When it comes to social media, many businesses now have Facebook pages, Twitter accounts, blogs and YouTube channels, yet they are left wondering, “What’s it all worth?”
Measuring the return on investment from social media is as challenging if not more challenging than measuring traditional marketing for a number of reasons.
Brand impressions differ
First, let’s face it. Many aspects of marketing are difficult to measure. A common quote in advertising states, “I know that half of my marketing dollars are being wasted. I just don’t know which half.” Marketing and public relations, two of the most common functions involved in social media, are notoriously difficult to quantify.
Time-proven metrics for measuring marketing don’t work well in social media. In traditional media the success of a television ad is determined by multiplying a score of how effective the ad is by the reach or number of people who see the ad.
This doesn’t work well in social media because brand impressions are not all the same. For example, there is a vast difference in the level of brand engagement of an individual who passively reads a tweet versus someone watching a two-minute video.
The true reach from social media is also elusive. A study from PageLever showed that only 3 percent to 7.5 percent of brand fans on Facebook actually see branded messages. So while many brands will claim to reach the 5,000 people who have liked them on Facebook, they are in fact only reaching a small percentage of this audience.
That being said, there are a number of strategies that can help assess the potential value from social media marketing:
Direct marketing return
This is the most obvious type of return from social media. It involves looking directly at indicators that social media is driving business. This may include areas such as website traffic, redemptions of coupon codes, leads generated or e-mail addresses obtained.
Customer retention return
Many angry customers don’t get satisfaction from traditional customer service, so they take to the Internet. It is a growing expectation that businesses respond to customers on social media sites.
In working with a company recently, an executive asked me, “We aren’t going to make everyone happy, so what’s the point?” I asked him what the lifetime value of a customer was, and he responded that it was a few thousand dollars. Next I asked how many customers they would have to keep as a result of social media efforts for it to pay out. The answer was one per month.
By using this logic, we can determine if it is reasonable to expect the social media efforts to keep one customer happy and prevent them from leaving.
Similar to the customer retention return, a return on word of mouth can be calculated by looking at the lifetime value of a customer and assuming that because of making the effort on social media, a certain number of incremental referrals were generated from customers. It usually doesn’t take very many of these to start paying off.
Awareness and exposure
Awareness and impressions do have value in marketing online. An old marketing principle known as the Rule of Seven states that it takes seven interactions or impressions with a brand before someone chooses to do business. By having a presence in social media brands can increase the general awareness and impressions of a brand.
The items above are just a starting point. The key to success in judging the return from social media is to fully understand the goals and objectives and then measure your campaign against your objectives.
Don’t hold social media too highly
When evaluating social media, be sure that you aren’t holding it to a higher bar than other media. I spoke to an organization recently and the VP of marketing asked how they should judge the return from social media. I told him to measure it the same way they measure the rest of their marketing. He gave me a funny look and said, “Well, we don’t really measure the rest of our marketing.”
Just because you can measure clicks and traffic, doesn’t mean that those are the only things adding value in your social media.
Be sure to think comprehensively about your social media efforts and set goals up front.
Krista Neher is the CEO of Boot Camp Digital, author of the bestselling “Social Media Field Guide” and an international speaker.