Finding the ROI in Social Media
There’s no debating it; social media is hot. It’s still growing at a phenomenal rate and the dollar figures associated with it are just as impressive. Forrester Research predicts Interactive marketing spending in the US will more than triple over the next five years, reaching $61 billion by 2012 and spending on social media alone will grow to $6.9 billion as marketers understand how to use and measure this channel. All of this momentum brings to light a universal challenge that executives, marketers and social teams face today—measuring their Social Media ROI. Like all aspects of business, social media needs to be measured and analyzed so that you can evaluate it in relation to other programs and improve on it over time.
Before launching a social media program, it’s essential to clarify success metrics and goals. While much of ROI focus is on the goal of making direct conversions, it is important to emphasize that social media is primarily about building new relationships, generating word of mouth marketing, and strengthening brand loyalty with your customers.
Social media success requires brands to reconsider their definitions of ROI without abandoning tried and true measures. It means that whatever non-monetary goals that are set have to be translated into dollars. Some of the basic business metrics you should measure to establish a baseline before you begin and then on an ongoing basis include sales figures, customer counts, retention rates, revenues and profit.
For most companies however, social media activities may only influence these metrics indirectly. When measuring social media success, you must first understand how social media is being used within your organization. Assess which departments are using social media and then measure success based on performance metrics that are relevant to each of those departments. Social marketing goals require a different set of metrics that may include:
- Website visitors
- Brand awareness
- Newsletter sign-ups
- Facebook fans
- Blog comments
- Social mentions
- Visitor satisfaction index
If you are just getting started, the Altimeter Group’s put together a fantastic report outlining a framework for social analytics. It outlines the key challenges of social data, proposes a value-based framework for social analytics, and recommends clear and pragmatic steps that companies engaged in social media must follow to ensure they are gaining insights, measuring effectively, interpreting accurately, and taking appropriate action—both today and long term.
No matter what metrics you track in the end, be sure to keep this in mind when you are calculating your social media ROI: not everything that can be counted counts, and not everything that counts can be counted. There is a wealth of data and opportunity in social media — and in digital in general — but it’s up to us to make sure that what we’re counting is aligned with solving the business challenge.
Social Intelligence Crusader
1. Altimeter Report: A Framework for Social Analytics
2. Best Practices: The Value of Social Media Measurement
3. Best Practices: Social Media ROI
4. Webcast: Measure Social Media More Effectively
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