Category Archives: Consulting

To MBA or Not To MBA – The ROI Question

This week a new client asked me why I had decided to pursue an MBA.  Specifically, what was the ROI for me? What an interesting question!  I’ve been so wrapped up for the past few years in work / school and just plain being in “busy” mode that I didn’t have a quick response … and that got me thinking …

Three years ago I decided to return to academia via graduate school and pursue an MBA.  I had been kicking around the idea of returning to school for several years and quite simply could not decide on whether or not an advanced degree would be beneficial.  Would the considerable investment of money and time have a return?

And therein was the faulty logic.

Earning an MBA has zero ROI.  There is no immediate return on the investment of time and money from a graduate degree. Sure, there is intangible achievement or return as your knowledge base and day to day application of Finance, Marketing, Operations, and Strategy increases.  But, intangibles are difficult to quantify and thus the difficulty in answering the ROI question and quite frankly, the lack thereof, of a firm Return On Investment to respond to the question at hand.

I learned about a financial return quantification method called EVA in Finance that may provide the best response.  EVA or Economic Value Added is a robust financial measurement approach that companies use to evaluate their economic profit – the value created in excess of the required return of the company’s shareholders.  The concept hinges on the fact that a company’s shareholders gain when the return from the capital (or investment) employed is greater than the cost of that capital.  In essence, EVA is the profit that is earned minus the cost of financing the firm’s capital.  Capital (or YOUR money) doesn’t just sit around doing nothing.  Companies spend or invest just as you and I do … although they may invest in R&D while you or I choose to go on a vacation, buy a pair of sunglasses, etc. An EVA analysis of pursuing an MBA is a better quantification as it accounts for the value of the investment rather than the return.

For me, the decision to invest time and money in an MBA hinged on the fact that the opportunity cost of NOT pursuing an MBA far exceeded the initial time and money outlay.  The economic value add of an advanced degree lays within the opportunities that become available – whether a new career path, skills to start a business, etc.   The EVA will continue to multiply throughout my life as I put the new skill set to work … the impact or intensity of the returns (whether financial or not) on my life is dependent on me taking actions based on the investment of time and money.

So, when asked about ROI … while the path to an MBA has been completed the journey has just begun … and the EVA will continue to exceed the opportunity cost for not investing in myself or my future.

P.S. Thank You to the University of St. Thomas  in Minneapolis, MN for a rewarding and AACSB Accredited learning experience.  Make sure to check out the UST MBA Program here: http://www.stthomas.edu/business/degrees/ustmba/eveningmba/

Advertisements

Marketing Technology: Cloud Computing Definitions – SaaS – PaaS – IaaS

Cloud computing stack showing infrastructure, ...

Image via Wikipedia

Marketing isn’t just about branding, creative, etc. – marketing accounts for the rise in global technology usage and stands poised to embrace the “Cloud”.  The Cloud is a virtual environment that precludes the purchase of servers and other technology components to deploy websites, social media sites, etc.  Amazon, Rackspace, Microsoft and Google have offerings in this space and there are three acronyms that marketers need to understand when deploying future marketing strategies – no matter which vendor you utilize.  The three most typical deployment models are:

SaaS – Software As A Service.  Pronounced “SASS”.  Simplest deployment method which allows software to be tapped from a cloud computing resource rather than relying on software installations and implementations.

PaaS – Platform As A Service.  Pronounced “PASS”.  Intermediate deployment that steps away from simply renting applications from the cloud by leveraging the cloud as an operating system (platform).  This also eliminates expensive network upkeep as most service providers provide routine maintenance and upgrades as a part of their SLA (service level offering).

IaaS – infrastructure As A Service.  Pronounced “I-AS”.  The holy grail of cloud computing! You access / rent everything from the cloud … this means servers, storage space, routers, and other hardware, networking capabilities, operating systems, and applications.  This allows for the ultimate degree of scaling as your projects (and customers) dictate.


Android Phones Pass iPhone in 2010 Unit Sales

According to Gartner Research, as of February 2011, Android has surpassed iOS in unit sales. Their research also indicates that Nokia’s Symbian maintains market leader status although the combined Android and iOS sales momentum in 2010 should have them worried about that status in 2011.

This is very important information to a marketer … at an aggregate level it would appear that marketers should continue to embrace iOS but need to ensure that they have a presence or app available for Android as well.  The press that the iPhone commands is misleading to marketers!  If your app is not available to Android (or Symbian) users then you are not engaging 67 Million folks (or 111 Million).  Scary, huh? And don’t get me started on organizations that are optimizing mobile sites for iOS with no thought or regard to Android … (note: I have both an iPhone and an Android based phone).

While the iPhone and iOS are “sexy” and hot topics … it is possible that the closed environment or ecosystem combined with limited distribution of Apple products may once again prove a challenge to Apple’s market dominance.  It wasn’t that long ago that Apple PC’s enjoyed a lion’s share of the market but limited distribution, closed environments, and high prices enabled Microsoft to quietly eclipse Apple as a market owner in less than 5 years.  This would explain the introduction of the iPhone to Verizon users this month – someone at Apple finally realized that they had limited access to the smartphone market with AT&T while Android based phones are offered by every carrier.

The lesson?  Organizations need to ensure that their mobile marketing presence is not limited to the Apple ecosystem.  The aggregate data and market research confirms that the iOS market share represents a minority of overall market opportunity.  Marketers who are partial to the iOS platform (and Apple) should be worried about the rapid increase in Android unit sales this past year … check it out for yourself in this killer video that shows the slow build of momentum since 2008 of the Android platform based on global Android activations from 2008 – 2011.  Pay particular attention to how quickly the platform base growth accelerates in 2010 and early 2011:



Short Term vs. Long Term – MySpace and Facebook

MySpace laid off almost half of its staff this week and is reportedly for sale amid reports of continuing subscriber loss to Facebook.  MySpace was the social networking site when Facebook reserved its membership ranks to attendees of Ivy League schools.  It was the first site that anyone could log into and create their personal “space” on the web including photos, music, mini-blogs and more.

It took MySpace less than 5 years to become a star and fall from grace in the markets while Facebook accelerated at a pace that now eclipses that of Google.  What happened?  Well … it’s a case of trying to be everything to everyone and the master of nothing.  It spread itself to thin and lost its way.  Facebook has always been straight forward – you get what you get.  Sure, they introduce new products here and there but it’s a “one size fits all” model no matter if you’re a celebrity, student, housewife, or just a regular joe.

The lesson?  Decide who and what you are and stick to your guns.  An ever changing business model that reacts to short term guidance or market pressures ultimately leads to failure.  We’ve seen it before and we’ll see it again – history always repeats itself.

When MySpace was sold to News Corp. it forced itself into the world of short term thinking where quarterly revenue was king.  The pressures to top quarterly analyst forecasts eclipsed a strategic vision that was responsible for its rise in popularity and ultimately led to an ever changing and increasingly complicated social media landscape and mission statement that turned off its core user base.  These users flocked to the simplicity that is Facebook (at least from a UI perspective) and the rest as they say is history.

Maybe Zuckerberg had it right by resisting the pressures for an IPO over the years and keeping Facebook private?  It has meant he can deliver on his strategic vision from a long term perspective rather than a reactionary stance every quarter like most public entities.  You tell me … MySpace is the 49th most visited site globally according to Alexa.com.  That’s nothing to sniff at unless you’re competing against the likes of other social media sites like Facebook, LinkedIn, YouTube, Flickr and a slew of others that rank higher for visitor count.  They’re all competing in the same space.  Pun intended.


Facebook’s Relational Map of the Earth

Doubt the importance of Social Media and the power of a personal or professional network?  Facebook intern Paul Butler was able to create a visual map of the Earth based on Facebook’s Apache Hive data (their data warehouse)!  This is not a map of the world with Facebook members plotted against it, rather, it is a map of the world that slowly appeared during the rendering process of Facebook connection and relationship data.  More from Paul’s post on Facebook:

“After a few minutes of rendering, the new plot appeared, and I was a bit taken aback by what I saw. The blob had turned into a surprisingly detailed map of the world. Not only were continents visible, certain international borders were apparent as well. What really struck me, though, was knowing that the lines didn’t represent coasts or rivers or political borders, but real human relationships. Each line might represent a friendship made while travelling, a family member abroad, or an old college friend pulled away by the various forces of life.”

The world as we know it still exists from a cartography perspective – but, the value of relationships is finally displayed as a mechanism that transcends traditional or natural geographic boundaries.  This poses an interesting dilemma for marketers everywhere – are you truly Global from a strategic marketing perspective? Whether you know it or not – you already are.

Link to Paul’s original post:  http://www.facebook.com/notes/facebook-engineering/visualizing-friendships/469716398919


Social Media ROI – Fact or Fiction?

Image Credit:  http://www.webguild.org/wp-content/uploads/2010/10/roi.jpg

ROI (Return On Investment) is a rather simple mathematical calculation that evaluates the efficiency of an investment or its performance in comparison to other investments.  How simple?  Here it is:  Gains – Costs / Costs = ROI.  Pretty nifty, right?

Here’s an example – if you use $100 of budget that nets $150 in revenue or gains your ROI is 50% (150 – 100 / 100 = .50).

The basic ROI equation becomes rather tricky in the Social Media realm.  How valuable is a Twitter follower?  What quantitative impact does a Facebook wall comment provide?  Is the quantity of LinkedIn connections more important than the quality?

Social Media is a channel of open communication that exists outside of the normal boundaries of push and pull marketing and is difficult to provide firm ROI in the traditional sense.  And this is where things get tricky …

Trying to prove the value of Social Media in a traditional ROI sense is rather difficult.  You cannot easily quantify the value add of a Social Media presence in terms of traditional ROI gains.  In fact, you’re more likely to show a loss when using a traditional ROI model.  Social Media, as a channel, should be analyzed from a branding, engagement, influence, and competitive value add perspective as a component of strategic marketing initiatives.  This allows for qualitative measurements of individual marketing channels that combined lead to revenue gains.  Strategic marketing encompasses the channels and messaging that will deliver on business initiatives (i.e. sales, hires, brand recall, viral marketing, etc.).  Thus, the Social Media aspect of marketing ROI cannot be measured alone.

I guarantee you that a marketing executive will get fired looked at funny if they delivered an ROI analysis that included this statement: “We spent $50,000 on a Facebook page and have not been able to prove that anyone posting comments on the wall or who has followed the page actually buys our products.  But, it looks cool. And, everyone else is doing it.”

Social Media’s ROI should (typically) be tied to branding and influence initiatives within the marketing budget and strategy.  Branding ROI is component of marketing ROI and should never be analyzed independently … rather, the entire marketing budget (thus, your strategy delivery mechanism) should be utilized against total revenues or gains to determine effectiveness of the strategy.  No results = Bad strategy.  Plain and simple.  Simply creating a corporate Facebook page or Twitter account is a tactical response to a strategic problem.  Changing your channels of communications as part of a shift in marketing mix that is quantifiable in gains (ROI) is a strategic move.

That marketing executive I mentioned earlier would look like a rockstar if their statement included:  “We built a fan base to mitigate negative public comments and bolster positive consumer opinions that would impact our brand.  We leveraged sponsored campaigns on this channel (Facebook) that were tied to the page and tracked click-throughs and sales via web analytics …”  and so on.

At the end of the day, it’s all about ROI.  Plain and simple.  Did your Facebook, Twitter, LinkedIn, Tumblr, etc. create gains on its own or was it part of a marketing mix that worked in unison from a strategic perspective to deliver gains?  The person signing checks or giving you a budget doesn’t care about fans, followers, comments, and so on … they are concerned with your strategy and its ultimate impact on revenue.  Positioning social media as a progressive and innovative component of your overall strategy makes you look like a rockstar – if, and only if, that strategy, as a whole, actually delivers something quantifiable like revenues, hires, etc.


Now Hiring! Brand Ambassadors …

Social Media Landscape

From time to time I’ve seen job postings or requisitions for Brand Ambassadors to represent a Brand in a positive way and carry the brand message out to the public via a variety of media channels.  This is an extremely important role in marketing that often represents a strategic initiative to initiate or further customer engagement especially in new marketing channels like social media.  The role affords the organization control over public messaging and can provide valuable feedback and metrics for analysis of market engagement, penetration, segmentation, etc.

I believe a lot of organizations have failed to recognize their employees as Brand Ambassadors. Yes, I’ve heard almost everyone say that they feel their employees are Brand Ambassadors but this isn’t something typically supported from a corporate perspective.  Thanks to social media (whether YouTube, Facebook, Twitter, Tumblr, Blogs … take your pick!) everyone can truly be an ambassador – and to the chagrin of a lot of marketing organizations … they already are.

Why not EMPOWER your employees to be brand amabassadors?  Every company has an opportunity to do this during new hire training, onboarding, or even via their employee handbooks.  HR and Marketing could team up and devise a very quick yet powerful brand overview or guideline that employees could feel empowered (and supported) to leverage across their social media presence.  Employees are (usually) very proud of their workplace and want to share stories, interactions, etc. with their personal networks … and trust me, they already do … but have not been armed with referencable items like logos, tag lines, style sheets, or even a Top 10 List of do’s and don’ts.  In the recent past, Google’s handbook summed all of this up in one line … “Don’t be stupid.” … although, I’m sure that’s changed by now.   Wouldn’t it be great if your entire organization felt empowered to be brand ambassadors?


%d bloggers like this: