Businesses big and small are tapping into the idea of social media marketing. It is estimated that 25% of people in the world now use social media and the number of social media users around the globe rose 18% in 2013. This rise of social media has provided commercial enterprises with a new and unique way to engage with existing and potential new customers.
Measuring the return on investment (ROI) from social media marketers is tough, but not impossible. It’s been deemed a headache in the social world and most marketers are still trying to figure it out.
“Don’t be intimidated by the social metrics,” said Lewis Bertolucci, social media manager for Humana Digital, at Social Media Marketing World 2014. “I definitely don’t have it mastered. It’s very much evolution. It’s not a revolution, right? You have to do this iterative approach to getting better and getting better and getting better.”
About one in three (37%) marketers said they are able to measure the return on investment (ROI) for their social activities, according to the 2014 Social Media Marketing Industry Report published by Social Media Examiner. That’s a slight increase from 2013, when 23% indicated they could measure social media ROI.
“Social media ROI is a numbers game,” said Nichole Kelly, author of How to Measure Social Media, at Social Media Marketing World 2014. “And if you know what the conversion rate looks like, you can reverse engineer to be able to deliver the results every time.”
Why is it important to measure social media ROI?
Bottom line: money talks. If you could tie social media efforts to revenue creation or cost savings, then you could share with your bosses how you’re making and saving them money – not just trolling on Twitter. You could track customers to see how social networking influences the sale.
Also, social media ROI can help you understand how social savvy customers operate differently than non-social media users. Filter referral sources in Google Analytics to see if Facebook followers convert at a higher rate than email newsletter customers. Find the right path to your audience and get the biggest bang for your buck.
Why is it so hard to measure social media ROI?
Key challenges to measuring social media ROI relate to technology and talent:
- Fragmented data systems (systems don’t talk to each other)
- Control over path to conversion (social media influence occurs early in the funnel, so how does it get credit?)
- Poor user experience in conversion funnel
- Lack of digital analytics talent
How do you measure social media ROI?
With all the talk about pins, likes, retweets and shares, where do you start? First, Nichole Kelly suggests auditing all of the systems that social media touches to optimize all of the touch points you can control. For example, you can add tracking code to your links via Google URL builder, optimize your website for conversion through UX and SEO, or control the information being passed into analytics.
Another important key of ROI is tying social media strategy into company objectives. If you don’t know the end-goal, then how can you measure it?
“You have to provide value,” said Scott Gulbransen, vice president of global communications and digital marketing at DSI, at Social Media Marketing World. “We’re not new to it anymore. Always align it with your business objectives, and you’ll be able to show your impact and your value to the company.”
Here are some examples of aligning metrics with business objectives:
- Reach: Is the company objective to increase its reach? Then, for example, measure the number of Facebook likes and Twitter followers to see change month over month, year over year.
- Action: Do you want to increase blog readership? You could track the number of pageviews, unique visitors, RSS subscriptions or time on page.
- Conversion: Most importantly, you probably want to measure how social media helps people get into the conversion funnel. How many blog visitors are converting into leads, whether that’s buying a product or downloading a whitepaper?
Nichole Kelly says measuring social media comes down to three things:
- Increase in sales volume
- Increase in revenue
- Decrease in cost
If you can’t achieve any of these things, then you need to change your strategy, Kelly says. On the surface level, you could measure reach, such as Facebook likes and Twitter followers. There are several more metrics for social media ROI.
Some basic hard metrics include:
- Cost per impression
- Cost per click (a.k.a. pay per click)
- Cost per engagement (retweets, likes, shares, comments)
- Cost per conversion
- Cost per acquisition (How much it costs to gain a new customer)
Talk to us!
Is your head spinning yet? Have you come up with a formula for social media ROI? If so, you’d become a social media super hero! How do you prove value for all of the tweets and posts you place on social networks? Let us know what you think in the comments below and share your social expertise.