You see it everywhere. Management teams and marketers desperately want to understand how social media is delivering to the bottom line. Marketers are getting tons of pressure from their management teams and are desperate for a way to prove their strategies are working. With so many chomping at the bit to get at true return on investment (ROI), how has it remained so elusive? Has social media become the marketing channel that we know we need to have, but can’t demonstrate why?
What if Social Media ROI was really simple, but we let a bunch of excuses get in our way of measuring it? Unfortunately, I think our judgment has been a little clouded because we’ve seen social media experts give one reason or another as to why we can’t measure social media ROI. To be successful we have to separate our ability to measure ROI from our personal views on whether or not we should measure social media ROI. So let’s take a look at some of the excuses that are being used to convince us that we can’t or shouldn’t measure social media ROI and remove our preconceived notions to determine how we can get the metrics we need.
Excuse #1: Social Media Lacks a Standard Framework for Measurement
Surveys have shown that marketers believe they lack a standard social media ROI metric. We’ve decided that social media is new and different than every other marketing channel and therefore we have to measure it differently. We are struggling trying to show the ROI of every conversation or think the experts who tout social media measurement have a secret formula. We’ve created way too much work for ourselves here.
All companies already have a standard framework for measuring business success using three core metrics: sales (units), revenue, and cost. We’ve figured out how to correlate almost every other marketing channel into its impact on these three metrics, but are trying to keep social media separate. We don’t need a standard framework for measuring social media; instead we need to show how social media impacts the standard framework for measuring business success: sales, revenue and cost.
Excuse #2: We Don’t Measure the ROI of (insert something)
I’ve seen this argument all over the place. We don’t measure the ROI of email, our phones, even our pants so why should we have to measure the ROI of social media? The argument is that measuring social media ROI is hypocritical because we aren’t measuring the ROI of other types of business tools, platforms, or technologies. While we may not measure the ROI of email or our phones, in actuality, companies are measuring the ROI of other marketing channels like TV/Radio advertising, public relations, online advertising, and search engine optimization (SEO) so why wouldn’t we use similar metrics to measure the ROI of social media?
The truth is we can actually leverage the metrics we use in these marketing channels to demonstrate the value of social media while we are collecting the data points to ultimately calculate an apples-to-apples ROI comparison.
|Public Relations||Online Advertising||SEO|
|Cost Per Impression||Cost Per Impression||Cost Per Inbound Link|
|Cost Per Mention||Cost Per Click||Cost Per Site Visitor|
|Cost Per Lead||Cost Per Lead|
|Cost Per Subscriber||Cost Per Subscriber|
All of the metrics can be effectively collected and calculated for social media and compared across marketing channels to see where social media is delivering value.
Excuse #3: We need to Redefine ROI for Social Media
There have been some really intriguing posts written about trying to create new metrics for social media like Return on Influence and Return on Engagement that more accurately demonstrate where social media is delivering. I have a huge amount of respect for marketers who are trying to find ways to measure social media in an innovative way. The challenge is when we create “new” metrics we have to spend a lot of time and energy educating our management teams on what these metrics are, how they correlate to existing metrics and ultimately what they mean for the bottom line. Therefore, I recommend that you focus on using metrics that have history in the organization first.
If you are spending your time trying to train an executive on what a “follower,” “fan,” or “retweet” is you could be wasting valuable time that could be focused on conversations about how to scale and grow the results you are seeing from social media. Compare this conversation to other marketing channels. Can you imagine trying to explain the intricacies of trying to increase search engine rankings by unraveling the pieces we think impact the Google algorithm to your management team? You would definitely see a lot of faces that look like a deer in the headlights, right? If you can transform your dialogue with social media to how it impacts the bottom line you will be far more successful in getting new projects and investments approved.
Excuse #4: Tools Don’t Exist to Measure Social Media ROI
There is a lot of confusion between measurement tools and monitoring tools in the social media space. This is further confused as monitoring tools are saying they measure social media ROI in their marketing materials. I’m a huge fan of monitoring tools and use them for clients. However, I haven’t seen one that provides end-to-end measurement. Why? Because social media is only one marketing channel, but its impact has to be measured across other marketing platforms. There are four pieces that need to be connected to measure the full impact of social media: the social media channel, the company’s website, the email platform, and the customer relationship management (CRM) system.
Sound impossible? Instead of looking for the answer in a social media tool, look at the tools you already have. What do you use to measure web analytics, online advertising campaigns, your email campaigns and revenue? Then ask how you can incorporate social media into the data these tools provide. This is my social media measurement recommendation for under $20 a month. It’s not perfect, but it gets you really close and is the best value I can find on the market.
Excuse #5: ROI Doesn’t Demonstrate the True Value of Social Media
Again, there is a difference between the ability to measure social media ROI and deciding whether or not it demonstrates the value of social media. I would agree that the financial metric of ROI may not tell the full story, however it is a metric that management teams live, eat and breathe. While it may not show the whole story, it certainly can tell a compelling one.
Keep in mind that you can’t measure social media ROI unless you can show the impact on revenue. Connecting to the CRM system is the missing link that is required for true ROI calculations. Companies who collect revenue through an e-commerce system will find it easier to get to revenue than other companies, however it isn’t impossible and I’ve done it with as few as 8 development hours. However, while you are finding a way to connect to revenue focus on costs. Social media typically costs much less than other types of marketing efforts and cost metrics will show a positive impact to the bottom line, while you build the connections you need to demonstrate traditional ROI.
What are your thoughts on social media ROI? Do you find yourself getting in your own way to measuring? What other excuses have you seen marketers use to avoid ROI? Please leave a comment and let’s start a healthy debate on social media ROI.
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