Redefining ROI for Social Media
As more businesses begin to see that social media is not a fad that will pass in the near future, businesses are no longer questioning the use of social media. Instead, businesses are questioning how to utilize social media correctly.
“It was all built on the premise that brands had to be there because this is where everybody else is,” said Debra Aho Williamson, an analyst at online ad metrics firm Emarketer Inc. “But now those companies are asking themselves, ‘Well, what do I do next?'”
A recent survey by Wildfire, stated that over 97 percent of the marketers who were interviewed believed social media is beneficial to their business’ success. However, a debate has erupted over how to measure social media success and return of investment (ROI). The Wildfire survey went on to state that 38 percent of marketers measure social media ROI in terms of likes, comments and interactions,15 percent measure social media ROI through increased brand awareness, and 24 percent measure social media ROI based on increased revenue.
Many businesses are no longer following the original definition of ROI when it comes to social media. The mathematical equation to measure how effectively a business uses capital to generate profit does not fit into the digital world. Instead, businesses are moving toward the use of analytic tools such as Google Analytics and HootSuite Pro in order to measure non-financial ROI.
“In my business, it’s crucial to use analytic tools to measure what your client defines as being successful,” said Amanda Pensack, Founder of Roxy Digital Group. “This includes web hits, re-tweets, comments, likes, follows, and ultimately how many people are engaging with you via social media.”
In order for businesses to get the most out of social media, Jason Falls, founder and CEO of Social Media explorer, says businesses must understand that social media offers businesses the ability to communicate with their audiences.
“If your goal is to participate in the conversation, to enhance your relationship with your audiences and become a trusted member of the community that surrounds your brand, then your measures should prove you’ve done those things. Your ROI is what you got out of the conversation, not what you got out of their checkbook,” said Falls.
Other social media specialists and PR professionals believe that social media itself is not measurable. However, interactions on social media platforms can be measured. Oliver Blanchard, author of “Social Media ROI,” believes that engagement and conversations cannot be measured and do not show if the business is succeeding. He feels that businesses need be asking the right questions. Blanchard says most businesses are concerned about the ROI of social media, but instead they should be concerned about the ROI of a certain activity through social media.
“[Social media’s] value to an organization isn’t measured primarily in the obvious and overplayed likes, followers, retweets and clickthroughs, or even in impressions or estimated media value,” said Blanchard. “Social media’s value to an organization, whether translated into financial terms (ROI) or not, is determined by its ability to influence specific outcomes. This could be anything from the acquisition of new transacting customers to an increase in positive recommendations, from an increase in buy rate for product x to a positive shift in sentiment for product y.”
Though social media ROI can be hard to measure, Krista Neher, author of Social Media Field Guide and CEO of Boot Camp Digital, has discovered four ways to measure social media ROI. The following is her approach to measuring social media ROI:
- Measure the value of a customer’s lifetime commitment to the brand.
- Measure the amount of traffic social media brings to the brand’s website and compare it to the price of an advertisement.
- Measure the number of upset customers that were not lost because of communication through social media.
- Measure the number of people exposed to the brand through social media who then share information about the brand to others.
Universal Measurement for Social Media ROI
At the AMEC’s 4th European Summit that took place in June, the discussion was based around creating universal measurements for social media that will be used globally.
“I believe we have started to lay out a clear roadmap on a path towards global standards,” said Richard Bagnall, Insights & Analytics Director, and Chair of AMEC Social Media Measurement Group.
However, many PR professionals do not believe a universal measurement system will be successful.
“If I had the solution to measuring social media, I don’t think I would automatically share my insights,” said Taylor Smith, owner of Distinct Media Solutions LLC. “It is definitely something a PR professional could make a ton of money on, resulting in huge ROI for themselves.”