Barriers to Measuring Social Media ROI
Many marketers say that measuring the ROI of social media
campaigns is important, but 70% of marketing professionals
in a recent poll said their companies aren't doing a good job
They cited the following as the biggest barriers:
• Lack of dedicated resources to do the measurement and analysis: 30%
• Don't know what to measure: 25%
• Social media isn't primarily about ROI: 20%
• Lack of tools: 14%
-- Mitch Betts
Source: MarketingProfs.com informal poll of 338 marketing professionals, June 2009
Social Media ROI – The Bottom Line
As more businesses begin to embrace social media, it’s becoming obvious
that measuring the positive and negative impact from social media campaigns
is as important as measuring any other strategy.
Social Media should be treated as part of an overall marketing and
communication plan and, as such, should be measured and monitored along
with all other marketing and communication activities.
Social media might be a different way of connecting with customers, but the
ways that you can tell if it is successful or unsuccessful are the same as
There isn’t a magic bullet, and having a Facebook Page won’t make your
business instantly more profitable. By defining goals, setting a baseline, and
tracking and correlating actions to results, you can figure out what works, what
doesn’t, and ultimately figure out what solutions are worth investing in, and
what options need to be altered or set aside.
Investment & Return Relationship
Action This is not ROI but is essential for
financial return to occur
Major savings on PR, Advertising
Non-financial and Customer Service can occur
Impact here and lead to non-traditional
Social Media ROI Options to Consider
• Internal platform metrics
– FB fans, Twitter followers, etc…
• Branding and Engagement
– direct brand mentions
– links with brand related anchor text
– branded search volume
• Targeted responses
– special promotions with direct responses
– intercepted dissatisfaction and other CS opportunities
• Making comparisons
– how mentions and referrals equate to AD/PR dollars
• Actual Sales and Profit
– consider all metrics and social media’s place in overall marketing plans and find
a way to quantify impact
Social Media ROI Approach
• Establish concrete goals
– what do you want to accomplish
• Establish concrete baselines
– sales trends, registrations, referrals, etc…
• Monitor baseline metrics
– Look for exceptions (pos or neg) that coincide with SM activity
• Use comparisons to evaluate non-traditional ROI
– do leads/sales generated from SM compare favorably to other
acquisition budgets being spent
– is SM bringing customer service costs down, etc…
• Calculate traditional ROI metrics from the data
– average increase in leads (actual)
– cost per lead ($)
– lead conversion to sales opportunity (%)
– opportunities converted to sales (%)
Social Media ROI Examples
• “Company A’s” total investment for social media programs (including
internal technology costs): roughly $4,000 per month
– total sales leads generated in April, May and June: 72
– average sales leads per month: 24
– average cost per sales lead: $125
– lead conversion to sales opportunities: 11.1%
– lead conversion to closed deals: 2%
• in the case of this company, due to the average price of their products, 2 or 3 sales per
month was more than enough to pay for the entire SM campaign
• Lee Odden, from Top Rank Marketing says his firm derives about 15‐20
major media mentions per month from social media which he estimates
equates to paying a PR firm $10,000/month
10 ROI Data Points for SMM
1. Traffic: This is one of the more obvious ways of measuring social media.
Remember that quality often beats quantity.
2. Interaction: Participation is a valuable indicator for many brands. It says something
about the kind of traffic you are attracting. Remember that an engaged customer is a
highly valuable one. Interaction can be anything from leaving comments, to
participating in support forums, to leaving customer reviews and ratings.
3. Sales: If the ultimate goal is sales, set a baseline and monitor trends for
exceptions due to a social media campaign. Dell did, and discovered that it made
$1m from Twitter in 18 months. Blendtec’s ‘Will It Blend?’ campaign on YouTube
helped to drive “a five-fold increase in sales”.
4. Leads: Sales isn’t the only thing to think about. Some companies simply cannot
process sales online, because their products or services do not allow for it. For
example, the automotive industry, which tends to measure the effects of its online ad
campaigns by the amount of brochures requests, or test drives booked (as opposed to
car sales, which is, in marketing terms, an altogether more macro effort).
10 ROI Data Points for SMM cont.
5. Search marketing: The SEO factor cannot be understated. Social media can be far
more powerful in this regard than you might initially imagine. For example, a well-
placed story/video/image on a site like Digg will generate traffic and a nice link but it
may generate interest beyond that. Bloggers and major publishers are now
following channels to unearth new and interesting stories (Sky News now has a
6. Brand metrics: Word of mouth and the viral factor (inherent in sites like Twitter and
Facebook) can help shift key brand metrics, both negatively and positively. These
include brand favorability, brand awareness, brand recall, propensity to buy, etc.
Expensive TV ads are measured in this way, so if these metrics are good enough
for TV then they’re surely good enough for the internet.
7. PR: The distinct worlds of PR, customer service, and marketing are fusing. Twitter
means everybody has a blog these days, and somewhere to shout about things to their
friends (and beyond). Social media sites are the biggest echo chambers in the
10 ROI Data Points for SMM cont.
8. Customer engagement: Given the prevalence of choice, and the ease with which
consumers can switch from one brand to another, customer engagement is one of the
most important of all metrics in today’s business environment. Customer engagement
is key to improving satisfaction and loyalty rates, and thus revenue. By listening to
customers, and letting them know that you are listening, you can improve your
business, your products, and your levels of service. An engaged customer will
recommend your brand, convert more readily and purchase more often.
9. Retention: A positive side effect of increased customer engagement - assuming
certain other factors in play work in your favor - is an increase in customer retention.
We are moving into an age of optimization and retention. Watch your retention
rates as you start participating in social media. Over time, all things remaining equal,
they should rise.
10. Profits: If you can reduce customer churn, and engage customers more often, the
result will surely be that you’ll generate more business from your existing customer
base (who in turn will recommend your business to their network of friends, family, and
social media contacts). This reduces your reliance on customer acquisition
budgets to maintain or grow profits.