Measuring social media ROI

March 20, 2010

in Metrics, Social Media, roi

Jeremiah Owyang, a leading voice within social media and digital marketing, predicted that 2010 would be the year that social media needs to prove itself. Well, here we are in 2010 and now is the time we start to look at whether or not our investment into social media activities has actually proved fruitful.

Some marketers may claim that measuring the effectiveness of social media marketing is difficult, and in all honesty it is, but it is possible and should be done. Marketers who claim it is impossible are more than likely those who do not look at effectively measuring the impact of any or all marketing activity. Typically those businesses who are already measuring the success of social media are those focused on putting in place metrics for activities such as enewsletters, CRM, collateral, sponsorship, advertising and have a strong understanding of return on investment.

ROI of social media
We can easily measure website visitors driven directly from social media channels such as blogs and YouTube videos by using metrics software such as Google Analytics. The growth over time for number of Twitter followers can be measured by tools such as Twitter Counter and Twitter Anaylser. Facebook Insights and Nielson’s BrandLift provides us with similar data. If the previous tools mentioned are already being employed to measure social media activity, then this is great. If not, you should look to introduce social media measurement to your team’s weekly or monthly processes.
But, the aforementioned are all non-financial impacts on a business. This is why C-level executives find it difficult to truly understand the value of PR, advertising and social media activity.

Oliver Blanchard, a business strategist, has looked in depth at the ROI of social media, supporting the theory that social media needs to be measured in direct relation to the resource allocation. For all the investment into blogs, communities, Facebook and Twitter it makes sound business sense that a company should see the direct impact these activities are having on the P&L. After all, being able to quantify the success of a campaign or activity in relation to beefing up the bottom line ensures that you are re-allocated budgets to carry out the activity in order to sustain and grow market share.

So, how can we show that our social media marketing activity is actually delivering direct value to the bottom line? Well, we start with the above process of measuring the activity using tools and processes but we also compare this activity to other business data.

What we should be looking to do is plot social media activity against sales revenue, transactions, new customers, loyalty data and market research. By comparing and contrasting both sets of data, we will be able to see a correlation between whether or not marketing activity that includes social media has actually helped increased sales before and after social media activity was introduced. If the correlation is positive, and sales activity has increased during the time that social media activity was introduced, then we can ascertain that certain social media activity has had a positive effect.

Tools such as BrandWatch and Radian6 can also be used to visualise the volume of conversation around your product and service and then you can overlay sales data over the same timeline to see whether or not social media conversation for example correlates with an increase in sales.

Deep data diving - This type of activity is incredibly effective as we are able to ‘deep dive’ into the data to understand particular conversations and the sentiment around your business and service at a particular time such as positive and negative sales spikes.

For marketers it is a case of applying a little more depth to your measurement. For example, measuring the conversations you have had on LinkedIn that culminated in forming a relationship with a prospective customer to that prospect actually becoming a customer and what additional value that has added to your bottom line.

Measuring the Twitter conversations that you have entered into that may have resulted in a new client relationship and sale. Measure the investment of time on Twitter to win that client in comparison to time spent at a networking event. Yes the measurement is more complex but it is quantifiable none the less.

{ 3 comments… read them below or add one }


Rain8 Social Media Marketing 09.02.10 at 4:35 am

Good article and very important subject. Most B2C firms GET social media - not that they don’t need to measure - but at least they are already in the game. A lot of B2B companies are still on the sidelines and will stay there until the tools are in place to directly correlate investment to returns. I think we have a way to go on measurement tool development and until we get some stronger tools we will be limited to the more visionary of the B2B’s.


Matt@rhc: Hampshire Marketing Agency 02.23.11 at 12:07 pm

Many companies aren’t actively tracking and analyzing their efforts. But you better believe that the CEO is monitoring it by thinking, “is it bringing in more sales or is it a waste of money?”


milf 06.16.11 at 6:33 am

yeah i mydo a lot of social media in my job. when i make a twitter channel i get excited at the prospect of getting all these new clients for my client but a lot of the time i do feel like i am putting in a lot of work and getting hardly anything back…

i think it has value for some companies, but for a lot of smal businesses it can be a waste of time. there are things you can use to monitor it though. a lot of free software which can get very deep. it’s pretty cool.

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