Social Media Marketing: Defining Your ROI
The Nike slogan of “Just Do It” describes how a lot of businesses use social media. People are quick to jump on the bandwagon, only to be left scratching their heads when it’s time to decide if their strategies are working or not.
Social media marketing is no different than traditional marketing in that you need to know if the return on investment (ROI) of your marketing strategies is up to par. This can be a bit tricky because the old standby metrics that compare costs to revenues don’t apply. Instead, your task is to figure out if the benefits of your campaign meet your expectations, and if they’re worth the resources required to generate them.
I’m Not Sure What to Measure
There’s no magic formula for evaluating the payoff from social media strategies, or for deciding what you should measure. The first step is to define your business objectives. Everyone wants to increase sales, but there isn’t a linear link between social media and closing deals. Social media is about people, conversations, and relationships.
Start with this basic question: why are you using social media? Do you want to get your company’s name noticed by key players in your industry? Boost brand awareness? Whatever your rationale, you need to clearly state your goal before you can measure it.
Any good measurement program includes a baseline measure. If you’re going to use social media to get you from where you are to where you want to be, you better have a good idea of where you are! It’s not an exact science, but the more clearly you can define the gap between your current status and objectives, the easier it will be to evaluate your campaign.
I Want to Measure Things That Can’t Be Measured
One of the great features of social media is that it can be used to drive qualitative benefits such as brand awareness, loyalty, and positive buzz. Great indeed, but how can you tell if you’re having much success? Or if you’re even hitting the right targets?
Let’s say you’ve heard about a hot new online seminar site where companies can post videos. Create positive buzz, you say. Okay, so how will you be able to determine if you’ve reached your goal? A minimum number of positive comments on the site might be your benchmark. Maybe a single positive comment about your video on a widely read forum is what you want. The point is, you can take a qualitative social media benefit and break it down into performance markers that apply specifically to your business.
Depending on which social media channels you use, you can also take advantage of some recently developed tools that measure “intangibles” like influence and consumer sentiment. There are a number of analytical tools available that can generate these metrics for Twitter, such as:
- Crimson Hexagon
- Twendz
- Twinfluence
- Twitter Grader
Other tools include:
- Facebook Grader
- Nielsen BuzzMetrics
I Want to Measure Things That Can Be Measured But I’m Not Sure Why
The quantitative benefits of social media are pretty easy to measure. To give you an idea of some possible quantitative metrics, here are just a few possible measures:
Websites
- Total page views
- Page views per visitor
- Frequency of visits
- Time spent on your site
Blogs
- Number of comments
- Number of clicks to your site
- Number of subscribers
Twitter/Facebook/Social Networking Sites
- Number of followers/contacts
- Number of comments
- Number of positive comments/testimonials
Sitemeter, Google Analytics, and Omniture are just a few of the tools available to track quantitative metrics.
So, you know what you want to count and how you’re going to count it. You happily watch your flock of followers on Twitter surpass the 1,000 mark. You do a dance of joy when you increase your network size on a social networking site by 20%. But … what does it all mean?
When it comes to traffic on websites, blogs, and forums, it’s fairly safe to say that more is better. Beyond that, relevance rules the day when it comes to figuring out how your campaign is doing.
What if your 20% increase in new social networking contacts consists of people who aren’t going to generate leads, sales, positive comments, or any other tangible benefit? You might be better off with a 10% increase consisting of contacts who are going to help your business in some way.
Twitter is perhaps the best example of how a “more is better” mentality can be misleading. It’s highly unlikely that all of your 1,000 followers are going to equally important to your business objectives. But somewhere in that big flock are people who are either part of your target market or can help you move forward. Spending time building those relationships rather than just sending out mass tweets might yield better results.
Costs: ROI’s Missing Link
In the days of traditional media campaigns, calculating the cost component of ROI was fairly easy. If you spent $30,000, well … you spent $30,000 on a campaign.
In addition to any financial costs of setting up your social media strategies, there’s a time investment as well. Someone has to update your Facebook page, send out tweets, etc.
Fortunately, the time investment in social media is often negligible after you get the hang of the application you’re using. But only you can decide if the overall costs justify the results you’re getting.
Next Steps
Exactly which metrics and objectives you choose are up to you and your marketing team. The point is, if you map out your plan before you jump into a new campaign you’ll be able to quickly tell if your ROI is up to par. If your strategy isn’t performing, go back to the drawing board. Repeat as often as you have to until you get the results you want.
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