Can Social Media Marketing ROI Be Measured?
There’s often debate between marketing people and financial people at any company. The financial people want hard numbers. They want to be able to measure specific ROI, or return on investment, for any marketing plan that’s implemented. What they don’t understand is that many marketing strategies, besides promotional deals that have expiration dates, often work in the long term. Many marketing campaigns work to build a brand so that the company stays top of mind in the consumer. Many times, this is hard to measure, or can’t be measured at all. This is certainly the case with social media. It’s still a relatively new marketing medium and the right tools to measure its ROI simply don’t exist yet.
The fact that social media marketing ROI is hard to measure is part of what has prevented many businesses to jump on board. Even though it’s a great way to communicate with a target audience, some CEO’s, Presidents, and Vice Presidents are still hesitant to get involved. It takes time and effort to do social media well. In order to implement a social media marketing strategy correctly, it takes hours of the day. While some companies even choose to hire someone to fill a social media specific role, other companies can’t possibly understand the point of spending salary money on something that can’t even be measured.
There are some people out there that argue that it is possible to measure social media marketing ROI, but what they are measuring isn’t really ROI, per se. ROI is a monetary measurement. If I spend “x” dollars, I should receive “x” dollars back in return. Sure it’s possible to measure how many new fans, followers, connections, replies, views, and retweets that a company gets on social media a month, but that’s not really measuring ROI since none of those things specifically correlate with the amount of business or dollars that a company gets.
However, just because it’s difficult to measure ROI, that doesn’t mean that social media doesn’t contribute to the bottom line. It certainly does if it’s used correctly because it’s a great way to build relationships with potential customers, clients, prospects, and other stakeholders. The only problem is that it’s hard to attribute the credit to any one medium. While some believe that the last point of entry should be credited with the conversion, that might not have been where the actual decision was made. Success is usually found through using a combination of efforts. A new client may have read your newsletter, connected with you on LinkedIn, and followed your blog before signing up for services. Which was it that landed the sale? It’s hard, if not impossible, to measure if anything is more important than the other when it comes to social media. Likely, it’s the fact that the company had a presence across all of these platforms that got the attention of the client. Therefore, it’s important to utilize as many social tools that are available to you because you never know what will prompt that final decision to buy your product or use your services.
12 Responses to “Can Social Media Marketing ROI Be Measured?”
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I’m a web designer. as anybody who’s been on the web long enough, I understand the importance of marketing, though to start with, I wasn’t referring to it as ‘marketing’, rather as ‘search engine optimization’. I embraced social media, though I pick and choose. It takes time and you wonder if your efforts are well spent. for someone like me who does little real life networking, I wonder what it costs me to connect with new people with a few clicks. each new connection is someone exposed to your brand, and it’s free. you cannot beat that. does it work? the question is ‘does advertising work?’ it sure does, if done well.
Social Media ROI measurements are maturing in real time. I agree that today it is hard – but worthy – work to quantify the metrics. Being able to demonstrate ROI is a requirement of getting C-level buy-in (and budget approvals) for social media initiatives.
So roll-up your marketing sleeves and start evaluating the cost reduction and avoidance metrics at your disposal today around:
- customer service
- earned media
- R&D
- HR recruitment
Multi-attribution tracking cross platform have to improve to become reliable contributors to the process (hear that fb?).
Thanks for reading Dara and for sharing your thoughts!
Take Care,
Nick
Hi Nick – Have you seen Argyle Social? They are a NC startup with a very promising app that can measure social ROI. Worth a look. I haven’t seen anything close to it.
Nick, I agree that social media ROI is highly challenging to measure. The primary reason is that it most often influences a sale, but doesn’t lead to one in a direct path.
Still, social media activities cost real money and have to pay their way. On that score, you might enjoy my recent post “20 Ways to Generate ROI from a Corporate Blog (http://webbiquity.com/business-blogging/20-ways-to-generate-roi-from-a-corporate-blog/). Would love your take on it.
Hi Tom,
Thanks for reading and sharing the post about social media ROI, I will be sure to check it out…
Thanks!
Nick
Hi Nick,
I like your post and agree with you entirely. You can measure ROI from a social media campaign (one with a start and end date) but before you do that you need a social media presence, which is different than a campaign and one you can’t (and shouldn’t) measure monetarily.
I wrote a blog reiterating some of the points you made, and that blog can be found here: http://www.digitalc4.com/blogs/Measuring-the-Value-of-Social-Media-Marketing.html
Thanks Nick!
Chuck
Thanks for reading and for sharing your post, I will be sure to take a look!
Take Care,
Nick
[...] company right now can tell you they have an exact amount for their Social Media ROI, however that does not mean that companies can’t track sales increases in relation to certain [...]
Nick,
I love the post and just shared a quote of yours in my blog on Social Media ROI.
http://www.socialstrategy1.com/2011/05/26/selling-social-media-to-your-boss/
Keep up the great writing!
Thanks Michael for reading and the quote!
Take Care!
Nick
Nick!! Finding your post just made my day. Let me explain.
I work for a software company whose main mission is to help clients measure and optimize their social media marketing ROI. Most people in the industry think that ROI is fluffy and that return should be measured in interactions or reach rather than dollars. Those that realize it should be measured in dollars still believe that it’s impossible (or prohibitively difficult) to do this. People that realize multi-touch conversion tracking (the solution you wrote about!) is the answer are few and far between, so we spend our days educating interested industry folks.
Our software provides basic multi-touch conversion attribution tied in with a URL shortener so that people can track their social-attributable revenue. If you’re curious on the details, we wrote a very down-to-earth white paper that you can grab here:
http://argylesocial.com/blog/2011/02/16/social-media-roi-whitepaper.html
Anyway, thanks for making my day. If you ever want to chat about this topic further please do email me
Tristan