Social Media ROI – Can it be Calculated?

So Frustrating!

I have been studying social media for a couple years now and have posted about it before. I continue to struggle with finding successful case studies where the ROI is apparent. In part, I’m sure it is because the measures are not sufficiently robust yet and there is so much experimentation going on it is hard to separate the wheat from the chaff.  But, with an increasing investment behind this communication tactic, finding a definitive answer is important.

 

What I Have Been Reading

I found an article titled “Social media ROI: It’s not about immediate results” that made some important points. It is a disconcerting thought. But, I like the fact the author positioned social media as a way to help create the voice of your brand. Tonality and brand character have always been challenging concepts in marketing. They are easy enough to conceptually understand, but quite difficult to execute properly and consistently. But, you really need to work hard to get it right in social media because inconsistencies are painfully obvious.

I also read an article posted on the MDG Blog that posed the question – Is social media marketing effective? In my mind it is the right question, but the post failed to answer it. Most of the measures presented were in-process measures like site traffic, fans/members and conversion rates. Of course, if the company engages in on-line sales it was the most important measure being evaluated. I did find it curious that despite the lack of a definitive way to measure social media ROI, it didn’t stop sharing a chart comparing ROI across different social media platforms (e.g. investing in Twitter versus Facebook). I don’t understand how if you can’t measure ROI reliably t you can compare channels based on their ability to deliver ROI. Of course the answer is the data presented is marketer perception rather than a quantitative assessment. The analogy that comes to mind is the hens asking the fox for his assessment on how safe the henhouse is.

I wasn’t surprised to find Google had a purported way to measure social media called Goal conversion! Goals are good right? Well Google believes that in-process activity is a way to measure ROI and encourages you to track things like clicks, newsletter subscriptions, free report downloads, time on site, pages/visit, etc.. Unfortunately, while Google delivers a mechanism it assumes the conversion goals you select have an established cause and effect relationship to ROI. Other than online sales, I don’t feel confident with the assumption and would label the data as “interesting to know” (i.e. marginally better than nothing).

I am not giving up my research to find definitive proof of social media effectiveness. Nor am I giving up use of social media as a communication channel. However, I will continue to view it as an experimental media we have a lot to learn about and from.

My focus area now is economic development (place branding). The one area I see social media as a promising channel is in building local advocacy and loyalty. Every community has people who are interested in sharing news about positive things that are happening. The challenge is ensuring they are aware of what is going on since positive news isn’t always given the same degree of airtime by the press as negative news. Therefore, if you can keep them informed and encourage secondary dissemination of positive news through their personal networks, it conceptually makes sense to do so. And, while I don’t have hard data to confirm it delivers an ROI, the logic is appealing enough that I would recommend any community give consideration to leveraging social media in this manner.

An example of using social media to build community loyalty and advocacy is Issue Media Group’s e-zine tactic. Like any newsletter like tool, the impact is only as good as 1) the number of subscribers and 2) the content quality. I had an opportunity to work with the Issue Media Group on the hiVelocity publication, and am an avid reader of the Soapbox Cincinnati publication. I can honesty say I often forward articles from both publications to relevant people in my personal network. A number of Economic Development Organizations have similar programs (e.g. newsletters), and I keep hearing positive things from my colleagues about their value.

What is Your Experience? 

Do you have, or have you read any good case studies on social media ROI? Please share what you can. This remains a high profile tactic and the more we can learn how to maximize its value, the stronger our community branding efforts will be. Think of this as an opportunity to crowd source knowledge on social media effectiveness (sort of). Thanks in advance for sharing.

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5 Comments so far

  1. Rope Roberts

    April 18, 2012

    Yes it can, if ithe measurements are built into the process before you start. Your strategy of which platform or channel to utilize, the message you plan to send, the branding you plan to place, and the interaction or feedback you desire from the exchange. Good points in the article above.

  2. Ian Smith

    April 18, 2012

    Ed,

    Great post. There are a few ROI examples in our recent edition of Canadian Cities Online Marketing Index (2011). You’ll find them on page 7.

    Yes for some, ROI can be difficult to define because of two possible reasons. 1) Lack of metrics & 2) Social media is a just tool.

    1) Lack of metrics -Some EDOs rush to adopt social media applications before setting objectives. Without any objectives, you really do not have anything to benchmark your efforts against. Yes, a huge # of fans, followers, pins and checkins are great but are these people being converted into buyers of your brand?

    2) Social media is just a tool – Social media is integrated into EDOs communication strategies and hence it is become difficult to zero in on if a Twitter account was responsible for a sale of Brand XYZ widget at the same time there is a national television ad campaign running at the same time. All this to say that social media is A TOOL that plays A ROLE in an overall strategy. The only way to identify ROI in this scenario is to talk to the marketing reps one-on-one.

  3. Dagny Evans

    April 18, 2012

    We can all probably agree that the value in social media comes from the personal connections and brand exposure. That said, the ROI of social media is definitely difficult to calculate or articulate. I’ve been polling business people to name a company (or companies) that are using social media really well (to further whatever specific goal). I have yet to receive a concrete response, especially in the small business space. I too am waiting for the shake out of social media networks for business.

  4. Sandra McCarty

    April 23, 2012

    The software company Hubspot has an article on it’s Inbound Marketing blog that might shed some light in determining ROI for Social Media.
    The article is titled ‘How To Measure Social Media ROI Like The Experts’ and explores 5 concrete metrics to measure social media ROI. See more at
    http://blog.hubspot.com/blog/tabid/6307/bid/29395/How-to-Measure-Social-Media-ROI-Like-the-Experts.aspx

  5. Good discussion. Time and time again these questions are raised. Since we’re talking about social media marketing, the goal is to either contribute to increased sales, or quality leads that turn into sales.
    I discuss my view on ROI for lead generation companies on my blog. If you’re not in it it make revenue, then you need to change your mindset. Here’s the link: http://www.nusparkmarketing.com/2012/04/stop-the-insanity-a-view-on-social-media-roi-for-lead-generation/

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