Many companies all over the world have received a larger social media budget for 2011 and are being pressured to yield results from that new budget. The excitement and hype of how effective social media can be has reached the top floor and those executives are willing to give it a try. But… not without accountability.
Marketers are being given more money and freedom with this new tool, but they’re also being told they must measure social media’s ROI and its effects on the business. This is great news in that businesses are beginning to realize the importance of social media within the marketing department, but the problem is there is no absolute standard method to completely and entirely measure the ROI of your social media campaign.
Here are some tips from those who have successfully practiced measuring social media ROI and some things you should be prepared for.
#1 Measuring Social Media ROI is DIFFICULT.
Difficult is capitalized for a reason. Some marketers have described it as being harder than Rocket Science and Brain Surgery combined! That might be slightly overboard, but if anyone tells you measuring social media ROI is easy, then they have never actually done it. To measure social media effectively, you must use some complex technical systems and find ways to include the social equation. Marketers really need to begin to learn these systems and geek talk in order to learn how to connect the dots. If that’s not for you, then make friends with a software engineer.
#2 Measuring Social Media ROI does NOT always mean Social Media Software
Social media software is not bad, in fact there are some great programs. However, they simply add data points into the ROI measurement process. They deliver the number your looking for. In order to effectively measure social media ROI you need to “figure out how to pass data between your web analytics software, your customer relationship management (CRM) software, your online marketing software, your social media engagement platform and your company’s reporting system/data warehouse.” Yes, that sounds intense, but you probably already have about 85% of the pieces in place and they are recording the results of other online marketing activities. The key is to know what to look for and where to look in order to not get overwhelmed by the complexity of all the data from the different systems.
#3 Measuring Social Media ROI is Possible.
Just because you can’t buy a program off of Amazon to measure your social media ROI, it doesn’t mean it’s impossible. It’s very possible and can be done with small effort depending on your current systems in place. If you have someone who knows what their doing, it can take around 12 hours. The key is not to lose hope and keep investigating and learning.
#4 Most Likely Your Social Media ROI is Negative
It’s simple, most businesses haven’t been doing social media for a long enough period of time to yield positive results. This doesn’t mean it’s not valuable or that it’s potential should be disregarded. It just means an executive is going to be disappointed if they’re expecting a big bold positive ROI number. Let them know that with any new marketing effort it takes time to build an audience and see conversions as a result. Social media is a long-term brand building strategy, not to say it can produce great short term results, but it is meant to take time.
For example, if Coke had measured the ROI for each of its commercials in the 70’s, more then likely they would have revealed a negative return. But we can see today that those early initiatives helped it to become one of the most iconic brands in the world. “Numbers” don’t always equal value.
#5 Social Media ROI is One Piece of Many
Some marketers predicts ROI will show positive results for ROI, but there are many other factors that can be looked at to see where social media is adding value to organizations and why companies should invest into it.
Here is an exercise that may help you frame the discussion.
1. Take a look at all of your marketing activities
2. Determine what metrics are used to evaluate its success
3. Divide those metrics by the cost it takes to deliver those results
4. Apply the same metrics to social media
5. Divide those metrics by the cost it takes to deliver those results
