You can (and should) measure social media ROI: here’s how

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ROI

Most businesses will not try a new marketing medium until they get a rough idea of the likely ROI associated with the new medium. This is natural because if the medium is not bringing in any return whatsoever, what is the point wasting time, effort, and manpower on something that doesn’t work?

I’ve been in the social media industry for quite a while now and have seen many businesses flock to popular social media channels like Facebook, Twitter, Google+, Pinterest, and LinkedIn without any strategy or ways to measure what they are doing. This is totally the wrong way to do it and most of the time, businesses only realise this after they have wasted time on the social web.

Social media is not a nice to have anymore, but a must have. Given the pace at which social media changes everyday, most companies are simply jumping on the social media bandwagon because their competitors are using social media. It’s natural that when everyone around you is doing something, you will join in because you don’t want to miss out.

I have also seen many starting with social media because they had a negative PR disaster before they had the chance to carry out a thorough ROI analysis with social media. Whatever the reason your business started with social media, it’s very likely you or someone in your company has asked the famous question of “What ROI is associated with social media?”.

To answer this question you have to tie in social media with your business objectives. This isn’t the answer people want to hear, but in my opinion, the only correct one you can use at this stage. If you are interested in social media ROI, you need the right metrics to calculate this, and in order to do this, you need to know what your social media goals are.

Here are a few examples of social media goals:

  • Increase brand awareness
  • Lead generation
  • Increase organic SEO results with an AuthorRank strategy
  • Increase credibility and thought leadership
  • Engage directly with your target audience
  • Market your content
  • Create relationships with your target audience
  • Save recruitment costs
  • Brand monitoring (ORM)
  • Improve customer service and experience
  • Support traditional marketing

Measuring the data

Once you have decided on your social media goals, you need to identify which metrics you are going to use to measure them. Using these metrics alone will not give you any ROI because they are simply numbers which show if indicators are moving up or down.

Here are a few examples of metrics you can use:

  • Website / blog traffic — (referral source is a social media channel)
  • Website registrations — email marketing campaign
  • Increase subscribers, followers, fans, +1s
  • Increased engagement score
  • Increase positive sentiment
  • Organic search rankings
  • Increased sales
  • Increased leads
  • Increase cost savings
  • Increase number of mentions
  • Decrease customer service inquiries

Working out the ROI

Once you have social media goals and metrics you are going to use, you need to assign a financial value to each of those goals. For example, did your increased engagement score increase any sales for you? Or, did your improved organic search engine rankings increased your leads?

Once you have assigned a value for each of your goals, you need to work out your costs such as the team involved manning your campaign, outsourcing the content, and any other costs involved with your campaign. The equation to calculate ROI: ROI % = (benefits — costs x100) / cost. Using this simple method to calculate the ROI of your social media campaign will give you a strong indication if you are getting any return for your efforts or if you should go back to the drawing board and refine your strategy.

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  • David Graham

    Thanks Anton. From a business-to-business social media marketing perspective, I keep note of value-adding interaction I have with prospective clients (and existing clients) and share this with the respective stakeholders within our business. Some examples will be business decision makers I connect with who agree to subscribe to our email correspondence, members of the media who request to publish our thought ware, CVs that are sent to be by potential employees. Over and above this, I also report on number of folowers (Twitter), connections (LinkedIn) and subscribers (email), content that has been shared on social media, specific business decision makers who have interacted on email (or requested content, meetings, presentations, etc), number of clicks on links in email correspondence (and by whom) and clicks on Bit.ly links o our blog and other channels.

  • Brandanon

    thanks for this interesting article Anton. On the ROI calculation- could you provide a simple example to show how the calculation works. I’m trying to figure out what measurement would you look when calculating the benefit. Is it In % increase, or absolute value so physical number of shares, or is it a combination.
    thanks

  • Mark

    Anton, I had hoped to find out how to “assign a financial value to each of those goals.” Though the lists of possible goals and measurements are interesting, the really tricky part of measuring social ROI is in how one can tie financials to the statistics that we all measure.

    Will there be a follow-up post helping us figure out how to do that?

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  • http://www.antonkoekemoer.com/ Anton Koekemoer

    Thanks for the summary David

  • http://www.antonkoekemoer.com/ Anton Koekemoer

    Thanks for the comment Mark. It’s difficult assigning a value to the metrics as I don’t know what your business is about, and what you are currently doing on social media. I know it’s difficult working out the ROI for social media, but one way you can do it is when you tie it directly back to your business goals. How much is a lead, sale or new customer worth to you? How much effort did you spend on the social web obtaining the new customer?

  • http://www.meredithandspain.com/ MeredithandSpain

    An article that might be interesting to take a look at. http://www.sas.com/resources/whitepaper/wp_23348.pdf

  • Karabo

    Great piece. I do agree that setting objectives before embarking on social media is crucial. Where I think it is premature to try and measure is before you actually start using your chosen channels. Building the relationship first, “listening” and gathering information are key to finding ways to incorporate social media in a financially measurable way. You have to invest, learn, then put ROI metrics in place, which as you rightly point out, will not always be of monetary value.

  • Mark

    I’m very new in digital marketing, so not sure what I don’t know. I’m in the medical device field, and most of my confusion comes from trying to figure out which sales come from digital and which come from “boots on the ground” sales efforts.

  • http://www.antonkoekemoer.com/ Anton Koekemoer

    So true Karabo. Thanks for the comment.

  • Ozana Giusca

    great advice. however, easier said than done. how can you assign a value to increased brand awareness?

  • http://www.ajishkumar.com/ Ajish Kumar

    Good one for all social media marketers.

  • http://www.ajishkumar.com/ Ajish Kumar

    I would rather look for more effective tools to measure the metrics.

  • http://www.antonkoekemoer.com/ Anton Koekemoer

    Will do follow up post in the next few weeks explaining this in detailed together with assigning a value to sentiment analysis.

  • Mike roberts

    I agree with everything. My question would now ROI looks when using SoMe as part of your graduate recruitment strategy?
    I’d be interested to hear from anyone who would be happy to share their ROI dashboard as this is of great interest to delegates of the Graduate Recruitment Social Media Conference & Awards event I help run.
    Please get in touch if you feel you have something you might want to share at the next conference in January 2014, in London

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  • Priyanka Joshi

    Those who are confused on measuring Brand awareness should definitely go for SMM automation tools. I have used over 10 social media management tools and I would suggest two: 1. Sendible(Probably the best tool, a bit costly though. and yeah edgy customer support but does almost everything. http://www.Sendible.com) 2. EaseSocial(For those who know their requirements and are price sensitive. Excellent customer support http://easesocial.com/). The dashboards of these tools help in tracking trends and your brand mentions. The sentiment analysis functionality of both these tools are pretty much similar and is leaps and bounds ahead of their competitors.

  • Priyanka Joshi

    Anton, will be waiting eagerly for your follow up article. Sentiment analysis is something that is one of my favourite functionality as a social media marketer. BTW really nice post. Keep em coming!

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