Metz, The Social Concept

Why $100,000 Will Barely Get You A Sandwich In This Town

March 16, 2009

I have a big “pitch” meeting tomorrow with one of the best hotel brands on the West Coast. This isn’t something that I haven’t done a half-dozen times before (and I’ve done it successfully, too). The thing that really surprised me is that this brand is looking to likely generate millions in bookings for numerous properties over the next twelve months, and they’re having a real hard time justifying a spend of around $180k to do this.

Generally speaking, seeing a 5.5x return-on-investment on a social web strategy for a first-timer brand in the lifestyle space is fairly solid. And, this prospect understands the basic ROI metrics. But, they seem fairly convinced that they should start small, taking a “bite”, before they stick around for the whole meal. And I can see where’s they’re coming from on this one.

That said, this brings up a pretty critical question about ROI metrics on the social web: Is it possible to achieve substantial ROI (5x-20x) on an implementation without an above-average spend?

Generally, I think that implementations (and I don’t call them campaigns because taking a lifestyle brand onto the social web is a lot closer to building a hotel property than it is to running an ad campaign) that start small ($100k/year) may lack the top-level buy-in, or even the right-sized team (2-4 people on client end, strategy team, interactive agency) to see the job through. Simply put, a $100k spend, even though it is ““the average”:http://www.web-strategist.com/blog/2009/03/16/report-social-media-marketing-up-during-recession/ “ (via Owyang), is not necessarily the “best” spend. Just because 3/4 of all marketers (with total budgets of $1M? $5M? $20M?) are spending $100k on social media or social web strategy doesn’t necessarily mean it’s the right thing to do.

[Just ask the 50% of all teens that have had oral sex. Just because everybody’s doing it doesn’t mean that it’s working.]

Perhaps, it may truly be better to defer an implementation for a few months than to “start small.” And I’m not just saying this because consulting pays my rent; I’m saying this because both client and consultant want case studies that show revenue outputs. I’d rather wait until my prospective clients see the value derived from the technology and how their competitors (i.e. Marriott) have been driving revenue for years, so they can make a decision based on financial and business factors, rather than fear or emotion.

I’ll let you know how it goes.

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