Social Analytics & Intelligence: Converting Contextual to Actionable Insights

Transcription

1 Benchmarks & Galaxy TM Vendor Evaluations Series Social Analytics & Intelligence: Converting Contextual to Actionable Insights 2012 Hypatia Research, LLC. All Rights Reserved NOTICE: Information contained in this publication has been sourced in good faith from primary, secondary and end-user research and is believed to be reliable based upon our research methodology and analyst s judgment. Ultimate responsibility for all decisions, use and interpretation of Hypatia research, reports or publications remains with the reader, subscriber or user thereof. Page 1

2 HYPATIA RESEARCH GROUP, LLC. Hereby grants and assigns to IBM Software Group, Business Analytics, worldwide syndication rights to a primary research study entitled Social Analytics & Intelligence: Converting Contextual to Actionable. This sales agreement entitles the purchaser, IBM, to all distribution, quote, syndication, translation, and publication rights. Hypatia Research Group, LLC must be credited with proper attribution [ 2012 Hypatia Research Group] in each and every instance of content usage. IBM agrees to take good faith steps to safeguard the Intellectual Property contained in this research study. Our usage policy is posted on our website at Journalists, media, bloggers, research firms, agencies, independent consultancies and all others please take notice. Note: The naming convention for this primary research study also includes Social Analytics & Intelligence: Converting Contextual to Actionable Insights and Social Analytics & Intelligence: Benchmarks and Vendor Galaxy TM Evaluations Hypatia Research Group. All rights reserved. No part of this research study may be repurposed, distributed, translated or published in any format without the express written consent of the Hypatia Research Group, LLC and its management Hypatia Research Group, LLC. All Rights Reserved NOTICE: Information contained in this publications remains with the reader, subscriber or user thereof. Page 1

3 Hypatia Research Group delivers high impact market intelligence, industry benchmarking, best practices, technology vendor selection, ROI assessment and advisory services that reduce cycle-time and influence customer management, product strategy and channel development goals. Coverage includes: CRM, Business Intelligence, Advanced Analytics, Customer Analytics, Text Analytics, Speech Analytics, Social Media, Marketing Automation, Information Management, Customer Data Management/Quality and GRC. Since its inception by co-founder Leslie Ament in 2001, clients have relied on Hypatia for industry insight, expertise and independent research for guidance in assessing various technology and service options. Like our namesake, Hypatia, we are committed to Calculating Results TM for our clients Hypatia Research Group, LLC. All Rights Reserved. Lexington, MA T: F: E: Hypatia of Alexandria (circa AD), invented several scientific devices-- the astrolabe, plane sphere, and hydroscope (hydrometer). These instruments were used to calculate the distance between planets, the position of visible stars at any time of the year, and the gravity of liquids respectively. Hypatia was the first woman to make substantial contributions to the development of mathematics, astronomy & philosophy.

4 Executive Summary Creating social intelligence out of social media analysis tools takes a village. A mere youngster in comparison to more mature technology relatives such as search, text analytics, and data mining tools; social analytics is a highly fragmented emerging software category that has rapidly developed alongside consumer adoption of social communication vehicles such as Facebook, Twitter, and LinkedIn. Businesses that market to these consumers want to know more about them. How old are they, where do they live, what sites are grabbing their attention and why? What products, services and content interest them, and most importantly, what influences them to purchase or recommend certain products or brands? Driven by high volumes of online user generated content, social analytics is actually, an exploding category. There is no dearth of software and service vendors offering sentiment analysis, twitter analytics, content analytics, and speech analytics tools. Each offers dashboards, drill-downs, graphs or other types of -- Michael Redgrave, CEO visualization that illustrate metrics for online sentiment analysis OpenAmplify (positive, neutral, mixed, or negative), such as influencer or netpromoter scores, share of voice, volume, product quality issues, crisis management, share price cause and effect or media and brand reach. Challenges: What Organizations Seek and Require Judging sentiment analysis is a non-trivial exercise and customers are just starting to understand how difficult this is to do well. With over 100 social analytics vendors to choose from, organizations seek to understand which selection criteria are most critical in making the right investment for their organization. At present, some vendors offer analysis of either Twitter and/or Facebook. Others focus on analysis of blogs, RSS feeds, and/or certain media outlets, while the most sophisticated literally drink from the fire hose in analyzing all online sources of user generated content. Metrics, trend analysis, and/or key performance indicators available through dashboards, visualization or other types of reporting are another area companies struggle to assess. Our research found most fall into one or more of the following maturity levels: Clients know they need metrics but are uncertain as to what to use in order to be effective; Clients expect vendors to provide them with a menu of available metrics or KPI s to choose from; Clients know precisely which metrics they want for each of their business objectives. Estimating total ROI eludes many organizations. More than 12% of all companies reported not tracking return on investment from SA&I. Among the largest enterprises using social analytics tools for more than two years, 34.6% cited not tracking ROI effectively. On the other hand, nearly 23% overall

5 reported getting an ROI of at least 2-3% of their annual marketing budget from SA&I investments. Our research revealed that corporate executives cited the following metrics as important for measuring the effectiveness of their social media efforts: Figure 1: High Priority Metrics Tracked 1 Capture of customer feedback on product design or merchandising Propensity to recommend brand, product or service: Influence or Klout Reports Brand Sentiment or Campaign Impact: positive, neutral, mixed or negative with historical analysis Share of Voice: by time-frame / historical analysis Size of Purchase or Value of Market Basket Probability to Purchase Decrease in average customer acquisition costs or reduction in sales cycle times Trending: Moving the dial by time-frame / historical analysis Customer Activation: Follows, Tweets, Likes, Community Joins etc... Demographics: Gender, age, geographic location or media type Volume of Voice: by time-frame / historical analysis Other: Please describe 35.9% 33.3% 33.3% 31.2% 30.3% 29.5% 29.1% 26.9% 26.5% 25.2% 20.1% 17.1% Source: 2012 Hypatia Research Group, LLC. All Rights Reserved Nevertheless, companies plan to invest in social analytics as a method of measuring if not justifying growing expenditures in social business initiatives. Early adopters have jumped on social analytics for measuring tactical or operational metrics. In 2013, nearly 60% plan to invest between 1-2.9% of their annual marketing budget; another 52% will invest between 3-4.9% of their annual marketing budget, and 39.5% will invest more than 5% of their annual marketing budgets. Presumably, all of this investment will occur after figuring out: What business application to apply social analytics to? What social processes to redesign or improve? What metrics to measure? Who will be accountable for creating and applying metrics to take action? When and what types of actions to take based on the creation of social intelligence? 1 Multi-response answers will not equal 100%

6 Figure 2: Company Investment in Social Analytics Forecast to Grow: % 59.6% 51.9% 27.9% 31.9% 39.5% 36.9% 22.6% 25.5% 23.6% 30.3% 26.5% 43.2% 4.7% 8.5% Less than 1% of our annual marketing budget At least 1%, but < 3% of our annual marketing budget At least 3%, but < 5% of our annual marketing budget More than 5% of our annual marketing budget Don't Know Source: 2012 Hypatia Research Group, LLC. All Rights Reserved Business Use Cases: Taking Action on Social Intelligence Not surprisingly, analysis of social media can be applied toward multiple business initiatives such as: Brand reputation, brand reach and crisis management o Course or message correction Product innovation, ideation and product design quality alert Sales and marketing o Correlation or probability of influence on purchase o Customer segmentation or profiling prior to taking action Customer service and support o Escalation and resolution of issues Business process improvement o Work-flow design o Rules-based alerts Competitive Intelligence

7 If these business initiatives seem similar to those for Voice of the Customer, it should. In the first industry analyst-authored primary research study written on VOC, Hypatia Research 2 identified integrated VOC technologies as encompassing and combining the analysis of both structured (data) and unstructured (contextual) information. In short, social media analytics and intelligence business processes and enabling technologies should be viewed as a subset of voice of the customer a rapidly growing piece of the customer intelligence pie due to the recent explosion in user-generated content. At EMC we have an interesting "thing" Hypatia Research defines social analytics and intelligence happening I suspect is common to others' technologies as enabling the monitoring, filtering, experiences... our PR folks are truly in categorization, sentiment and trend analysis, text analysis, correlation discovery and root cause analysis of "measure mode" approaching social as all types of unstructured social media and/or usergenerated content from multiple sources both private "Listening" to them is a finite concept, they would any traditional channel. and public. In short, social media analysis helps using specific Boolean logic rather than organizations discover actionable signals within the embracing organic conversations. noise of more than 50 million conversations per day and to use this customer intelligence for guidance, decisionsupport and/or corrective action deemed most --Keith Paul, Chief Listener. EMC advantageous in meeting business objectives and/or corporate goals. Bottom-line: Social Analytics & Intelligence solutions are much more than a social media monitoring tool. Ideally, social analytics software tools should help organizations measure the effectiveness of social media on business but, insofar as measuring a tangible ROI software alone is just a major part of an overall strategy, operational plan and solution. 2 Operationalizing Voice of the Customer: Benchmarks, Best Practices and Maturity Models, 2010, Hypatia Research, LLC

8 Figure 3: What S&I Capabilities Do Companies Value Most? Search and content organization 28.1% 58.3% 13.6% Probability or Intent to Influence Others 27.7% 54.5% 17.9% Probability or Intent to Purchase 26.8% 54.0% 19.1% Root cause analysis: Identification of root cause 26.8% 54.0% 19.1% Emerging Topics: Trending Topics or Word Clouds 26.8% 51.9% 21.3% Discovery Correlation: Analysis of Cause and effect 26.4% 55.7% 17.9% Key word matching 24.7% 54.0% 21.3% Associate Analytics: Links a specific referral source to a conversion or purchase. 20.9% 57.9% 21.3% Don't know 12.4% 27.0% 60.5% Sentiment extraction 9.8% 58.7% 31.5% Critically Important Important & Useful Not essential Vendor Galaxy TM Leaders Source: 2012 Hypatia Research, LLC. All Rights Reserved Our illustrative chart (Chapter 2) utilizes a data-driven methodology to evaluation and place vendors on an X/Y axis corresponding to dimensional measurements of maturity and vision. Top vendors evidenced the most comprehensive offerings, exhibited a roadmap with innovative new product or feature releases, a clearly defined product methodology and vision for SA&I services inclusive of strategic, operational and technical services, as well as integration partnerships. Integration is key for many, but not all vendors, in order to take action (execute) on social intelligence through complimentary enabling technologies such as customer interaction and relationship management, or marketing automation. Weighted modeling ensures that only the top 10-20% place in Hypatia s Galaxy. We recommend that organizations shortlist all Galaxy leaders and evaluate Satellite vendors carefully for consideration before making a final selection. The following vendors have been evaluated in Hypatia s 2012 Galaxy TM for Social Analytics & Intelligence.

9 Figure 4: Vendors Evaluated: 2012 Social Analytics & Intelligence Attensity Crimson Hexagon Nielson: BuzzMetrics SAS Autonomy CustVox OpenAmplify SDL BuddyMedia 3 IBM Oracle Syncapse Buzzient Kontagent QuestBack Trakur Clarabridge ListenLogic Salesforce Radian6 Verint Claritics Microstrategy SAP Visible Technologies Our Assessment Source: 2012 Hypatia Research Group, LLC. All Rights Reserved Insofar as converting context into actionable insight, we are currently in the early adopter stage for social media analytics and intelligence. Companies are eager to monitor and/or explore trends, as well as to benchmark the rise in positive or negative sentiment against public relations communications, customer service or product quality issues, product launches or share of brand voice. However, our assessment is it will take time for organizations to fully process what is feasible in regards to capturing, managing, analyzing and above all, creating social intelligence in order to take action on this usergenerated content. Various approaches to creating intelligence out of social media analytics in this fragmented market landscape will continue to have an impact on adoption rates. For example, early adopters such as media and advertising agencies are more likely to select software products that measure consumer perception, and share or volume of voice along with cause and effect of communications or brand campaigns. Alternatively, organizations that seek Real-time social analytics challenges often come down to two issues: to leverage SA&I solutions on an enterprise-level for multiple business initiatives are motivated to develop discrete multi-phase business objectives, key performance metrics, and operational execution plans before engaging with a vendor or provider of services. In short, multiple business functions will utilize social intelligence as a subset of integrated voice of the customer for various purposes. We expect that enterprises will begin their use of SA&I in the customer service, brand and marketing communications and competitive intelligence functions initially, before expanding to other business areas as outlined earlier. Noise or signal? Analyze single posts or body of work? --Ian Hersey, CTO Attensity 3 Acquired by Salesforce.com

10 Thus, not all organizations will migrate to a single SA&I tool initially, but will likely pilot various tools as part of their efforts in evaluating SA&I or VOC platforms. Companies that already have, or are now planning their SA&I investments, will expect their vendors to stay abreast of new technologies and provide new functionality. This might include more robust customer interaction functionality, through either integration with legacy interactive marketing applications or an expanded social engagement platform over time. In the following chapters, our research and market analysis of over 500 end-user organizations will present: How organizations set goals and objectives for investment in social analytics & intelligence initiatives. Which role(s) are primarily accountable for these programs, and moreover, how should these teams be structured organizationally. Return on investment benchmarks by geography, industry, maturity level and size. Maturity levels for social analytics & intelligence: What differentiates beginners from the more sophisticated practitioners? How organizations plan to harmonize customer s online interactional information with transactional data stored within legacy systems such as CRM, marketing databases, financial systems (ERP) or data warehouses? Business initiatives and use cases that are high priority for social business investment; Which features, functionality and capabilities organizations value most and why? Which best practices or lessons learned from other organizations effective social analytics & intelligence initiatives might benefit my organization.

11 Table of Contents Executive Summary... 3 Challenges: What Organizations Seek and Require... 3 Business Use Cases: Taking Action on Social Intelligence... 5 Vendor Galaxy TM Leaders... 7 Our Assessment... 8 Introduction Flavors of Social Analytics and Intelligence Research Approach & Vendor Rankings Survey Respondent Profiles Chapter Two: Market Realities Organizations Invest Without Clear ROI Metrics Organizations Invest for Multiple Reasons Companies Seek Consultative Services & Process Expertise Chapter Three: Current Vendor Landscape Evaluate Platform Solutions AND Point Solution Integration Levels Check for Technology Partnerships Hypatia s 2012 Social Analytics & Intelligence Galaxy TM Galaxy Leaders Satellite Competitors Nebulae Contenders Chapter Four: Benchmarks, Metrics and ROI Finding the ROI in SA&I ROI Differs by Industry ROI Tied to Maturity Level Rather than Timeframe Best Practice Business ROI Evaluations Brand Mandate at L Oréal Social Engagement Improves Satisfaction & Perception Chapter Five: Conclusions Hypatia s Assessments Initiate the Journey About the Author Appendix A: Research Methodology... 50

12 Hypatia s Primary Research Studies Galaxy TM Vendor Evaluation Guides & Benchmark Studies Vendor Evaluation Guides: Point of View:... 51

13 Table of Charts FIGURE 1: HIGH PRIORITY METRICS TRACKED...4 FIGURE 2: COMPANY INVESTMENT IN SOCIAL ANALYTICS FORECAST TO GROW: FIGURE 3: WHAT S&I CAPABILITIES DO COMPANIES VALUE MOST?...7 FIGURE 4: VENDORS EVALUATED: 2012 SOCIAL ANALYTICS & INTELLIGENCE...8 FIGURE 5: RESPONDENTS BY GEOGRAPHY FIGURE 6: RESPONDENTS BY COMPANY SIZE FIGURE 7: RESPONDENTS BY INDUSTRY / SECTOR FIGURE 8: RESPONDENTS BY FUNCTION FIGURE 9: RESPONDENTS BY ROLE FIGURE 10: TOP THREE CHALLENGES: SOCIAL ANALYTICS & INTELLIGENCE USAGE FIGURE 11: TOP REASONS ENTERPRISES INVEST IN SA&I TOOLS FIGURE 12: TOP REASONS FOR INVESTMENT IN SA&I TOOLS BY SIZE FIGURE 13: TOP THREE ACTIONS PLANNED TO CIRCUMVENT SA&I CHALLENGES FIGURE 14: 2012 AGGREGATED GALAXY SCORES: SOCIAL ANALYTICS & INTELLIGENCE FIGURE 15: ACCOUNTABILITY FOR SA&I INITIATIVES & PERFORMANCE METRICS FIGURE 16: KEY PERFORMANCE INDICATORS TRACKED BY IMPORTANCE: SA&I FIGURE 17: RETURN ON SA&I INVESTMENT: % OF ANNUAL 2012 MARKETING BUDGET FIGURE 18: RETURN ON SA&I BY SECTOR: % OF ANNUAL 2012 MARKETING BUDGET FIGURE 19: DURATION OF USAGE RETURN ON INVESTMENT FIGURE 20: HIGH PRIORITY METRICS TRACKED MOST OFTEN FIGURE 21: SA&I BUSINESS CASE MATRIX & MATURITY MODEL... 46

14 Key Findings Social Analytics & Intelligence: Converting Contextual to Actionable Introduction Social media content is a valuable, but often unorganized, corporate asset. Reasons for investing in SA&I vary widely: although managing brand perception, primacy, and crisis prevention is a high priority for investment in SA&I. SA&I is a subset of integrated Voice of the Customer technologies, business processes and performance measurements. Flavors of Social Analytics and Intelligence Social Analytics and Intelligence is a business category that we consider to be a subset of integrated Voice of the Customer business processes, performance measurements, and enabling technologies. Hypatia Research defines social analytics and intelligence technologies as enabling the monitoring, filtering, categorization, sentiment and trend analysis, text analysis, correlation discovery and root cause analysis of all types of unstructured social media and/or user-generated content from multiple sources both private and public. In short, social media analysis helps organizations discover actionable signals within the noise of more than 150 million conversations per day and to use this customer intelligence for guidance, decisionsupport and/or corrective action deemed most advantageous in meeting business objectives and/or corporate goals. At present, SA&I product capabilities fall into four major categories: Social Media Monitoring Analytics Market or Customer Insights Social Engagement Is it possible to measure ROI in social media? I am going to share an experience I had with a new business. I bought the proper search terms for my business. I included content sites. Most of my visitors came from content sites and the conversion rates were horrible. I had to turn off content sites because their intention is to learn not to buy. Content sites are much like social media sites, where the intention is interaction not purchasing. Trying to create brand awareness on social media sites is totally different than traditional marketing off line. On SMS, you need to engage and collaborate and provide valuable information to build a brand. The stupid phrase "like us on Facebook" builds numbers of uninterested non-buyers. I postulate that building top of mind brand awareness on social media is a waste of time and money unless you collaborate and engage. --Fred Held, Executive in Residence, Engineering School at California State University, Los Angeles

15 Research Approach & Vendor Rankings Hypatia presents the results of its survey of organizations using SA&I products, describes the criteria for selecting SA&I and the metrics that organizations use to judge the success of their customer content. Our study also includes vendor evaluations of two dozen leading SA&I vendors in the market utilizing 12 data-driven dimensional criteria coupled with end-user customer interviews, and product demonstrations. Hypatia takes an end-user approach to customer intelligence research. Similar to Consumer Reports 4, our industry experts are objective in providing end-user organizations with independent primary research assessments as decision-support in evaluating various enabling technologies, service providers and consulting firms. To maintain its independence and impartiality, Hypatia Research does not engage in syndicated research sponsorships 5, accepts no outside advertising, provides no free samples, and utilizes proprietary research techniques to evaluate vendors. Along with our trademarked Hypatia s 6 Galaxy TM evaluation rankings of vendors that offer Social Analytics and Intelligence software, this study provides end-user organizations with an analysis of why companies invest in SA&I, what tangible benefits are possible with SA&I, and what metrics can be used to measure the ROI of a SA&I initiative. In short, our research provides actionable insight that companies may use in compiling a vendor short list, request for qualifications and best practice terms of engagement with software vendors. Why this focus on actionable insight? Knowledge for the sake of knowledge without a purpose is outside our mission. Since 2001, Hypatia s tagline has been calculating results. Our research methodology, a hybrid approach that combines qualitative and quantitative input from end-users, benchmarks the business return on investment realized by organizations of all sizes. Survey Respondent Profiles According to our research, respondents came from a range of industries, with the largest sectors being manufacturing (14.9%), professional services (13.7%), financial services (12%), retail (11.5%), healthcare providers (10.2%), and consumer goods (7.9%). In terms of size, the organizations were divided fairly evenly, with a somewhat higher percentage of very large organizations, over $800M, which comprised 37.5% of the respondents. Mid-range companies ($51 5 Vendors may license distribution rights to Hypatia Research studies after completion, but may not commission syndicated studies. 6Hypatia of Alexandria (c AD), a professor of astronomy, mathematics and philosophy, invented several scientific devices--the astrolabe, plane-sphere, and hydro-scope (hydrometer). These instruments were used to calculate the distance between planets, the position of visible stars at any time of the year, and the gravity of liquids respectively.

16 million to $799M) represented 34%, and the smallest firms, $50 million and under, were represented at 28.6% of all responses. Geographically, nearly forty-nine percent came from North America, 26.7% from Europe and 25.4% from Asia--primarily China, Japan, Korea and Australia. Those who answered the survey were most likely to be directors or managers (64.3%), with 21.8% at a vice president level or higher. The majority were in sales, alliances or marketing roles (47.8%), seconded by IT (21.9%), and followed by research & development/product management (13%). Fully 60% have used some type of SA&I application(s), with only 11% of these having utilized it for more than three years. 41% do not currently utilize social analytics even though 26% of these companies do have corporate Facebook pages or twitter account. Early days in this nascent enabling technology space even though text analytics tools have been in use for more than ten years. Figure 5: Respondents by Geography North America Asia Pacific: Australia, China, India, Japan, Korea, etc EMEA Source: 2012 Hypatia Research Group, LLC. All Rights Reserved

17 Figure 6: Respondents by Company Size 28.6% 21.4% 16.5% 17.4% 16.1% Less than $50M $51-$250M $251 -$800M $801M to $2B More than $2.1B Source: 2012 Hypatia Research Group, LLC. All Rights Reserved

18 Figure 7: Respondents by Industry / Sector 13.70% 4.40% 6.90% High-Tech: Software or Hardware Public Sector & Government Agencies Higher Education & Not for Profit 14.90% 12.00% 7.90% 9.10% 9.40% Telecommunications: Communications, Publishing & Media Consumer Goods & Electronics Health care Provider: Hospital, Clinic, etc... Retail Financial Services: Retail Banking 11.50% 10.20% Manufacturing Professional Services: Consulting, Accounting, Law Firms, etc... Source: 2012 Hypatia Research Group, LLC. All Rights Reserved Figure 8: Respondents by Function Marketing / PR / Community Manager / Customer Service 26.8% IT / Networks / Database / Project Management 21.9% Business Development / Sales / Alliances 21.0% R& D / Product Management / Product Ideation & Innovation 13.0% Human Capital Management / HR 6.3% Operations: Legal, Risk, Counsel 1.8% Source: 2012 Hypatia Research Group, LLC.. All Rights Reserved

19 Figure 9: Respondents by Role 8.00% 3.10% 4.90% 48.70% 5.80% 13.80% EVP / VP COO / CFO CEO / CMO CIO / CTO Team Member / Individual Contributor Supervisor/team leader Director / Manager 15.60% Source: 2012 Hypatia Research Group, LLC.. All Rights Reserved

20 Key Findings Social Analytics & Intelligence: Converting Contextual to Actionable Chapter Two: Market Realities Organizations of all sizes are struggling to create new business processes and rules to manage social interaction efficiently Companies that seek social analytics solutions often invest for multiple reasons and without clear ROI metrics SA&I software vendors that offer consultative professional services such as configuration of business processes mapped to realistic performance metrics by business use case are in a position to provide higher value to end-users as well as to themselves. ith over 100 social analytics vendors to choose from, organizations seek to understand W which selection criteria are most critical in making the right investment for their organization. At present, some vendors offer analysis of either Twitter and/or Facebook. Others focus on analysis of blogs, RSS feeds, and/or certain media outlets, while the most sophisticated literally "drink from the fire hose" in analyzing all online sources of user generated content. Most of the twenty-four vendors evaluated offer enterprise-level social intelligence tools rather than those designed for consumer usage. Moreover, conversations about social media have taken over a large amount of digital ink in cyberspace lately. We see this in our analyst inquiry calls as well. Organizations of all sizes are struggling to: Correlate social activities to tangible results Convert social analytics into actionable intelligence, and Create new business processes and rules to manage social interactions or to create social engagement. How much of your day do you spend on each social media platform? I'm finding myself, more and more often, getting overwhelmed by the amount of time it takes to be engaged. Any tips? --Sherri Pellegren, Social Media Strategist, On-line Community Manager at Jewelry Retailer The good news is that we have answers for all of these end-user questions. Our latest global research encompasses Asia Pacific (25%), EMEA (26%) and North America (49%) as well as companies of all sizes and industries. Our research reveals that organizations cite a desire to hire staff with domain and functional expertise in social media processes and analytics as a top priority (44.6%) followed by building a business case to justify investment (37.7%). Tracking return on investment came in as a third priority (38.6%). This is not surprising as social analytics and intelligence usage for taking action requires numerous skills that are in limited supply and relies on multiple business functions to execute on the decision support provided by

21 contextual analysis. Organizations understand the need to walk before racing competitively. Thus, hiring expertise to help prioritize and to develop business use case justification is more important than tracking return on investment. Figure 10: Top Three Challenges: Social Analytics & Intelligence Usage 7 Challenge 1 Challenge 2 Challenge % 8.5% 13.6% 37.7% 38.6% 44.1% 25.0% 17.8% Hiring staff with domain or functional EXPERTISE in social media processes and analytics. Building a business case to JUSTIFY investment in social media analysis tools 5.9% Tracking return on investment (ROI) from social media analytics tools. Organizations Invest Without Clear ROI Metrics Source: 2012 Hypatia Research Group, LLC. All Rights Reserved Metrics, trend analysis, and/or key performance indicators available through dashboards, visualization or other types of reporting are another area companies struggle to assess. Our research found most fall into one or more of the following maturity levels: Clients know they need metrics but are uncertain as to what to use in order to be effective; Clients expect vendors to provide them with a menu of available metrics or KPI's to choose from; Clients know precisely which metrics they want for each of their business objectives. 7 Multi-response answers will not equal 100%

22 In short, organizations invest for a variety of reasons and acquire knowledge and experience along the way. This type of experimental laboratory approach is not all that unusual for emerging technology usage. (Remember text analytics usage ten to fifteen years ago?) However, much more in the way of budget and resources are being invested in social media analytics without a guaranteed return on investment. Nonetheless, companies continue to invest for a variety of business reasons. Organizations Invest for Multiple Reasons One of the many reasons companies continue to pour money into social analytics software and services is the wide range of business use cases it can be applied to. Companies are more comfortable than ever before in using business intelligence reporting tools to inform their decision-making. Now that it is possible for line of business functions to see the why behind the BI by leveraging contextual information (unstructured content such as social media or user generated content versus data which is structured) along with data, companies are eager to augment their customer intelligence initiatives. Figure 11: Top Reasons Enterprises Invest in SA&I Tools 8 Respond to customer requests for service, support and information promptly 37.4% Competitive or Market Intelligence tracking Better management of messaging, reach, reputation, positioning, and consistency of our Measure effectiveness of product launch or other marketing campaigns We socially engage customers to fill the sales pipeline, educate customers and/ or influence Develop a large on-line community of Influencers and brand champions for our products & services Social media analysis is part of our overall Voice of Customer programs Social media analysis for product innovation, Ideation and design enhancement initiatives Proactively uncover potential issues, make appropriate course corrections, and resolve Better management of our enterprise risk and liabilities. 31.5% 30.6% 28.9% 28.1% 26.8% 25.1% 25.1% 23.8% 22.1% Source: 2012 Hypatia Research Group, LLC. All Rights Reserved 8 Multi-response answers will not equal 100%

23 According to our results in double-digit findings, companies primarily invest in SA&I software and services for three reasons: 1) Customer Management o Service & Support o Marketing 2) Sales Enrichment 3) Enterprise Risk & Liabilities o Product Enhancement or Design Quality Defect o Brand Management However, when segmenting these reasons by company size, a slightly different story materializes. Of our 526 global responses, 45% overall came from organizations with less than $250M in revenues, 17.4% had revenues of $251-$800M, 16.1% had revenues of $801-$2b, and 21.4% had more than $2.1b in revenues. More than half (12.2%) of these largest enterprises had greater than $10b in revenues. Figure 12: Top Reasons for Investment in SA&I Tools by Size 9 More than $2.1B 35.1% 26.1% 25.4% 29.2% 28.0% 29.4% Proactively uncover issues to take appropriate course corrections or resolve complaints Promptly respond to customer requests for service, support & information $801M to $2B 17.5% 15.9% 14.9% 12.5% 17.3% 14.7% We socially engage customers to fill the sales pipeline, educate customers and/ or influence purchasing decisions $251 -$800M 10.5% 15.9% 13.4% 12.5% 12.0% 13.2% Better management of messaging, reputation, positioning, and consistency of brand Competitive or Market Intelligence tracking Less than $250M 36.8% 42.1% 46.3% 45.9% 42.6% 42.6% Measure effectiveness of product launch or other marketing campaigns Source: 2012 Hypatia Research Group, LLC. All Rights Reserved 9 Multi-response answers will not equal 100%

24 Not surprisingly, organizations reasons for investing vary considerably by company size, job function and geography. Our business ROI evaluation of cosmetics company L Oreal in Chapter Four is an excellent example of this research finding. (For further social analytics & intelligence research by industry, geography, company size or job function, contact HRG@HypatiaResearch.com.) Large Enterprises With greater resources available to them and more invested in branding via use of agencies for media, creative and promotion (examples: Victoria Secret, Volkswagen and Budweiser Super Bowl Ads), larger enterprises are more likely to use social media analytics to proactively uncovering potential issues in order to make appropriate course corrections and/or resolve complaints before they escalate (35.1%). This might include corrective action to branding, messaging, customer service and product quality or liability issues. The next highest priority is the ability to measure the effectiveness of product launch or other marketing campaigns (29.4%), followed by better management of brand positioning and messaging (29.2%) and exploitation of social analytics for competitive and market intelligence (28%) tracking. Upper Mid-Market Enterprise As with large enterprise, the upper mid-market ($800M - $2.1B) invests in SA&I most often to proactively uncovering potential issues in order to make appropriate course corrections and/or to resolve complaints before they escalate (17.5%) followed by use of social analytics for competitive and market intelligence (17.3%), and tracking and prompt responses to customer requests for service and support or information (15.9%) Lower Mid-Market Enterprise When it comes to investing in emerging software categories, this segment s behavior more than any other demonstrates show me the money or return on investment. In stark contrast to larger enterprise segments, organizations ranging from $251M-$800M are more likely to leverage SA&I for discrete, measureable, operational reasons such as: promptly responding to customer requests for service and support or information (15.9%); followed by social engagement of customers to fill the sales pipeline, educate customers; and/or influence purchasing decisions (13.4%); and the ability to measure the effectiveness of product launch or other marketing campaigns (13.2%), Small Enterprise With resource constraints and lesser budgets, SMBs (Less than $50M in revenues) are more likely to prioritize their use of SA&I as follows: Social engagement of customers to fill the sales pipeline, educates customers; and/or influence purchasing decisions (46.3%); Management of brand positioning and messaging (45.9%)

25 Measure the effectiveness of product launch or other marketing campaigns (42.6%) Utilization of social analytics for competitive and market intelligence (42.6%) tracking, and Responding to customer requests for service and support or information (42.1%). While companies of this size do not generally spend the same percentage of their budgets on external agencies for media, creative and promotional support in the same manner as larger enterprises, this segment does tend to take a more hands-on approach in matters relating to branding and customer communications. Conversely, this segment is least likely to employ social for proactive discovery of potential issues such as risk or product liability. Companies Seek Consultative Services & Process Expertise SA&I software vendors that offer consultative professional services such as configuration of best practice business processes that are mapped to realistic performance metrics, and aligned with specific business use case, are in a position to provide higher value to end-users as well as to themselves. Benefits to providers of software plus consultative services accrue in the form of: Immediate customer feedback Hands-on experience resolving business process mapping and configuration of rules, alerts or escalations Granular understanding of how different functions utilize social media and which performance metrics need to be tracked or measured at each stage of customer engagement Domain and sector expertise gained during the engagement

26 Figure 13: Top Three Actions Planned 10 to Circumvent SA&I Challenges Action 1 Action 2 Action % 13.2% 21.7% 32.3% 38.7% 34.0% 26.4% 14.5% 11.9% 14.0% 10.2% 6.8% Engage an independent CONSULTING firm or agency to select and implement a social media analysis solution or program. Select & implement a social analytics solution using INTERNAL resources. Invest in a social media analysis SOFTWARE solution with assistance from the software vendor or its partners. Invest in social media analysis software as a service(saas) or as managed services Source: 2012 Hypatia Research Group, LLC. All Rights Reserved As top priority, 34% of respondents plan to source expertise externally in order to get their SA&I programs up and running and/or to augment or refine current programs. Selection and implementation of a social analytics tool using internal resources only at 32.3% is of secondary priority to development of a program or selection of a solution utilizing external expertise. A full 38.7% plan to rely on a software vendor or its partners for expertise, while only 14% will invest in SA&I via managed services, preferring to keep proprietary and domain expertise in-house. (Example: L Oreal Business ROI Evaluation in Chapter Four). In assessing these responses through a different lens via an aggregated perspective, we noticed that organizations are equally split in their plans to utilize external expertise versus internal resources when addressing SA&I challenges. Provided with seven potential answers to the question What are the top three actions planned to circumvent SA&I challenges? enterprises shared that: 71.9% plan to source expertise externally in order to get their SA&I programs up and running and/or to augment or refine current programs 10 Multi-response answers will not equal 100%

27 71.9% plan to select and implement a social analytics tool using internal resources only 65.1% % plan to rely on a software vendor or its partners for expertise 31% % will invest in SA&I via managed services What does this this mean for end-users of SA&I technologies? Similar to gloves, hats and pantyhose, one size does NOT fit all. Organizations will likely take a hybrid approach in addressing SA&I challenges.

28 Key Findings Social Analytics & Intelligence: Converting Contextual to Actionable Chapter Three: Current Vendor Landscape A highly fragmented vendor landscape confuses and challenges organizations that seek social analytics solutions; Platform solutions outperform point solutions by integrating content from multiple channels: both interactional and transaction; Integration with CRM information still a challenge for most organizations and software vendors would do well to address this bottleneck ypatia Research defines social analytics and intelligence technologies as enabling the H monitoring, filtering, categorization, sentiment and trend analysis, text analysis; correlation discovery and root cause analysis of all types of unstructured social media and/or user-generated content from multiple sources both private and public. In short, social media analysis helps organizations discover actionable signals within the noise of more than 50 million conversations per day, and to use this customer intelligence for guidance, decision-support and/or corrective action deemed most advantageous in meeting business objectives and/or corporate goals. Bottom-line: Social analytics & intelligence solutions are much more than social media monitoring tools. Ideally, social analytics software tools should help organizations measure the effectiveness of social media on business but, insofar as measuring a tangible ROI software alone is just a major part of an overall strategy, operational plan and solution. Evaluate Platform Solutions AND Point Solution Integration Levels Many of the SA&I products often look similar at first glance at a features list. But the depth and breadth of the features may vary markedly, as will other potentially critical areas like the range of integration adapters available. The integration abilities of different SA&I systems vary greatly. Ideally, they should be able to share social and user generated media with customer systems such as CRM, call center, sales, and marketing campaign optimization software via ready-made adapters. Most SA&I vendors, however, have few specific adapters and rely on integration via Web services or open APIs to enable customers to do their own integrations. That puts the burden on customers to either hire an outside integration firm, pay extra for the SA&I vendor to help, or climb the learning curve and do the work in-house. Any of those options will add either time, money, or both to the project.

29 Check for Technology Partnerships Speaking of integration, it also is worth looking at whether any of the important functionality especially functionality that is critical to the organization s implementation is provided by integration with a third party vendor when it is billed in the marketing literature as being part of the Social Analytics & Intelligence solution. While it s good to have integration API s or connectors to third-party products for additional, customers need to know when that integration involves a critical piece of functionality and how seamless it really is in practice. Most core social analytics or sentiment analysis functionality is part of the package, but some of the text analytics, decision-management, dashboards and reporting, as well as the ability to take action on social intelligence may be supplied from third-party partnerships. Examples of this include Verint, which not only has its own text analytics capabilities, but also OEM s from both Attensity and Clarabridge. Likewise, Radian6 embeds OpenAmplify for some of its sentiment analysis based on natural language processing technologies. In the case of SAP, they partnered with NetBase to resell its Enterprise Social Intelligence Platform solutions as the SAP Social Media Analytics application by NetBase. Organizations should know which vendor developed the technology, is accountable for licensing, upgrades or maintenance, and who will provide professional services such as training, knowledge transfer or integration services. A technology partnership often works fine even providing access to best of breed components as long as the integration is: Really seamless (smooth from a business user perspective The vendor isn t charging extra for a feature billed as part of the suite The partnership remains intact for the life of the license and/or implementation However, vendors that provide an enterprise approach, either through a platform or via tight integration with partners, scored higher in our data-driven Galaxy evaluations than point solution providers. We found that organizations are planning to invest more in social interactions, and to measure these interactions via social analytics. However, with 25% of global companies challenged in justifying the expense via return on investment metrics or business case success stories, vendors would do well to address the requirements of multiple business functions within the enterprise. In short, provide a scalable solution that addresses numerous functional requirements so that companies are not tempted to take a siloed approach to social initiatives. Analysis of social media can be applied toward multiple business initiatives such as: Brand reputation, primacy and crisis management o Course or message correction Product innovation, ideation and product design quality Sales and marketing o Correlation or probability of influence on purchase

30 o Customer segmentation or profiling prior to taking action Customer service and support o Escalation and resolution of issues Business process improvement o Work-flow design o Rules-based alerts Competitive Intelligence Hypatia s 2012 Social Analytics & Intelligence Galaxy TM Ten dimensional criteria comprised the scoring for Hypatia s Galaxy rankings and our overall assessment of these software providers. Each vendor was scored with range of offering, corporate product/service roadmap, innovation and vision charted on the X- axis while maturity, execution strength, global reach, and number of customers were charted on the Y- axis. Weighted modeling ensures that only 15% of top scoring vendors would place as Galaxy Leaders, while the next 50-60% are categorized as Satellite Contenders and the final 20-30% placed as Nebulae Competitors. As a result, there are often less than two percentage points separating Galaxy leaders from each other and only four percentage points separating the top Satellite vendors from those in the Galaxy leadership orbit. We recommend that organizations shortlist all Galaxy Leaders and evaluate Satellite vendors carefully for consideration before making a final selection. In the Galaxy chart below, planet size illustrates estimated company revenues for SA&I offerings from a relational perspective. For example, Verint sells many different enterprise software and hardware products, but only approximate sales from its offerings in social and text analytics technologies were factored into revenue size. Moreover, number of customers, and not revenues generated were factored into our evaluation scores. Other aspects of the companies and their products were derived from enduser interviews, product demonstrations and vendor briefings. Hypatia also evaluated companies on 10 categories of functionality. Overall Galaxy leaders and Satellite Competitors scored well in most categories relating to search, twitter analytics, sentiment analysis, influence analysis, and reputation monitoring. However, Galaxy leaders evidenced greater capabilities for converting context to actionable insight via text analytics, relationship visualization & correlation, [also known as root cause analysis], configurability and customization of business rules & workflow. (A separate companion study scheduled for publication in October 2012 entitled How Social Interactions Enhance Customer Engagement Processes focuses on exploiting social channels for customer service and support. Other primary research reports in our Social Analytics & Intelligence Series include: 1) What Large Enterprises Do Differently: Best Practices & Benchmarks for Social Analytics & Intelligence Usage 2) Leveraging Social Channels for Customer Service & Support

31 3) Social Analytics & Intelligence for Small and Mid-Market Enterprises: Best Practices & Benchmarks 4) What Capabilities and Functionality CMOs Seek and Require From Social Analytics & Intelligence Solutions 5) Finding an Effective Return on Investment from Social Analytics & Intelligence Solutions by Industry and Sector 6) Finding an Effective Return on Investment from Social Analytics & Intelligence Solutions by Company Size and Geography 7) Point Solution or Enterprise Platform: Selecting the Right Social Analytics & Intelligence Tool 8) What Capabilities and Functionality Large Enterprises Seek and Require from Social Analytics & Intelligence Solutions 9) What Capabilities and Functionality Small Enterprises ($50M-$250M) Seek and Require from Social Analytics & Intelligence Solutions 10) What Capabilities and Functionality Mid-Market Enterprises ($300M-$850M) Seek and Require from Social Analytics & Intelligence Solutions Galaxy Leaders Top vendors evidenced the most comprehensive offerings, exhibited a roadmap with innovative new product or feature releases, a clearly defined product methodology and vision for SA&I services inclusive of strategic, operational and technical services, as well as integration partners. This integration is key for many, but not all, vendors in order to take action on social intelligence through complimentary enabling technologies such as customer interaction and relationship management, or marketing automation. Overall, Galaxy leaders were more likely to: Have offered SA&I functionality, tools or solutions for 2+ years Offer more sophisticated analytics that provides actionable intelligence rather than trending statistics for guidance Exhibit a customer base in several industry verticals and/or geographies Present a strong product vision, roadmap, and product development methodology Supply professional services to assist customers with customization or configuration of KPI s, metrics, workflows, alerts, and knowledge transfer in support of business objectives and/or corporate goals Satellite Competitors Companies with solid scores landed in our Satellite category. These vendors were often quite strong in functionality, but may have lacked either business maturity having smaller customer bases or fewer years in business or global reach. In one or two cases, a company with average scores had two or three features that were exceptional. These companies should be strongly considered by customers in

32 need of specific functionality or domain expertise. An example of this is BazaarVoice with significant retail and CPG expertise. Satellite-ranked vendors had greatly varying scores in the maturity category with some who scored low in the quantitative areas such as years in business or geographic range scored high in dimensions relating to corporate vision, product strategy or global reach. Syncapse, for example, had average scores on the Y- axis with significantly higher scores on the X- axis, Thus Satellite vendors are well worth including on the short list of potential investments if they scored strong in the key categories needed for specific business initiatives, be that range of features, range of services, or the strength of their customer base and geographic coverage. Nebulae Contenders These vendors offer either a point solution with limited capabilities or are higher business risks in terms of time in business and other factors relating to maturity such as funding, leadership, or lack of a strong product roadmap or ability to execute. However, while these companies may not meet the definition of a robust SA&I platform, they often excel in specific areas where customers may need extra expertise or a best of breed product. In other cases, the lower scoring vendor may be an open source provider who lacks sufficient number of proprietary customers or depends heavily on third-party open source products to fill gaps in the product line. Small businesses and mid-market organizations with constrained resources may find value in evaluating these vendors.

33 Figure 14: 2012 Aggregated Galaxy Scores: Social Analytics & Intelligence Source: 2012 Hypatia Research Group, LLC. All Rights Reserved IBM 1 st place tie With an unrivaled portfolio of software solution components, consultants, IBM Global Business Solutions (GBS) and professional services team, Global Technology Solutions (GTS); IBM has packaged a comprehensive social analytics and intelligence solution for the marketplace. Developed within a framework of capture, analyze & predict, engage and act 11 IBM s Social Media Analytics solution empowers organizations to transform a multitude of online contextual sources into insight, predict optimal next best actions and outcomes, and to act upon this consumer insight for business gain. Solution components available encompass: 11 IBM s framework for customer intimacy

34 IBM Cognos Consumer Insight (CCI) facilitates analysis of brand sentiment, emerging topics, share and volume of voice IBM SPSS Predictive Analytics accelerates use of predictive models to reveal customer insights that can be leveraged to make smarter decisions, solve problems and to improve business results. IBM Coremetrics Social Analytics-- simplifies analyze owned social channels and measure the ROI of social media across paid, earned and owned media. IBM Unica Campaign--Engage in one-to-one social dialogues via social network channels IBM Unica Interact--Deliver real-time offers inside of social widgets and networks IBM Social Media analytics supports line of business functions by empowering them to be more proactive, agile and responsive to customer demands and opinions by listening, measuring and analyzing large volumes of publicly available content on the Internet. Architected with seamless connections between the Cognos business intelligence platform, Cognos Consumer Insight, and SPSS Predictive Analytics means a more comprehensive business analytics environment (structured and unstructured) is readily available. More than a mere social listening platform, IBM Social Media Solution impresses by permitting line of business users, rather than only elite decision scientists or statisticians, to integrate consumer sentiment with other data sources (sales and marketing data), and to cultivate correlated analytics and predictive models that provide differentiated consumer insights. These insights may be used to react and engage via social channels in near real-time, learn from repeatable behaviors or sentiments related to product affinity or purchase intent (via propensity models), and to refine further interactions with prospects, partners and customers. Customers: United Stationers, and BBVA (Financial Services). Industries currently licensing include consumer goods, consumer electronics, food and beverage, sports equipment, and telecommunications. Geography: Worldwide Website:

35 Key Findings Social Analytics & Intelligence: Converting Contextual to Actionable Chapter Four: Benchmarks, Metrics and ROI Accountability is most often shared by multiple functions or roles Benchmarks, metrics and return on investment varies significantly by industry and company size Capturing Customer Intelligence (35.9%) via SA&I is of greater importance than reducing customer acquisition costs (29%) T racking return on investment from social media is both complex and imprecise endeavor. However, measuring business initiatives impacted by social media using key performance metrics is very possible. The bigger elephant in the room typically encompasses: Which role or function is responsible for measuring key performance metrics? Which metrics are worth measuring AND most importantly for what business purpose? Which role takes action (corrective or initial) on SA&I findings? Figure 15: Accountability for SA&I Initiatives & Performance Metrics Primarily Accountable Contributor No Accountability 50.6% 51.9% 49.8% 49.8% 51.1% 54.0% 51.9% 51.5% 55.3% 46.8% 45.5% 45.1% 36.6% 34.9% 33.6% 32.3% 32.3% 32.3% 29.4% 28.9% 26.8% 25.5% 25.1% 24.3% 16.6% 19.6% 15.7% 17.9% 17.9% 22.6% 18.7% 20.0% 19.1% 22.6% 23.4% 20.4% Source: 2012 Hypatia Research, LLC. All Rights Reserved

36 On the surface, it seems that the website manager (36.6%), sales & business development (34.9%), corporate strategy, corporate marketing and product management or merchandising roles (32.3% are on the hot seat of accountability in regards to making decisions based on SA&I results. Supporting and contributing on an operational level are: Customer service and support (55.3%) Market research or competitive intelligence roles (54%) roles Brand managers and product marketing functions (51.9% each), and Ecommerce leaders (51.5%) Contributors are more likely to monitor SA&I for trends such as potential risks, opportunities or customer requests in order to prioritize issues and to take corrective action. "The right KPI s and metrics utilized within a closed-loop business process are key to understanding what kind of value social analytics and intelligence contributes to your business." --Hypatia Research Group Typically significant geographic differences are found in accountability for technology return on investment. However, social analytics and intelligence tools are at a nascent state of development thus regional differences in accountability were found to be minor. In contrast, accountability varies greatly by company size the most striking example is that sales & business development roles are not highly accountable in upper mid-market and large enterprises. (See our upcoming What Large Enterprises Do Differently: Best Practices & Benchmarks for Social Analytics & Intelligence Usage. Finding the ROI in SA&I There are measures available, and it's important to track what can be tracked, in order to be able to prove the business case for SA&I investment. While there is no single metric or set of metrics that can determine the success of a SA&I investment in each and every situation, there are a number of benchmarks available for evaluating how SA&I solutions add value to business goals. Corporate executives surveyed by Hypatia Research shared that the most important metrics for measuring the success of their Social Analytics and Intelligence efforts were, in order of importance: Capture of customer information such as product likes, design suggestions, merchandising feedback (35.9%) Propensity to recommend brand, product or service: Influence or Klout Reports (33.3%) Brand Sentiment or Campaign Impact: positive, neutral, mixed or negative with historical analysis (33.3%) 31.2% cited Share of Voice by time-frame or (SOV) by historical analysis to be of high importance

37 Surprisingly, performance measurements linked to a tangible business impact such as market basket value or probability of purchase, were not among those of highest importance for most organizations. Even a concrete reduction in operating costs ranked lower in importance. For example, only 29.1% of organizations deemed a decrease in average customer acquisition costs or reduction in sales cycle times to be of high value. Other somewhat counter-intuitive findings include: 30.3% consider size of purchase or value of market basket impacted by SA&I to be a metric of high importance 29.5% consider probability to purchase a metric of high importance Figure 16: Key Performance Indicators Tracked by Importance: SA&I 10.7% 11.5% 12.4% 13.2% 11.1% 15.4% 16.7% 53.4% 55.1% 54.3% 55.6% 58.5% 55.1% 54.3% 35.9% 33.3% 33.3% 31.2% 30.3% 29.5% 29.1% Capture of customer information such as product likes, design suggestions, merchandising feedback Propensity to recommend brand, product or service: Influence or Klout Reports Brand Sentiment or Campaign Impact: positive, neutral, mixed or negative with historical analysis Share of Voice: by time-frame / historical analysis Size of Purchase or Probability to Value of Purchase Market Basket Decrease in average customer acquisition costs or reduction in sales cycle times Low 10.7% 11.5% 12.4% 13.2% 11.1% 15.4% 16.7% Average 53.4% 55.1% 54.3% 55.6% 58.5% 55.1% 54.3% High 35.9% 33.3% 33.3% 31.2% 30.3% 29.5% 29.1% Source: 2012 Hypatia Research, LLC, All Rights Reserved A majority of respondents (66.2%) at the manager level on up to the C-Level believe their organization is achieving an annual return on SA&I investment that is between 1% and 7%. A lucky 6.4% cited capturing between 7-10% annual ROI, while 3.8% boasted an ROI of greater than 10% annually.

38 Figure 17: Return on SA&I Investment: % of Annual 2012 Marketing Budget ROI equals less than 1% annually 12.0% 0.4% 11.1% 3.8% 6.4% 9.4% 15.4% ROI equals more than 1% and less than 2% annually ROI equals more than 2% and less than 3% annually ROI equals more than 3% and less than 5% annually ROI equals more than 5% and less than 7% annually ROI equals more than 7% and less than 10% annually 18.8% 22.6% ROI equals more than 10% annually We don't track or I have no idea Other Source: 2012 Hypatia Research, LLC. All Rights Reserved ROI Differs by Industry Each sector s benchmarks differ significantly, although variations are not split between B2C versus B2B or even B2B2C. In most cases, distinctions are the result of domain standards and expectations, operational expenses, resources, company size and/or maturity level of each industry. For availability of industry-specific studies on social analytics & intelligence, contact HRG@HypatiaResearch.com.

39 Figure 18: Return on SA&I by Sector: % of Annual 2012 Marketing Budget 2.0% 12.2% 8.2% 12.2% 20.4% 14.3% 16.3% 14.3% 16.7% 33.3% 16.7% 33.3% 2.4% 3.6% 5.9% 3.0% 4.8% 5.3% 12.5% 6.1% 14.3% 10.7% 23.5% 33.3% 17.9% 31.6% 12.5% 15.2% 26.2% 25.0% 21.2% 28.6% 50.0% 41.2% 33.3% 26.3% 21.4% 12.5% 24.2% 10.7% 14.3% 7.1% 50.0% 11.8% 21.1% 3.0% 33.3% 37.5% 15.2% 9.5% 21.4% 11.8% 15.8% 7.1% 5.9% 12.1% ROI equals more than 10% annually ROI equals more than 7% and less than 10% annually ROI equals more than 5% and less than 7% annually ROI equals more than 3% and less than 5% annually ROI equals more than 2% and less than 3% annually ROI equals more than 1% and less than 2% annually ROI equals less than 1% annually We don't track or I have no idea ROI Tied to Maturity Level Rather than Timeframe Source: 2012 Hypatia Research, LLC. All Rights Reserved Among all timeframes of usage, twelve percent of survey respondents said they were not tracking ROI from SA&I. Another eleven percent reported annual ROI of less than 1% annually. That reflects the relative newness of the SA&I category, as opposed to simple twitter or Facebook analytics. However, timeframe of usage differs GREATLY from maturity level usage. The former reflects the old adage practice makes perfect, while our analysis illustrates that ROI is closely tied to effectiveness of usage as defined by maturity level. For example, consider the initial investment cost of software licensing, deployment, integration and training. One would expect the return on investment to improve over time if maturity levels advanced as well. However, they don t always. As illustrated by figure 19, more than sixty-eight percent (68.5%) of organizations realized the highest return on investment in years 2-3 of usage, (>3% through double digit returns defined as a percentage of annual marketing budget), while nearly thirty-two percent (31.9%) attained this ROI level after more than three years. The reasons why ROI increases with the maturity level rather than length of usage encompass: SA&I is an enabling technology, rather than a magic bullet; and therefore it requires time to fully implement and operationalize.

40 Optimization of SA&I often requires domain expertise that is either externally sourced or internally acquired after knowledge transfer, hands-on experimentation or professional development. SA&I solutions are often deployed in phases: one department, region, or channel at a time. Departmental and cross-enterprise processes frequently need to be re-engineered to fully realize benefits. Figure 19: Duration of Usage Return on Investment More than 3 years 24.1% 6.9% 20.7% 13.8% 10.3% 10.3% 10.3% More than 2 years, but less than 3 years 10.5% 5.3% 15.8% 26.3% 21.1% 5.3% 15.8% 1 to 2 years 15.0% 10.0% 20.0% 15.0% 30.0% 5.0% 5.0% More than 6 months, but less than 1 year 11.8% 11.8% 29.4% 17.6% 11.8% 11.8% 5.9% We have a corporate Facebook site or Twitter account only 12.5% 14.1% 9.4% 28.1% 14.1% 10.9% 7.8% 3.1% We have a corporate Facebook site or Twitter account only More than 6 months, but less than 1 year 1 to 2 years More than 2 years, but less than 3 years More than 3 years We don't track or I have no idea 12.5% 11.8% 15.0% 10.5% 24.1% ROI equals less than 1% 14.1% 11.8% 10.0% 5.3% 6.9% ROI equals more than 1% and less than 2% 9.4% 29.4% 20.0% 0.0% 20.7% ROI equals more than 2% and less than 3% 28.1% 17.6% 15.0% 15.8% 13.8% ROI equals more than 3% and less than 5% 14.1% 11.8% 30.0% 26.3% 10.3% ROI equals more than 5% and less than 7% 10.9% 11.8% 5.0% 21.1% 10.3% ROI equals more than 7% and less than 10% 7.8% 5.9% 0.0% 5.3% 0.0% ROI equals more than 10% 3.1% 0.0% 5.0% 15.8% 10.3% Source: 2012 Hypatia Research, LLC. All Rights Reserved Best Practice Business ROI Evaluations As the following case studies illustrate, creating a closed-loop Social Analytics and Intelligence strategy, operational business processes and realistic execution plan is a major challenge. Working in a multichannel and/or multi-regional environment makes formulation of a closed-loop strategy essential for success. 27 Brand Mandate at L Oréal L Oréal USA, headquartered in New York City, with 2011 sales of $5 billion and 9,800 employees, is a wholly-owned subsidiary of L'Oréal SA, the world s leading beauty company L Oreal, (OR:EN Paris), (LRLCY:OTC US), with a portfolio of 27 international, diverse and complementary brands such as