I’ve been reading a higher-than-usual number of blog posts and articles about social media ROI – how to measure it, what to measure, what not to measure. I’m not sure if there was some sort of collective epiphany that led to this all of a sudden (or I just have ROI on the brain), but many of these posts have given me some food for thought about the topic – so I decided to write my own post.
As you read through the many articles floating around out there, here are some of the myths I’ve discovered about social media ROI to help give you a little bit of perspective:
- ROI can’t be measured for social media marketing. Sorry, but marketers can no longer fall back on this excuse. When social media first started gaining momentum as a potentially viable marketing channel, no one was quite sure yet about how to measure efforts. Because it was a very young medium, there was a gap in terms of knowledge and tools to help us do this. Now that social media has really come into its own as a marketing channel, our collective knowledge about it has grown and more tools have become available to track a variety of metrics, including ROI.
- The only return that matters in social media is Return on Engagement (ROE). I remember a couple of years ago when “Return on Engagement” was being touted as the “new ROI” for social media. I like to say that social media is all about being social, and “engagement” is one of those buzz words we as marketers throw around to describe how social our organization, brand, etc. is. While engagement in social media is important, it simply cannot be substituted for ROI. It doesn’t matter how many friends, fans or followers you’ve accumulated, or even how many retweets or wall posts you get. If you can’t track all your hard work back to some sort of conversion – whether that’s a purchase, a sign-up, a donation, or whatever conversion goal you’ve determined – then all of that won’t amount to squat.
- Social media ROI is calculated the same way as for any other marketing campaign. I recently read a post on Mashable about how to calculate the ROI of social media, and while it provided a good foundation, it took a basic ROI formula used for more traditional marketing channels and applied it to social media. Using direct mail as an example for comparison, the post would have you believe that you would need to acquire X amount of customers in X amount of time via social media to demonstrate ROI. What it didn’t take into consideration was the time social media actually takes compared to other channels, and that social media is not direct response. What you have to do is take what you know about calculating ROI for your other marketing efforts and apply that in a way that works for your specific social marketing initiatives, knowing that social media is not a quick hit. It requires more direct customer engagement (there’s that buzzword again) and less direct response marketing. Here’s a post that provides an interesting social media take on the traditional ROI formula.
- Social media isn’t worth getting into if direct ROI can’t be measured. ROI can be determined in a variety of ways – it just depends on, as I mentioned in #2, what your conversion goals are. You might not be able to track monetary ROI, but you can track other conversions that are just as valuable. Plus, social media can help you uncover a wealth of insights about your customers, your product, your brand, and your organization that can be just as valuable. If you’re able to identify a potential flaw with your product or negative customer service issues through chatter on Twitter, then you can use that information to improve the product or your customer service processes – potentially saving your company grief and/or money in the long run. Don’t you think social media is worth it for that reason, at the very least?
- Social media is cheap, so ROI should be high. It may be free to start accounts on any number of social media sites, but the cost in terms of time and resources to manage those outposts the right way is not. Like it or not, social media will take some budget. It may not be as much as a PPC campaign or a print ad, but don’t fall into the trap of thinking that it’s so inexpensive as to automatically yield a high ROI. In fact, according to a recent infographic compiled by Focus.com, the average cost of social media is $210,600 in one year: