Does Social Media Bring ROI?

Does social media Bring ROI?

The debate continues as to whether or not social media brings with it ROI-or perhaps better phrased, whether social media affects the ROI of your online marketing efforts. The reality is we simply don’t know if Social Media has a analytical, fact based ROI but there is significant anecdotal evidence that indicates it does.

In the current market, Social Media is a niche opportunity. It is a fact that social media is being adopted in “niches” or in small, specific departments within a company like Customer Service, marketing department, IT department but not in all areas of the and that is the basic reason why there is yet to be a fact-based proven ROI. In most cases each of these adoptions was driven out of some fear (we have to monitor this, get on top of any negative comments or complaints) or a moral concern (our customers are our lifeblood – so we are going to do this). The investment was probably minimal – perhaps funded right out of the operating budget of the organization where it was used.

The time has now come when companies are starting to talk about the success of using social media and they are being challenged to quantify and prove their ROI claims. Social Media runs on anecdotes, not analysis so this creates a unique problem in terms of proving ROI.  Let’s look at an imaginery example-Peter pies sells 3 million in product from their pie outlet after offering those products on Twitter. That is a great anecdote – but it isn’t analysis. Asking the critical questions:

• What would they have sold without Twitter?
• Was that a 3MM increase in sales – or just 3MM net sales from those links?
• How much did it cost to generate the 3MM in sales and how does that compare to email?
• Is this repeatable – can it be replicated in other parts of the business – and how do you know?

It doesn doesn’t take long to figure out that it doesn’t equate to ROI. It might… but there is no way to prove it without greater analytic detail.

There are always early adapters for whom the initial opportunity is too good to stay on the sidelines. These groups adopt the technology or methodology relying on the promise of good returns and fitting it into their current operating budget. Once they believe they have seen tangible results they try to promote the “win” outside the organization by creating justifications for what they’ve already done. These justifications bring more questions and a desire to take a closer look at the details.

Outside scrutiny happens in two phases:

1. Was it worth it?
2. Can it be done systemically/can it be replicated? – can I forecast a x% increase in metric z if I do this again.

Large enterprises are first and foremost risk management systems. They systemically avoid large risks.

The are two major factors that will likely result in Social Media generating a valid ROI:

1. It is measurable.
2. The unrecognized value of social media far exceeds the recognized value.

Measurability

Social Media is eminently measurable. Rational decisions must be made about what to measure but there is no fundamental barrier to creating valuable measures.

So, how do you determine what to measure about social media? How can you create a fact-based ROI for your social media marketing efforts? What is your goal? Do you want to track how people are sharing your website? Do you want to track a specific social media campaign? Or maybe you’re just interested in trends related to a specific meme or social media phenomenon? Each one requires different tools and different focus. You’re going to focus on traffic statistics if you’re tracking social media website engagement,

Engagement is one metric that is relatively easy to measure. What exactly is engagement? Engagement refers to the attention other people pay to your published content. Content includes things like blog posts, news & articles. Visitors see and read a post, and then because it’s interesting, controversial or perhaps inspiring in some way they get “hooked” and decide to take further action. When you get hooked and act on something you read that is engagement. The action taken by a person is called an engagement event. An engagement event is a singular activity performed using a specific social networking site or application. So as an example we can use a tweet. One tweet equals an engagement event. Essentially an engagement activity is when one person shares your content with someone else online. The problem is in weighting activities because not all engagement activities are equal in importance.

This is where a good social media analytics program can really help you to hone your metrics and analyze the numbers so they become meaningful in terms of ROI.  Unfortunately, until recently there hasn’t been a site which aggregates all of your analytics including social media. In researching the issue of social media analytics in regard to generating ROI a program which stood out as a potentially powerful tool to help you define ROI as well as manage your campaigns to increase traffic and conversions is postrank.com. The one exciting feature of this program is the ability to aggregate and access Google analytics and the postrank social engagement analytics from one location. The ability to aggregate analytics is a step forward in better understanding exactly what is driving traffic and which actions are generating ROI. This site provides the “missing link” between traditional analytics and emerging social media analytics.

Another feature I find interesting and useful is the ability to trend for each unique article over time and to receive in depth detail about each engagement resulting from that article. This allows you to truly hone and focus content while learning to understand your clientele’s responses, wants and needs to increase and grow your following.

Of course you must still know what questions to ask of the data. You must strip down the layers and understand exactly what your traffic drivers are, which driver influences another driver etc. This then is the true process of defining ROI for social media and more traditional marketing approaches.

Conclusion

Social media has a very appealing value proposition in that it creates a backdoor into all other market channels. The ability to build relationship is already proven through CRM (customer relationship management) studies and learning exactly what is appealing to your potential clients and what their needs are gives you an enormous advantage in knowing what to do to capture a conversion (sale). The actual enormity of this advantage is largely still untapped and unrecognized although it is quickly gaining recognition as a very powerful tool. The real work to be done is in asking the right questions to isolate and understand the power of this value proposition in terms of actual ROI.

So, to sum up there is plenty of anecdotal evidence to support the assertion that social media campaigns do generate ROI and we are beginning to see efforts at proving that ROI with facts. How? There are tools now to help you in the form of analytical sites that are focusing on measuring the quantity and quality of social engagements (events) as well as providing an aggregation of both traditional and social media analytics. With these programs and the analytical ability to ask the right questions of the data you can begin to objectively prove whether or not your social media campaigns are delivering ROI or not.  It isn’t easy, but it is doable.