A Practical Way to Measure your Social Media ROI
It's the question that most marketers hate. They've got a finely tuned social media strategy ready to roll out, they've done the hard sell and everyone's on board, and then at the last minute the CEO asks, "What's the return on investment?"
The reality is that there is no silver bullet when it comes to measuring social media ROI. If you look at a typical online conversion funnel, social media is generally considered an awareness and engagement channel, sitting at the top of the funnel, as opposed to a conversion-driving channel at the bottom of the funnel. This means that although not many conversions may be directly attributed to social media, there is a strong chance that social media is playing a role in driving conversions later on in the purchase funnel. Put simply, social media is not getting the credit it deserves. This is why developing a media attribution model becomes important, but we'll stay away from that topic for now and focus our attention on measuring ROI without a full media attribution model in place.
It's definitely not an easy task to measure social media ROI as indicated by an Adobe white paper that says 88% of marketing professionals didn't feel they could accurately measure the effectiveness of their social media campaigns. But that doesn't mean you shouldn't try.
To make life easier, we've decided to share a model that helps you calculate or forecast your social media ROI. At this point it's important to note that there are many different approaches to measuring social media ROI. We've opted for a simple approach that requires some basic inputs from common data sources like Google Analytics (or equivalent) and Facebook Insights. If you've got any suggestions on how to improve our model or use an alternative approach, we'd love to hear them in the comments.Download our social media ROI model here
- Update the model assumptions to numbers that reflect your business and that you're comfortable with
- Update monthly actuals or forecast gains metrics using data sources such as Facebook Insights, Google analytics and call centre reports
- If you can think of any other measurable gains from social media include them in the model
- Update monthly actual or forecasted social media costs
- Review your ROI actuals or forecast
Once you have an ROI figure you should continue to measure and optimise your social media efforts with the goal of improving your ROI.
If calculating social ROI is all too hard for you, then you should at least make sure you're tracking key social media metrics and demonstrating value. Examples of these metrics include social media impressions, downstream traffic and conversions on your website, engagements, sentiment and customers served. If you're looking for an example of a well-structured social media report that demonstrates value to your stakeholders you can downloadour free social media report template here.Ben Howden is Strategy Director at Inlight Media – a leading digital agency based in Melbourne.