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