Can ROI on Social Media be measured for Business?
Maybe it’s one of those things that simply can not be explained, and the bold who invest their time in it, not knowing what exactly the reward will be, fortune may or may not favor. Does it really just change our focus to what we sometimes forget about from being caught up in the day-to-day operations of running our businesses? (i.e. Researching our competitors, engaging our customers, etc.)
One thing is clear: It’s about engaging. If we engage those around us, they become interested; personally and professionally.
How to Measure Social Media ROI for Business
Social media measurement is one of those topics about which everyone has an opinion, but nobody agrees on the solution. The question about how to measure the return on investment (ROI) for social media participation comes up in every workshop I deliver, as definitive, statistic-based metrics seem to be the primary way communicators feel they can secure approval and budget for these programs from their management teams.
If you’re waiting for someone to provide that magic bean, then put away your watering can. It ain’t gonna happen. That’s one of the reasons why I tend to think that social media (by which I mean actual conversations and relationship building exercises, not widgets and Facebook (
) fliers) is more aligned with the goals of a PR program than it is with marketing.
In the absence of any accepted metrics, businesses still need to be able to determine whether or not a social media program is moving the needle, moving product or otherwise making an impact. This largely depends on the company’s social media objectives. Because these dramatically differ based on the organization, it’s impossible to agree upon standards. That doesn’t mean we can’t measure ROI at the company level, though.
With that in mind, here are a few ways to consider measuring social media ROI for your business:
Qualitative
First, determine what you want to measure, whether it’s corporate reputation, conversations or customer relationships. These objectives require a more qualitative measurement approach, so let’s start by asking some questions. For example, if the objective is measure ROI for conversations, we start by benchmarking ourselves with questions like:
- Are we currently part of conversations about our product/industry?
- How are we currently talked about versus our competitors?
Then to measure success, we ask whether we were able to:
- Build better relationships with our key audiences?
- Participate in conversations where we hadn’t previously had a voice?
- Move from a running monologue to a meaningful dialogue with customers?
There are companies that offer services to assist with this kind of measurement, which requires a great deal of human analysis on top of the automated results to appropriately assess the tonality and brand positioning across various social media platforms.
Quantitative
If the goal is to measure traffic, sales or SEO ranking, we can take a more quantitative approach. There are some free tools that can help with this type of measurement, including:
AideRSS allows you to enter a feed URL and returns statistics about its posts, including which are the most popular based on how many times they are shared on a variety of social networking sites (Google (
), Digg (
Google Analytics (
Xinu is a handy website where you can type in a URL and receive a load of useful statistics ranging from search engine optimization (SEO) to social bookmarking and more.
In addition, you might look at how many people join your social network (or become your connection) in a given period of time, how much activity there is in your forum or what the click-through rate is to your product pages from any of these platforms that result in direct sales.
Conclusion
The key takeaway, regardless of how your company chooses to measure engagement, is that you have a success metric in mind before you begin. Without some sort of benchmark, it’s impossible to determine your ROI.
As I said at the beginning, this topic is one that has been tossed around in the blogosphere for a long time and this is an overview. For further reading, I recommend you check out Katie Paine’s blog, where the conversation about social media measurement continues to evolve. And I’m sure there are many companies that would be happy to automate this process for you. Look for their thoughts below in the comments.
[Aaron Uhrmacher is a social media consultant. In addition to his posts on Mashable, he blogs at DISRUPTology.]
April 11th, 2010 at 12:04 am
You made some good points. Needless to say, many more discussions need to take place regarding this subject matter. Many internet and marketing enthusiast have a gut feeling that building relationship and a following on the internet (i.e. social media) is a good thing. However, although signing up to participate in discussions on the majority of the platforms are free, the time and energy it takes to learn how to do it right and then actually do it is not. This is why these discussion regarding how to measure time spent doing social media is so important.
Here is my contribution to the discussion and a suggestion on how to measure (using a two phase approach) one’s efforts with respect to engaging in social media.
When measuring the effectiveness of a social media strategy social media managers might consider approaching their measurement techniques from a short-term and long-term approach. When you first enter into the social media marketing realm, your primary goal is to pick the right platforms or sites (e.g. Facebook, Twitter, YouTube, etc), publish great content, increase your audience or following while simultaneously attempting to start conversations with your new found friends. How well you do these things as you implement your social media strategy and plan should be your first measuring rod called “Measuring Social Media Implementation and Effectiveness”. Free Twitter applications like Tweetstat, Klout, and Tweet Counter (just to name a few) can assist with measuring your Twitter effectiveness and both YouTube and Facebook have their own analytic tools to help with tracking effectiveness on their
sites.
Once you have good content, have successfully built a strong following and tweaked your strategy, then you can start to get creative and launch some social media campaigns that will actually generate revenue that can be directly tied to your social media efforts making it easy to measure Return on Investment (ROI).
April 18th, 2010 at 9:33 am
Thank you for your insight Lafate.
Important to note, without the combination of ‘system’ and ‘human’ there’s no way we can achieve accuracy. Like anything else, only so much of ‘human’ actions are predictable.
As you mentioned, many more discussions need to take place…
We look forward to hearing more from you.