A study by e-marketeer in summer 2009 has discovered that the greatest barrier to entry into social media for companies is not knowing how to measure the return on their marketing investment. If you dip your toe into the blogosphere measuring the ROI of social media is a hot and highly debated topic. What most people agree on is that you must measure the ROI of your investment in social media. Twitter and facebook can be a delightful waste of time if efforts are not targeted.
So, how you measure the ROI of your social media investment… with difficulty… seems to be the answer. Unlike some more traditional forms of marketing and sales, social media isn’t a simple cause and effect marketing mechanism. It can’t easily be defined as PR, sales, customer service or marketing — it can be a combination of all four. For example, Easyjet uses Twitter for customer service. The customer service supervisor at Luton was in touch with me via Twitter when I suggested about using Easyjet for my holiday next year.
There is no definitive answer for the ROI of social media, but there are some things you must complete to evaluate the effectiveness of your investment.
Firstly, you need to decide and agree on what you are trying to achieve with your activity on social media. Is it PR, marketing, sales, customer service — or a mixture of all four? What tangible things are you trying to affect… leads? conversations with potential or existing customers and clients? readership of articles? Traffic to website? SEO?
Secondly, you need to determine how you will measure these objectives. Google analytics, Google Feedburner, Google Webmaster are great free tools that help you measure traffic and subscribers to your site. Numbers of people signing up to your mailing list may be a way of deciding on how well you are engaging people in your brand and site. Number of comments and social bookmarking is an indication of how well your content is engaging an audience — but whether it is the right audience is the question. You can also ask new clients how they heard of you, and why they decided to talk with you.
Thirdly, you then need to measure what you have decided to measure…
Simple really… or is it?
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3 Comments
Heather, an interesting, to the point post that provides a straight-forward perspective on the topic of ROI for social media. I agree, it is neither simple or obvious how this is done when compared to traditional measures.
Great post! In some cases, measuring ROI in the traditional sense (of course, other types of ‘returns’ matter too) seems straightforward – linking Social Media metrics (like followers) to conversions (like sales from a landing page). We just posted on this issue on the SWIX blog, feel free to check it out here: blog.swixhq.com.
Thanks for the comment Rob & Jad – I think that the ability to measure ROI for social media will carry on being a hot topic. Anyone that really cracks how to measure ROI from a ‘pull’ type of marketing, will make a lot of money from it!