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20/02/2012 by

Social Media ROI: Myths, Truths, Measurement

Still in doubts if the social media strategy and execution brought the awaited and estimated results to your company or to your client? Are you doing everything “right”?

ROI of Social Media: Myths, Truths and How To Measure

Is the way you calculate social media ROI the correct one and you’re meeting your business objectives and goals? If you answered YES to these questions, congratz!
But still, are you 100% sure you’re doing it the right way?

Many are still skeptical about social media, some claim it’s not really measurable, it’s difficult to get the benchmarks and without the metrics it seems difficult to claim that a strategy really worked. And of course CMOs and executive board wants to see real numbers.

Would you calculate the ROI of your dog? Would you calculate ROI of your mom? Or your suit? The fact is that there is ROI of everything that provides value, the only issue is that it’s not always obvious.

For social media marketers it’s a high priority, because they:

  • need to improve effectiveness
  • need to improve integration with other marketing
  • feel pressure to report quantified outcomes

Need to Measure Social Media

So even though there is a way of calculating ROI of social media and the marketers feel the need and urge to get these numbers, why so many brands already implemented social media without knowing the ROI?

A clue might be that social media had a driving force, early adoption of new technology / business innovation and there was not enough time for detailed ROI analysis. And as everyone and everything evolves and matures, learns on the go – it’s the same with social media and calculation of ROI.

OK, so what is really needed to know to calculate the ROI of social media?

ROI Comics

Of course first of all the metrics have to be set, these are specific to your organization. This may be partially the reason why there isn’t an universal answer for what and how to measure in social media, as the goals, objectives and KPIs differ per segment and organization.

Before setting these, it’s also important to determine why are you doing it. If it’s just because “our agency advised us to do it” or “our competitor is doing it too” – well, please think about the reasons more deeply.

Examples of typical social media business goals:

  • Determine what customers and prospects are saying about your company via social media monitoring
  • Gather competitive intelligence
  • Engage with customers and prospects online
  • Build thought leadership through sharing relevant content
  • Maximize reach of content and messaging in social channels
  • Support existing sales and marketing campaigns
  • Support recruiting and retention efforts
  • Build a customer community to provide support and advocacy

Yes, it’s all about data collection and metrics, but still – these are not ROI. Yet. To get to ROI, these metrics have to be turned into business benefits – a combination of tracked data and outcome data, which are not directly connected to social media, e.g. total sales, number of test drive requests, registrations, etc.

And as a comparison is necessary, it’s great to have data before and after the social media program started.

Getting to a practical part – I hope everyone knows the ROI equation 😉

ROI Equation

And now let’s get a real-life example how to calculate the ROI for social media.

Sea World San Antonio

Sea World San Antonio developed a social media campaign for a launch  of a new roller coaster with the help on-line buzz through roller coasters influencers…

Long story short – they invited the influencers for the first ride, made some videos that were positively commented by these folks and got some 50 links from unique sites; 30 of these were from the roller coaster enthusiast sites.

Returning to the equation:

Benefit – with a simple survey (only 2 questions) conducted on the park’s visitors and a formula that applies to each park visitor, they were able to determine that the people that heard about the ride from the Internet resulted in more than $2,6 million in revenue.

Costs – taking into account the cost of people who worked on the campaign (creative, production, etc.), process and technology (marketing system, cameras, etc.), was $44,000.

ROI calculation

For each dollar spent, $58,09 if value was added to the bottom line. How come?
Know the right people to encourage and engage!

The conclusion? There is not really a “right” or “wrong” way how to calculate the ROI of social media, it’s up to you which numbers and figures are the most important and must be taken into account.
It’s learning on the go that starts with process, metrics and measurement.

This is a way how you convince your executive board and management that social media has value, can be measured and provide ROI figures that can be compared over time.

And how do you calculate ROI of your social media activities and campaigns?
Or still in doubts about these numbers?

Leave us a comment below, glad to read & answer your thoughts and questions.


Soruce: Radian6 Free Resources


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Comments (7)

  • Igor Beuker 20/02/2012, 17:59

    Wow I’m going to read this post agian tonite and tomorrow morning…

    eMarketer has told all CMOs want higher ROI in social… so hopefully they are reading …


    • Thomas
      20/02/2012, 18:04

      good stuff, tweeting this.

  • Igor Beuker 20/02/2012, 21:11

    clear is that many agency CSOs do not offer great help to CMOs;

    CSOs often talk too much in Web metrics and forget to include: AIDA, brand tracking by ie MetrixLab and NPS is too often not included.

    Like before, the digital industry could often do better stakeholder mapping in order to speak their language…

    So ROI, not always only about; hits, views, clicks, CTRs, shares, likes etc.

    We might be telling that social could contribute to Brand and Business objectives (BoBo) as well, blending in: AIDA, NPS and other stuff CMOs can come home with..

    It takes two to tango 😉


  • Ann 20/02/2012, 22:49

    “Many are still skeptical about social media, some claim it’s not really measurable, it’s difficult to get the benchmarks and without the metrics it seems difficult to claim that a strategy really worked.”

    I feel that way, but it might be because I don’t have all the numbers to plug in, I don’t have a way to find out if it’s working and yet, I have clients who expect me to know this without any work on their part at all.

    • Hi Ann, it can be frustrated as the clients are not always in favor of sharing all the numbers that are necessary.

      Sometimes I feel like a “fortune teller” as well. But the clients have to understand that marketers don’t have any crystal ball and the more input is provided, the better we can work. And of course I’m not talking about confidential figures.

      Maybe a better communication and managing expectations upfront is the key to get all the X-es for the ROI equation.

  • Igor Beuker 20/02/2012, 23:21

    Hi Ann

    Very good point you touch here. we mostly start with talking about their brand, how they do normal brand tracking stduies and with what tracking company (ie Metrix Lab or other).

    Next we talk AIDA and NPS. That mostly brings CMOs in their confort zone, since we speak their frequency.

    Next we show some ROI dashboards, and we tell them how we can set KPIs together.

    That mnostly relaxes.

    Problem I have a CSO: most brands have no CRM implemented yet, and do everything through media campaigns and ads.

    We ask those brands for their DNA: are you ready to invest in loyal clients, fans and brand advocates? If they are not CRM driven yet; difficult to get that across.

    So match making and DNA check are important. Mapping brand stakeholders that claim to own social are next steps..

    Off course we ask: do you have a budget line-item yet for social media marketing (in your SAP system?).

    If no: what budget will social come from? Pr, media, online,brand or other?

    Next we ask CMOs: what was your budget plan for 2012? Have you got a benchmark on what other brands spend on social per year?

    If no: we help them. If yes: we becnhmark their budget on what other brands do in that segment/ industry …



  • SBissesar 21/02/2012, 11:03

    NPS on its own cannot help a brand to be successful. It’s still a good metric which can help to achieve success. This success can be realized as soon as the CMO is involved with the right processes and systems in a company and as soon as they know how they must provide the right information to the employees, accordingly the employees will know how they can anticipate on the feedback that is given by the consumers (CRM). Eventually this all will help grow the company/brand. CMOs are used to this NPS system and they know what their ROI will be and how this all will have impact on the company’s KPIs.

    Since social media is growing a lot of companies think that their business results will simply get better by participating passively. Unfortunately the business industry did not had the chance to proof what impact social media really has on traditional marketing terms as NPS/AIDA.. I think we need to focus on how the industry can make a bridge between traditional marketing communications and social media with a focus on traditional marketing terms as NPS/AIDA. Perhaps there can be developed a kind of converter for companies which makes the metrics easier to understand. I think this will be one of the ways how companies might measure their ROI of social media.

    Companies must not focus on the quantity but on the quality of their activity on social media.