Why Social Media ROI CAN Be Measured – Here’s Why #190

Good marketing includes careful measurement of your return on investment (ROI). But can you do that for social media?
In this episode of our popular Here’s Why digital marketing video series, Mark Traphagen shares what ROI looks like for social media campaigns, and gives tips on what to measure.

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Transcript

Eric: How can you measure ROI from social media?
Mark: First, let’s define what we mean by ROI. Obviously, it stands for return on investment. But a lot hangs on what you mean by the two nouns in that phrase. Now, what is the investment you’re making? And what return are you expecting?
Since ROI came out of the financial world, it’s typical to assume that both the investment and return are in dollars and cents. But there are other kinds of significant investments and returns you can measure.
Eric: So how do you know what the investment and the expected return are?
Mark: Well, that depends on your business goals for social media, which is always the place you should start.
Are you trying to drive sales? Then the traditional dollars and cents are what you should measure. But there are other legitimate goals such as

• Brand Awareness
• Sentiment
• Brand Mentions
• Audiences
• And others

all of which can be driven by social media as well.
Eric: So let’s start with the traditional monetary measurement of ROI. Can that be driven by social media, and what are you measuring exactly?
Mark: The short answer is yes, it can. But only for some types of businesses. For example, if you’re selling a commodity product and competing mostly on the basis of price and you have a relatively short buying cycle.
Eric: Meaning people see the product or offer and tend to either buy it right then or not?
Mark: Right. So in that case, it’s pretty easy to measure actual sales generated from a social media campaign.
Of course, as with any of these measurements, they’ll only be accurate if you set up correct goals in your analytics, and if you carefully tag the URLs in your social posts so you know which actually drove a sale. At the more advanced level you should also be measuring things like lifetime value of a customer.
For more accurate attribution of the role social media plays in bringing you sales, I recommend this guide by David Kutcher.
Eric: Does revenue-based ROI only work for those short buying cycle situations?
Mark: No. It is possible to do some measurement of the situations where it might take many touches and perhaps through different mediums before someone buys. But the attribution gets murkier. The truth is that no analytics set up is going to track and correctly attribute every sale. So in these cases, it’s more important to look at trends. Is the average sale per campaign going up or down?
Eric: Let’s move onto those other non-revenue based ROI investments then.
Mark: Okay. Sure. With these, it becomes even more critical to have a clear idea of what your goal is. For example, if your goal is brand awareness, what does that look like on social? Deeper reach? More engagement with your post? More shares of your content? You need to determine what matters to you and then measure that.
Eric: All right. So that covers the return side of ROI. But what is the investment for things like brand awareness or audience-building campaigns?
Mark: If you’re using paid social campaigns, the ad spend is an obvious part of that. But for any campaign, paid or organic, you should be keeping track of the time your staff spends creating and promoting the social content. The value of their time becomes the primary investment factor.
And before we go, I want to emphasize again the importance of learning how to tag your campaign links using consistent tags and setting up correct goals in your analytics.

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See all of our Here’s Why Videos | Subscribe to our YouTube Channel