In this the blog the question ‘Can you measure the return on investment (roi) for social media’ will be explored. If you are unfamiliar with the the concept of the finding the roi from social media, or need further clarification, the following video should address most issues:
https://www.youtube.com/watch?v=xMAr_gKRQmI
For businesses, measuring the ROI on social media is arguably very important, after all if your putting money into advertising or building a presence on social media site then you want to know whether its making you a return (Arno, C. 2015). Unfortunatley however ascertaining whether you are getting a return can prove tricky, according to forbes (2013) 88% of 750 marketing proffesionals did not think they could measure the effectiveness of their social media campaings, further more 52% stated there biggest frustration was trying to work out the ROI.
Some argue that the ROI simply cannot be done, and like alternative advertising methods, such as billboards, the only thing you can do is hope for the best (Wordstream, 2013). However there are sources out there which offer guidance to try and quantify the activities on your social media which may lead to an answer; Forbes (2013) offer three methods to do this, using:
- Metric tools, such as conversion rates
- Interactions, analysing the ‘likes’ of your posts, plus taking into account the friends of the users who were exposed when they liked your post.
- Analysing traffic, such as analysing your website analytics against the Pay per click (PPC) campaigns
Hoffman, D.L. & Fodor, M. (2010) argue that most approaches organisations take to work out the Roi, are the wrong way to go about it, and further states that to work out the return the ‘traditional ROI approaches should be turned on its head’. The argument put forward is that instead of calcuting the returns through the consumers responses, they instead should consider the motivation for consumers using social media and then measure the social media investments they make with a company. To put this in context when working out the reutrn for the investments there are 3 factors,as follows:
- Brand awareness (no.of ; followers, impressions, reviews/ratings)
- Brand engagement (no.of; Comments, active users, likes rate of activity)
- Word of mouth (frequency of appearance in timelines, no. of; posts on walls, reposts/ shares)
Roi is important for any individual or business wanting to quantify the benefits they recieve from investing on social media. Two different approaches have been looked at, but even using those solutions can be; tricky, costly, and the result may still not give a definitive answer. However the best course of action is to concentrate on the metrics which can be quantified, such as the click through rates (CTR), which google analytics is an effective and free tool which can be used to do such things. Further metrics include the number of followers, likes, retweets, shares etc, although this wont give you a complete picture as to the return on your investment it will give you an idea, to some extent, how well the campaign is doing (Arno, C. 2015).
References
Arno, C. (2015). Is It Possible to Measure Social Media ROI?. [online] ClickZ. Available at: http://www.clickz.com/clickz/column/2339947/is-it-possible-to-measure-social-media-roi [Accessed 28 Apr. 2015].
Forbes, (2013). CapitalOneSparkVoice: How To Measure Your Social Media Return On Investment. [online] Available at: http://www.forbes.com/sites/capitalonespark/2013/04/25/how-to-measure-your-social-media-return-on-investment/ [Accessed 28 Apr. 2015].
Hoffman, D.L. & Fodor, M. 2010, “Can you measure the ROI of your social media marketing?”, MIT sloan management review,vol. 52, no. 1, pp. 41-49.
Wordstream, (2013). Measuring the ROI of Social Media | Wordstream. [online] Available at: http://www.wordstream.com/blog/ws/2013/04/25/social-media-roi [Accessed 28 Apr. 2015].