Thursday, March 5th, 2015 | 18 min read
The 2015 South By Southwest Interactive festival is just around the corner, and your company’s strategy is most likely set and ready for action. Between conferences, exhibits, and parties, the jam-packed five days of SXSW Interactive can be an incredibly valuable time for your business.
But do you know how to accurately measure the value of your brand’s participation in the event?
It is shockingly common for companies to jump right in and plan their SXSW activities blind to the true ROI of the event, assuming that the resulting revenue will outweigh the costs. And the costs aren’t small. With event badges upwards of $1,000 and lodging and transportation in Austin limited, simply attending the conference is a pricey endeavor, never mind the added costs of throwing a party or sponsoring an event.
Regardless of the cost, the temptation to participate is enormous. There’s no denying that SXSW gives brands unprecedented access to a top-tier audience – last year’s event brought 72,000 attendees over the three SXSW events, 23.2% of whom are CEOs or Directors and 33% of whom have a purchasing power of over $100k.
This group is not just successful, but influential, comprised of the most on-trend, high-tech, and socially-active individuals in the country.
With all of these potential customers in one place, it would seem absurd for your company to forgo a presence at SXSW. But, when it comes down to it, are you really seeing any tangible benefits? And if you are, do you even have the tools to crunch the numbers and refine your strategy?
Whether your company is B2C or B2B, small or large, there is business value to be found at SXSW – but the truth is not every company is fully reaping the benefits. While the checks have already been signed for this year, it’s not too late to track your costs and revenue during and after the event in order to truly quantify the benefits of your participation.
SXSW is hands-down the party of the year. We’re here to help your business make the most of it.
Calculating the return on investment of SXSW Interactive is complicated. But, as with calculating the return on investment of any activity, we go back to the basics of econ 101 with a simple equation:
To see this formula in action, skip to the Example Calculation.
To get started on your own calculations, download the interactive worksheet.
While there are many variables that go into each factor above, this formula provides a framework that your company can customize to its specific needs.
In applying this equation to SXSW, the costs are pretty straight forward and include employee expenses such as transportation and housing, participation in the official conference, and surrounding activities such as parties and marketing tactics.
On the other hand, determining the specific revenue streams can be trickier and more complicated. The most visible of these are the traditional revenue streams, which tend to differ for B2B and B2C companies and can include closed deals, merchandise sales, and ticketed events.
Less visible, but equally important, are the intangible revenue streams that capture many of the unique opportunities that exist at SXSW. Here, we are faced with the challenge of quantifying the benefits of brand visibility, conversational buzz, and trend discovery. Determining these values is the root of the challenge in calculating the ROI for SXSW and other large scale events.
While it’s impossible to capture the value of every single interaction, this guide can help break it down. We’re not proposing a blanket solution, and by no means should any company follow this methodology without customizing it to their individual business needs. This formula is simply a starting point – a framework that your company can adopt in order to calculate the return on investment of this event.
Employee attendance will most likely be a large percentage of your SXSW costs. Although many of your employees will probably want to join in on the SXSW party, it’s important to keep your attendee list to a minimum and only include individuals who will provide tangible business value by attending the event. For attendees, it is important to set expectations about responsibilities during the week and the amount of expenses per employee you are willing to cover. Consider the following cost categories to determine how many employees to bring:
SXSW Interactive is an amazing opportunity to interact with industry leaders and influencers, but it’s not cheap. The options listed below are just that – options, and it’s important to pick the ones that are best for your company. Consider your business goals and target audience. Do you want to educate your employees and network with industry leaders? Then you should outfit them with badges for access to keynotes and workshops. Is your goal to promote a new product and grab the attention of industry bloggers? Then tradeshows and exhibitions are your best bet. Are you looking for more of an overall brand presence throughout the five days of the conference? Consider a sponsorship.*
* All prices from the 2015 SXSW Marketing Deck
** Source: Hollywood Reporter (2014)
In addition to official SXSW Interactive activities, there are many other opportunities for your brand to gain visibility during the five days of the conference. From cocktail parties to food truck sponsorships to free swag, there are many creative ways outside the conference itself to promote your brand, become part of the conversation, and capture the attention of this unique audience.
Depending on your company, there should be at least some traditional, measurable revenue streams directly related to SXSW. These are the most concrete reasons for attending the event and should be prioritized as much as possible in order to gain cash flow directly from the event. Once the monetary value of each item is determined, the items can be summed and represent your traditional revenue value.
We have now reached the point in our formula where calculations become tricky and most companies forgo measurement due to a lack of tools. While pinning down the monetary revenue of brand impressions, social buzz, and the “cool” factor from SXSW is difficult, determining the value of these activities is crucial for understanding your true ROI at the event.
It is critical that your business customize the intangible revenue formula to your specific goals during the week of SXSW. While we would love to provide a one size fits all equation, it would simply be inaccurate to assume blanket values and goals for each company.
Intangible revenue consists of a diverse range of factors and here we list only a sampling of the possibilities. Essentially, it can include any activity that provides value for your company at SXSW that is not already included in the Traditional Revenue equation. Value can result from in person activities such as handing out swag or samples, traditional media activities such as PR pick up, and social activities such as @mentions and engagement. With social as a tool, we are now able to quantify hard data on these previously untrackable conversations.
Below are some examples of factors you could include in calculating your intangible revenue at SXSW. The estimated value, or revenue, for each activity should be then summed to quantify Intangible Revenue.
Intangible Revenue = $ Value Factor 1 + $ Value Factor 2 + … + $ Value Factor n
This encompasses product or swag giveaways both in person and through social. For each sample product given, your company should already have a calculation of the estimated future revenue. If the tactics are changing significantly from the normal methods, you can alter the equation to reflect SXSW factors.
Any contests or sweepstakes run leading up to or during SXSW have tangible business value in both creating buzz and gathering new potential customers or leads. The success metrics of the sweepstakes should have an associated potential value.
Other Email and New Contact Acquisition Activities
During SXSW, is your social content encouraging individuals to download a guide or sign up for a demo? Has a prospect approached you to set up a meeting? These email acquisitions can be included in the equation depending on the value your company places on new contacts. Especially in B2B sales pipelines, it is important to track all leads created and deals that progress at SXSW in order to accurately attribute them to SXSW. This may result in the delay of full ROI calculations until these deals are further down the pipeline.
When a celebrity is endorsing your product, whether via contract or organically, it results in a huge boost in buzz for your company. If on social, this buzz can be quantified by taking into account the celebrity’s social reach and the engagement the post received.
For most companies, one of the major goals of creative marketing and sponsorship activities is press mentions. These mentions provide a great boost in the organic reach of your activities and should be tracked and assigned a valuation.
Company Member as Panelist or Speaker
While this most likely includes press pick up, having a company member present as a panelist or solo speaker is a great opportunity to bring value to your company. This value is often captured through social conversations and influencer blogs.
Social Buzz and Exposure
There are many aspects to consider when measuring social buzz and exposure.
As mentioned above, this section of the formula requires the most customization on the behalf of your company. Once the factors are determined, the estimated monetary revenue from each activity can be summed to achieve your estimate intangible revenue value:
Intangible revenue = $ Value Factor 1 + $ Value Factor 2 + … + $ Value Factor n
As a caveat, it is important to ensure that all of the expenses associated with these activities are included on the costs side of the equation. For intangible revenue, we are only looking to capture the value, or theoretical revenue, generated. In order to calculate the accurate ROI, the costs need to be balanced on the other side of the equation.
Protekt is a midsize B2C company whose primary good is protective cases for phones and computers. At SXSW, their two main goals are gaining industry buzz and showcasing their new product line for influential bloggers.
Using the formula we defined in the method, we can estimate Protekt’s ROI at SXSW:
With all of these factors in mind, your company can hopefully begin to piece together your return on investment of participating in SXSW. The key to seeing the whole picture lies in quantifying intangible revenue, and while our formula isn’t comprehensive of every possible revenue stream, it can be used as a starting point.
While it’s easy to keep planning your company’s attendance at SXSW year after year, it’s essential that you determine your business’s goals and the metrics that indicate success. With this knowledge, you can restructure your SXSW presence to truly get the most out of this unique event.
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