I once heard that the ROI on social media is that a business will still be around in five years. While I do wholeheartedly agree with this statement, I think it doesn’t go very deep. I might even go so far as to say that it is what lazy marketers say. I strongly believe that not only is there a financial ROI, but it can indeed be measured.
Before setting out to measure ROI it is crucial to set your social media goals. This will inform which factors to measure and what success looks like. You may even find that a financial ROI is not your main objective.
According to Pamela Vaughan the top 5 Social Media ROI metrics are:
- Reach
- Traffic (or Clicks)
- Lead Generation
- Customer Acquisition
- Conversion Rate
If you measure these numbers you will be well set to calculate a financial ROI at the end of your campaign.
ROI can also be measured in a variety of other ways including revenue and contest entries. So as I mentioned before, it really depends on your circumstances and will often vary campaign by campaign.
Ideally we want to align return with a dollar amount, so the sales to cost ratio is really what we want to ultimately measure. This is the cost of a social marketing initiative relative to the net sales revenue generated. This is perhaps more suited to individual campaigns, but can still be applied to a more general social media effort.
I suggest utilising specific social media campaigns with predetermined goals in mind. By limiting the parameters it makes measuring ROI easier, and perhaps more meaningful.
Check out this infographic which shows a vast array of measurements.
How to measure the data?
There are plenty of third party resources that make monitoring the key figures and performing analyses relatively straightforward. Simply Measured would have to be my top choice but it is very expensive. Google analytics is also really good and you will likely need to use this anyway for your website analytics. Followerwonk and Twtrland are also worth checking out. Or you can just get an agency to take care of the hard work for you and give you the key insights to equip you to make the right decisions.
Review and reset
At the end of a campaign, you need to review the numbers, and reset your goals for your next campaign. If you are not utilising the numbers to draw meaningful insights I can guarantee you will not be taking advantage of all that social media can offer.
Measuring and achieving ROI on social media can be a big challenge although there are tools available to you that try to make it all a bit easier. But when you have to take care of a whole lot of other tasks, it can be too much, as there are only a certain number of hours in a day. At Woocom we have people dedicated to managing social media who bring a raft of experience to the table, so why not get in contact if you think you might need some help in setting up a strategy and managing your entire social media presence.
David Rose is a Social Media Manager at Woocom, a dynamic, full service multi-channel web marketing agency specialising in every aspect of web marketing from content management systems through to social media and custom application development, based in Perth, Western Australia.