How to ensure you are seeing a ROI with your Social Media
One of the biggest problems that digital marketers face is the interpretation of social media metrics and how to determine when social media is worth it. Nearly half of marketers can’t even determine whether social media generated any revenue for their business and as high-profile firms like Procter & Gamble cut digital ad and social media spending, managers are increasingly anxious to see a concrete return on investment (ROI) on their social media spends. This post will help you determine which tools you need to tell if your social program is helping your business.
Defining Social Media ROI
Traditionally, marketers measured the direct cost of launching something on social media, for example the cost of developing a unique post or the cost of boosting a post, and then attempt to calculate how many sales that piece of content has influenced. However, this isn’t the best approach when it comes to social media. When ROI is assessed this way, the investments a customer makes in your brand are ignored. Non-financial outcomes like brand awareness and brand engagement are so important to include in your ROI calculations, but many marketers compress these dimensions simply into followers and post likes, or even worse, ignore them entirely.
The key to incorporating these harder to quantify elements into your ROI calculation is to set clear objectives for what you hope to achieve with social media.
Setting Social Media Goals
Identifying a few key areas of your business that you want to grow and determining complementary social media goals is key. But, your goals should have clear, quantifiable milestones that you can use as a yardstick for your social media performance. Creating tangible goals like “we want 20 5-star Facebook reviews this month” is going to make it easier to achieve them than simply saying “we want our store to have better reviews.”
The goals you pick will also determine which social metrics are most relevant to you. For the above goal, it’s clear that your most important metric will be Facebook reviews.
Facebook, Instagram, Twitter, and LinkedIn all have fairly powerful analytics tools built in. With them, you will be able to easily identify and monitor metrics like:
- Site traffic generated
Some more complex goals that involve tracking metrics across platforms will probably require you to use an analytics platform like Google Analytics or Hootsuite Impact. No matter what, you should identify what you want to achieve before picking metrics to monitor.
Obtaining ROI from Your Metrics
Having determined your goals, the social metrics you need to be looking at and where to find them, it’s time to actually calculate your ROI. In monetary terms, your ROI is simply the difference between your earnings and costs divided by your costs. Traditionally, those amounts are dollar values, but almost no social metrics are reported in dollars. So how do you bridge the gap?
There are two approaches marketers can take. The first is to assign a dollar value to social media metrics and perform a traditional ROI calculation. This can be tricky, because it’s not always clear cut how much revenue additional followers or increased engagement will bring in.
A simpler (and perhaps more natural) method is to avoid assigning a dollar value at all. As an example, if you spent 10 man hours developing a series of posts for Instagram and saw your following grow by 50 over the course of a month, your return would be 5 followers per man-hour. If your following grew by 100 the next month, but you still only put in 10 man-hours on a campaign, each man-hour would be responsible for 10 followers, a 100% increase! Comparing your metrics in this way allows you to avoid assigning a dollar value to your following and makes comparing individual campaigns easy.
Ensuring You See Results
Establishing clear, measurable objectives for your businesses’ performance and consistently measuring yourself against them is the key to ensuring long-term success with social media. Focusing on the social media metrics that directly relate to your goals will also help you avoid falling into the ‘vanity’ metric trap, where followers and post likes take priority despite not actually helping you achieve the results you want to see.
This week’s blog is written by our Marketing Assistant Greg Goulanian, who is currently pursuing an Economics degree
at the University of Victoria.
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