Good point.

Thanks.

- Greg

I’m inspired by the passion involved around this subject, the above goes to prove that.
The ROI of the social web/media will be danced around for some time, with various methods put into practice.
The one thing that surface throughout though is the need for a baseline. Without having the intelligence first, gathered through optimised searches of all platforms, any talk of measurable return is pointless.
Having systems in place to access all this is where the strength lies.

Intelligence is King..

Pan

Thank you for your input.

- Greg

I think a distinction needs to be made between response and ROI. Digital Media is very good at measuring response, but that can be affected by many things outside of the campaign as well.

Moreover, having a good response campaign won’t help you if your brands internal attributes are falling. That’s a different problem and requires a different solution.

- Greg

I reread your first thread in this ROI blog. I think you get it.

But there is a wild world out there that is tracking differently, and with meritorious intentions. Look at Avenue A / Razorfish. Well, there business model is, in part, founded on determining the metrics of measuring digital ads, and thereafter using such to determine advertisers’ market strategies. Razorfish’s initial approach mated, in part, users’ demographics to ad products Well, that service is highly valued by very smart people, even senior ad executives who have been in the business for decades. Is Avenue A / Razorfish’s contribution of no value? (btw, they just sold. This is a highly valued company).

There are other things out there that raise some interesting questions in this digital ROI era. Take Google for example. It now places ads based on, inter alia, relevance to the content of one’s e-mail message. This approach may significantly affect one’s ROI for digital marketing. It is distinguishable from Razorfish’s approach in that its placement engine mates with e-mail content rather than the e-mailer’s demographics.

There is a lot of stuff to be sorted out for sure. Its all art now; the science may catch up later.

I agree. ROI is an enormously complicated issue for an integrated marketing program. There are a variety of approaches, and none are perfect.

- Greg

But, to answer your question, the answer is a bit more complicated than it seems, and I do not have all the numbers. iTunes launched one quarter behind iPod. So, their respective first year revenues include about three quarters sales for iPod and two quarters of sales for iTunes. Really, that part of the calculation is simple. One simply adjusts the numbers for part year sales.

As for subsequent years, I am not sure of the costs for maintaining the iTune server and back-end costs, research, IU design work, licensing department issues, etc. If I were to gander, I would say that these internal costs for iTunes are at 15% of revenues. (I am not going to mention revenues actually realized from actual iTune downloads. I believe Apple acquires a royalty for these iTune sales. These royalties are likely less than 25% at best, of actual sales revenues)

The bigger question is kind of a chicken v. the egg thing. Which product is really driving revenue? Is it that iPods drive revenue for iTunes, or is it the opposite? The answer is a little more complicated than it seems.

(Take into consideration other efforts by the rest of the competitors. Zune, for example, has matching products, but its music store is not well developed. Amazon has a well developed music store, but no matching MP3 player. Pure off-line word of mouth promoting, social fad , cool factor, recognized white / gray ear buds, etc (this is a kind of advertising that is not different than wearing a Nike tee shirt), all contribute. On the other hand, the easily navigable UI on the iTune site, along with content, are extraordinary drivers of sales.)

There are other factors as well. What may be asked of the iPod / iTune phenomena, may be applied to the iPhone, or other Apple products. For that matter, one may have to really factor the increased value of the Apple brand in driving all its sales. That brand value is exceedingly important, and likely exceedingly impossible to calculate.

Having said all of that, I believe when the smoke clears, we suddenly see that all the stuff about ROI’s and other indexes are wrongly applied the digital sphere. We simply need new formula to calculate returns. We need formula that reflect values individuals and place on any given product or service, as well as his or her effectiveness in communicating the same to a social network when making a recommendation to purchase a product. After that is done, we can measure the efficacy of any business’ marketing effort, ad product, etc. (I know that can be complicated as well. It varies from video to print, to banner, to repeats)

You should be more specific – Launch year or subsequent years?
)

(lets not forget that part of iPod’s popularity is the iTune interface, and the content selection contained therein.)

Tell me which one markets the other. Tell me what metrics we use to determine the ROI of one when compared against the other.

(If I remember correctly, Apple outsourced the build-out for iTunes. The original contract cost was a little more than $600,00. I suspect service / maintenance costs are a fraction of initial build outs. Apple does not directly market iTunes, but this UI generates well over a billion in revenues a year (gross unadjusted). Apple does market its iPod & iPhone lines. I do not know the costs.) Its revenues for iPod sales are about 2.6 billion / quarter.

Gets complicated right?

Ibrahim Moss