that are pushing wineries to retool their marketing and sales efforts. ROI has driven a lot of winery owners to focus on DTC sales, more so since the major distributors are no longer hand selling wines from small production wineries. A lot of our (DeVineWare) clients and my friends in the business are challenged to get the attention from the 3-tier, whether broker, wholesaler, restaurant or store. My concern becomes figuring out what is really attracting consumers to wine. The old stories of the vineyards, the wine pioneers, and the romance of the lifestyle seem to be receding in importance. How many wineries with their namesake have passed onto larger companies?
    Having said that, unless you can keep a customer now a days, you are hard pressed to find new ones that have the loyalty that is needed to build brands. It is so important to ‘know’ your consumer, to respond to what is important to them. You can’t do this without a staff that can know their customers and grab them before they leave for the next ‘hot new wine’. Thanks again.
    Michael Lavenson

  10. Scot Burns - August 12, 2010

    Great post Tom – you once again bravely challenge the status quo!
    What works for some may not work for everyone. And, many times, the ones that do best are either lucky, experts at what they do, or have spent considerable amounts of time and money to get those results. Point being, most wineries feel compelled to jump on the band wagon of participating in social media when all it’s really doing is fragmenting their time and possibly diluting their brand.
    My position stands as it always has that you need to go into your marketing with a strategy. After all, hunters don’t just shoot blindly into the woods with the hopes of making their kill. They find their target, aim, and use the right weapon.
    Scot Burns

  11. Susan Hanshaw - August 13, 2010

    Tom, as someone who spent 20 years in the direct marketing industry, which is all about the study of ROI, I know for a fact that the ROI of social media can be measured in the DTC channel. Those who say it can’t either don’t understand the mechanics involved or are unwilling to make it a discipline.
    The process of measuring the ROI of any marketing effort requires that you know who the effort was delivered to and what response was achieved. This means that wineries need to know which of their customers are connected to them on the social networks and then study the impact those relationships are having versus the customers they are not connected to. As the owner of a direct marketing firm active in the wine industry, I know that most wineries have not yet taken it to this level.
    There is a big focus now on the ROI of social media, but what about email? There is so much money being left on the table by wineries who don’t recognize that a more sophisticated, disciplined approach in all DTC efforts could make a HUGE difference in sales.

  12. The Ceci Sipper - August 15, 2010

    Do you think the same conversations/debates/thoughts were made when mass printing, TV, radio were brought on to the scene? Too bad we don’t have easy access, like blogs, to see what those thought exchanges were. But I am willing to bet they were not so different than the ones we are having now. This is a very interesting discussion and I thank you for posting this and opening up this debate/conversation/etc. I am actually writing my masters thesis on the subject of the European wine industry’s adoption of internet/social media marketing and communication.

  13. @nectarwine - August 17, 2010

    Tom, when did you get an extra 7 charcaters on Twitter. Last I checked it was 140 characters…
    Would you open a business with out a web site being part of your budget? I think that playing in the social world is becoming part of the “cost of entry.” If you’re not doing it, your competitors are and it will become increasingly more obvious the longer you hold out.
    Just like in 1992-94, the businesses that waited to build a web site were scrambling to get on board…now look at how far those electronic business cards have come…they are critical to the way we interact with our customers.
    The more the world becomes mobile, the more important having a social strategy will be to being MORE successful and even maintaining the status quo. This space will be infinately more advanced 5 years from now and those that understand that now will be that much further ahead of the game.

  14. @tescowineonline - August 19, 2010

    I have been finding the time I spend on social media websites such as twitter and facebook difficult to monitor as I cant be everywhere at the same time. however, I did manage to improve my interaction with potential clients and customers by using the brandseye social media tool.

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  16. Thomas Hansen - September 18, 2010

    Hi Tom, you’re into a very interesting subject here. Though as everything, it’s not if you take it on or not, it’s how you take it on. If all you do is register an account at Twitter and Facebook, you’ll probably not succeed very much. If you however create incentives for your customers to Tweet and post at Facebook themselves, you’re looking at something completely different …
    Regardless of what you do, you should be able to measure it through traffic and sales at e-commerce site, if you cannot, then fixing that should be priority 1 …

  17. Braden - October 8, 2010

    Social media sites are not only being considered just for interaction between people around the world. But many of them have considered it as a platform to advertise/sell their goods, services, media and many more products. All most all type of ads can be seen. The beauty of using these social media sites to promote and market is that it can be accomplished with relatively lower costs.

  18. Francis - January 18, 2011

    Social media sites are no more just a networking site. With each passing time, it has transformed into a great platform for marketing people. The best part about these sites is that it is very cost effective too.

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