Social media ROI is difficult to measure. But, this doesn’t mean it cannot be measured. With every business, irrespective of its size getting onto the social media marketing bandwagon, they want to know the kind of returns they are getting from their investment. There is a lot of math involved in calculating ROI but when it comes to social media there is yet another element added to this mix and that is emotion.
As you can very well imagine, there is no point in using math to calculate the value of emotion. But you need to figure out a way to calculate ROI by considering both the emotional aspect, as well as, the practical aspect.
Social media is a coming together of the tangibles and the intangibles; the ponderable and the imponderable. But, businesses who want to conceptualize, strategize and implement a social media strategy, want some straight answers. If they are going to put in ‘x’ amount of money in social media, what’s the revenue that’s going to be generated, directly as a result of their investment?
Yes, they will be quite happy to nod their hands when you talk to them about the immense number of ‘Likes’ their business page is attracting on Facebook, or the authority it is able to generate through guest blogging, but what they are looking for is quantitative benefit. The “immense’ number of Likes led to $_______ revenue generation. As a social media marketer, you will need to fill in the blank. If you aren’t able to, well god help you.
But wait, before asking for god to come to your rescue, why don’t you judge social media ROI. I am not saying it’s easy to do this, or you are going to be able to zero in on an exact figure for the ‘returns generated’, but it can be done.
Let’s take a look at 6 ways that I believe will help you get a definite answer to the investment vs. ROI question.
But first a rider; something that you need to get across to your clients as well; measuring your social media ROI with traditional metrics, expecting the use of social media to directly impact the business financially, won’t be possible here. All you can do is implement a social media campaign and compare the businesses sales revenue number after a quarter, six months or a year, to the revenue before the campaign was implemented.
Now let’s begin.
Yes, traditional metrics need to be thrown out of the window, but ROI calculation isn’t possible without identifying the metrics, is it? This isn’t as complex a problem as it looks. Start off by identifying the quantitative metrics, meaning unique visitors, number of followers, page views, bounce rates, or any other elements that can be measured, something that you can put a figure on.
Once you have identified the quantitative metrics, you now need to figure out the qualitative metrics. These are the intangibles, for e.g. the positive reputation of your business; the negativity associated with your business meaning the people who are calling your products cheap, or worthless; basically this includes all the emotional chatter associated with your business.
And finally, you come to ROI metrics, which when you get right down to it is how many people are buying your products vis-à-vis the investments made in trying to attract those people. In order to judge the social media ROI, you can’t just depend on ROI metrics alone; you also need to get the quantitative and qualitative metrics into play as well.
2. Identify a Currency
You need to be prepared to handle clients who believe that the only currency that helps determine ROI is hard cash, the dollars earned. Everybody wants to make money with social media, and nobody is in it for charity. But social media ‘currency’ is markedly different from the traditional ‘currency’. Here the currency is in the form of interactions and relationships. The interactions that a particular business has with its potential and existing customers must add value to it as a whole. Social media in a way is a reputation building exercise. And you can’t put a price on reputation.
When clients want to tap into your social media expertise to grow their businesses, what they essentially want to do is make money. They are just coating their objective in better words. But, it’s your job to tell them that you will make money by participating in social media, but that will only be a result of ‘participating in conversations with your target audience’. This ‘participation’ will lead to business growth.
So lay it across to your clients, that to expect a direct benefit in the form of money earned, is the wrong way of going about determining social media ROI. This article on The Currency of Digital Media gives some good information about what is the ‘currency’ of social media.
Before you actually begin judging your social media ROI, it’s important to identify the nature of this ROI. It all begins from here.
3. Define Verifiable Assignments
To judge your social media ROI after the campaign has been deployed is difficult and I will go so far as to say, impossible. A tracking mechanism needs to be integrated right when you are conceptualizing your strategy. To track and monitor your ROI, you need data, and that too data related to customer behavior.
It’s all about integrating your social program with customer assignment. If a customer completes that assignment, you have the data needed to calculate ROI. So, something as simple as a redeemable coupon can help you track your ROI; something else that works is tracked clicks, post click landing pages and form filling. As I mentioned earlier, social media is all about intangibles, but if you create customer opportunities that can be tracked/traced, you will be able to judge the ROI of social media.
Having said that, it’s important to once again underline the fact that social media is also about interactions and its only high value interactions that can lead up to these verifiable opportunities.
4. The Brand Visibility Formulation
There are plenty of tools that will help you monitor and track your brand visibility like HowSociable, Vrank, and TweetBeep etc. Now, forget about these tools for a second, just a second mind you, because they are important. To judge your ROI or get an approximate idea of the potential revenue your social media campaign can generate, all you need to do is find out how many people you are interacting with on social media.
If people are noticing your content and are sharing it across social networks, then your business is getting noticed by a large number of people. These people are becoming your fans and followers, thus enhancing the visibility of your brand.
So, the next time a client asks you about ROI, talk to them about the wide audience that your business was able to reach by adding up the fans and followers on Facebook, Twitter and other social media platforms that you are targeting.
This looks like a simple enough formulation, Brand Visibility = Fans and Followers on Social Media Networks, but it’s a great starting point. It helps you zero in on a figure for ROI estimation. It helps your client’s crunch numbers to get a clear idea about potential for revenue generation.
5. The Content Engagement Equation
As social media marketers, we continuously harp on engaging the target audience with great content. Clients are repeatedly told how their social media presence needs great content to survive and prosper.
But, once you your social media campaign is underway, what is going to be your answer when your client asks you to put a figure on their business’s ‘content engagement’. Saying it’s something that cannot be measured is not going to cut it for you.
So, here’s something you can do; add up the total number of shares and replies you have got and divide it by the total pieces of content that you have shared socially.
This is as good a way as any to put a figure on content engagement. Again this figure allows you to get an approximation of the ROI that the social media campaign can deliver. I am sure you must have figured out by now that they are plenty of ifs and buts, as well as a lot of approximation involved, while coming up with a figure for your social media ROI. But, that’s the way the wind blows.
6. Good ol’ Google Analytics
Google Analytics Social Reports allows you to tangibly demonstrate the ROI of your social media campaign. The first thing that you must do is define the Key Performance Indicators of your social media. These could include but are not limited to, shares, downloads, email opt-ins, and purchases. What you are essentially doing is defining the goals of your social media campaign; and you are using analytics to measure the performance of your social initiative by using these goals as a parameter of measuring the ROI.
With Google Analytics, you can identify the social networks that are the most effective source for revenue generation. By going through the data, you will know whether it’s Facebook, Twitter, StumbleUpon or LinkedIn or some other platform/s that is referring the targeted traffic to your site. This allows you to make focused investment in only those platforms that are contributing to revenue generation in a big way. Analysis reports like Visitor Flow Reports etc. are of great help while fine tuning your social media strategy.
Google Analytics also offers you something called the Google Analytics Social Sources Reports that give network specific reports about pages views, duration of visit etc. Such reports are of great help to judge the social media ROI of your carefully planned campaign.
ROI vs. Investment
Social media is big business these days. In the last few years, plenty of social media experts have emerged on the scene, whose sole focus of attention is using social media for business benefit. The focus on ROI has only become widespread, as businesses realized that social media is playing a huge role in improving the strategic business growth.
But with increasing dependence on social media comes with its own set of questions and doubts. A business wants to earn money, and your clients will want you to unearth the social media potential in a quantitative manner. If they are going to invest money in a social media campaign, they will want returns and that too tangible results; this is but natural. Social media campaigners, companies specializing in offering social media services and other professionals, now need to come up with their own ROI calculation strategy.
This strategy needs to be formulated based on the needs and requirements of the client, their business goals, and of course the investment they are willing to make in the social media marketing campaign.
Judging social media ROI is a challenging exercise but made simpler if you can identify the right metrics, the perfect currency, zero in on the necessary formulation and of course ensure that appropriate analytics are used. But more than that, you, as a social media expert need to assimilate all this information, and explain the significance of these aspects to your client. The most important point that you need to explain to your client is that reviewing the merits and demerits of a social media campaign purely in terms of the ROI is wrong.
Building a solid reputation, becoming an authority figure and improving customer connect takes time and its results will be evident; but for that to happen you need to draw out a comparison between the figures of the past and those of the present. Only then will you be able to judge the ROI related impact of your social media strategy.