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Social Media ROI

March 17, 2010

Putting A Dollar Value On A Friend..?

For time immemorial, those engaged in the business of promoting another’s product or service have been faced with the task of justifying themselves in the language of an accountant.  It would seem as though businesses which have been formulated around tangible products can’t seem to wrap their minds around something that cannot as easily be physically counted or assigned a monetary value.  Why is it, that this need for financial certainty is demanded of advertisers, marketers and public relations practitioners?  Does a business require that a water company financially justify the effects of a well hydrated work force?  Must a cellular provider present a diagram outlining the potential for an increase in the firm’s bottom line if its staff were to be given Blackberries?

Eventually, this double standard of expectation was overcome within the realm of traditional media.  The business community accepted that an ad in a newspaper was worth $X if it were ‘H’ by ‘W’ in size and the news paper was read by ‘Y’ number of people each day.  Communicators everywhere breathed a collective sigh of relief.  As social media began to spread and started presenting a real challenge to traditional media outlets, the game changed and a new breed of social media marketers once again find themselves struggling to quantify their legitimacy.

There are several reasons why calculating a traditional notion of ROI (return on investment) is made difficult within a social media campaign.

  • In most cases, social media campaigns are carried out over a wide range of social platforms, each with its own metric (likes, diggs, friends, retweets, comments…).  Is every metric created equal?
  • The Conan Effect: If a single, highly influential individual retweets your message and it is picked up by that person’s followers, you could experience an exponential boost in social awareness.  Although it can be measured in hindsight, any outlying data will make it difficult to predict the ROI of future campaigns.
  • Time Frame: Many traditional ad campaigns are like hit and runs.  Smack the viewer with an impression then wipe your hands clean.  Social marketing campaigns are often fundamentally different.  It’s not about “finally getting on” a social media site.  Once you are there, you need to create your community and nurture it.  There is a lot of maintenance work that needs to be put in so that your followers, once hooked, do not later feel neglected.

Yes, social media campaigns are about conveying a message but it goes further than that.  It is about building relationships that run two-ways.  Many adults see their children engaging in social media and think that there is nothing to it.  Comparing a teenager’s online presence to your business’ is like comparing a lemonade stand to Vitaminwater.

In order to get a better picture of the performance of a campaign we need to ditch any preoccupation with determining a return on investment and begin thinking in terms of a return on influence.

Tips For Measuring Social Media ROI

Don’t get hung up on quantitative results like your number of followers.

Begin to Establish Qualitative Goals.

  • Increase brand satisfaction – Goal: Discover customer grievances and work to fix them, generating an increase in positive responses.
  • Increase presence and authority – Goal: increase site traffic and linkbacks, increasing page-rank.
  • Influence a position on an issue – Goal: increase the amount of conversations the issue, increase the % of favourable tones.
  • Develop loyalty – Goal: increase the number of positive conversations about you.

Develop Your Own Key Points of Interest (KPI).

  • Volume – fans, followers, tweets/minute
  • Engagement – retweets, subscriptions, comments, sentiment, likes, time spent
  • Conversion – click-throughs, linkbacks, leads generated, sales, actual action

Whatever your method of determining ROI, define your keys for success narrowly.  Social media campaigns are part of a bigger picture and are never a stand-alone.

It is shocking that a survey conducted by Mzinga and Babson Executive Education showed that 84% of social media programs don’t even bother to measure ROI.  Despite the difficulties in measurement, one must recognize that messages which don’t have an online presence are quickly being left in the dust.

Still need convincing?  Check out this video.

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2 Comments leave one →
  1. April 24, 2010 10:56 pm

    Social media is changing the entire enterprise. I think that a valuation method for corporate social capital akin to brand valuation is the standard that we are looking for.

    http://socialcapitalvalueadd.com/about-scva/

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  1. Do You Know Where Your Friends Are? « Coerced Musings

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