I recently wrote a post where I revisited a number of social media statistics, which attracted a lot of attention. Among all of the feedback one trend stood out: people need more information about return on investment from social media. So I’ve decided to bat a few things around, as it’s quite a complex subject.
We've written extensively about social media ROI in the past, and have also highlighted some social media engagement metrics that should help you. And now, I’ve gathered various opinions from some of the British heavyweights in social media, as everybody has different thoughts about this particular area.
But firstly, if anyone says you simply just can’t get a return from social media, I’d say that’s not true. Investment in the channel isn’t necessarily financial and subsequently, neither is the return. Secondly, I’m also happy to suggest that even if you are looking for non-financial return metrics and it’s going badly, then you’ve either got a poor campaign going, or the channel isn’t right for you. This goes right back to the importance of any initial strategy and planning for your marketing activity.
However, to come back to financial ROI, statistics do exist, other than the usual Blendtec, Dell-Twitter ones that are constantly cited. Unfortunately, there's not enough to even make a half-decent blog-post, but I'm happy to share them with anyone who's interested. I’ve also spoken to a number of UK agencies and companies (confidentially) who are seeing a direct financial return from their efforts in social media. This in itself is great, but also problematic.
The industry is crying out for positive case-studies and I genuinely wonder that by not sharing success stories, the value of social channels may be called into question, the backlash of this being that those operating in this space may lose potential business.
So where are all the case studies and what do my peers within the British industry think?
Joel Davis, CEO, Agency:2
Calculating ROI should be at the heart of any social media marketing planning process. Hard metrics such as sales, conversions and applications should always focus on defined measurements. An approach like this allows for campaigns to be optimised throughout any live programme and it allows marketers the insights to compare channels and their respective performances for future campaign planning. It's worth noting that ROI should not be at the cost of brand reputation. Proper quality assurance should always be implemented throughout every campaign to ensure that both the brand and the results shine through.
Leanne Rinning, Head of Online PR, bigmouthmedia
Conversation around social media and ROI continues to rumble on… however it is well known within the world of search that social media is a secondary driver of traffic - it should therefore come as no surprise that it is difficult to track in terms of monetary value – nevertheless it is not to say that it is impossible... The relationship between social media and search has truly intensified over the past 12 months, both mediums are wholly complimentary of each other.
Virtually all social activity undertaken online will impact what you do for search and vice versa. You need to measure and understand both mediums to appreciate the full benefit. For example, if your social campaign is creating a lot of noise, this could impact how much traffic your PPC campaigns generate, subsequently you would need to adjust bids. Once you have analysed the results of your campaign look at your sales revenue. Look for patterns and trends in order to determine the impact of social media on sales.
Michelle Goodall, Online PR & Social Media Consultant, Econsultancy
In economic terms, ROI is simply defined as ‘the monetary rate of profit or return relative to the money invested.’ Therefore it goes that ROI in social media should simply be defined as the monetary profit or return relative to the money invested... But for some organisations it isn’t just about profit and return and financial ROI. I’m not in the businesses of rewriting established economic terms, so maybe it’s more important to redefine what is the ‘R’ you are looking for when you ask the question ‘how do you measure the ROI of social media?’
To define your ‘Return’ in ROI, ask what value you are looking for from social media and how that relates back to your overall objectives. This is not restricted to monetary profits but also can include operational cost savings, increases in actions, engagements or awareness, a life being saved, etc.
For example, a new agency and established client who are using social media to research and recruit new staff:
Return = Brilliant recruits, financial savings without recruitment agency fees and job ads
Investment = Resource, time and effort
Or a charity using social media channels to build engaged communities of volunteers and fundraisers to spread the word exponentially, increase donations and provide a volunteer workforce:
Return = Increased donations, increased positive word of mouth, static relative staff overhead/costs, savings on advertising costs, 'charity mugger' costs
Investment = Resource, time, effort, training
Jason Ryan, Head of Strategy & Planning, iCrossing
I think that we are rapidly developing better approaches to help us attribute financial ROI to social media channels. In terms of directly attributed ROI, some brands are successfully incorporating eCommerce directly into their owned social spaces; and traffic from social media, and therefore conversion rates, can be segmented using web analytics to get a better view of the ROI of social media initiatives compared against other digital marketing channels.
In addition, some brands are calculating ROI based on earned visibility, e.g. blogger outreach, in comparison to placement through paid media channels. There is still some way to go before we can attribute a return from social media in the research and consideration stages prior to purchase; and also in understanding the lifetime value of an engaged customer. Even when we can attribute direct financial ROI to social, we need to remember that it is about more than this. For example, what is the value of a conversation with, and advocacy from customers.
Katy Howell, MD, immediate future
ROI can be measured in two ways: sales and savings. But like all marketing activity, it is often difficult to untangle from other forms of activity without resorting to direct marketing tactics. This is not always the best option for the brand that is trying to be social. It is often at odds with the need to create dialogue.
It is better to evaluate social media success based on the issues that slow or block the consideration phase in the sales pipeline. This in turn feeds into measurement of the lifetime value of the customer and the power of advocacy. It might be that customers don’t buy because they are not clear on the product, they might think the brand lacks credibility or they have had a poor service previously. Connecting with audience insights and behaviours means clear metrics can be set that tackle these issues and ongoing evaluation can give a clear indication of progress. The end goal is still the same, ROI, but the process allows for conversation, relationships and creation of advocacy along the way.
Peter McCormack, Co-Founder, McCormack & Morrison
It is certainly much easier to track social ROI if you are selling online and treat social media as a DR channel, it is those brands who have no direct online sales channel who are using social media for advertising and word of mouth who will struggle to prove ROI.
Ciarán Norris, Head of Social Media, Mindshare
“You can't measure return on social media” is the standard cry of the social cynic, to which the short response is, yes, you can. The long answer is that you can't measure return if you don't know what it is you want to measure. The problem is that too many people launch social media campaigns with no idea why - "We need to be on YouTube, let's put up an ad - it's had 10,000 views, is that good or bad?"
If you go back to the basics, and I still think Forrester's POST Methodology is as good a place to start as any, and think about who you want to talk to & what your objectives are, then the technology/platform you'll use, and what the right KPIs would be, come easily. It could be brand-minutes (time spent engaging with the content), pass-ons, changes in consideration (which Facebook's Nielsen partnership is starting to really shine a light on) or increases in search volumes and sales. But if you're just doing something because you feel that you ought to, then the only success you'll be able to measure is whether or not your boss noticed.
Lucy Freeborn, Creative Director, Propellernet
Unless the online industry sticks a stake in the ground, demystifies social media and starts measuring what we do in terms of what our clients really care about, sales, we will perpetuate the image of social media as an indefinable and unsatisfactory comms channel. Social media already delivers tangible results in terms of customer care, awareness and reputation management, but in a time when marketing departments are under resourced and budgets come under real scrutiny, clients want agencies to demonstrate clear ROI and actual sales from social media that map back to their business objectives and in any pitch or up-sell situation, this will win you business, it’s as simple as that.
The very nature of social media means that it can be owned by the Marketing, PR or Acquisition leads. Having very clear, demonstrable results that map back into a client’s overall business objectives will enable any client with less experience in social media than you, to see the benefits... Demystifying social media with clear measurement is the easiest way for it to be taken seriously as a part of the online marketing mix.
Andrew Seel, MD, Qube
It is important when considering ROI in social media to treat it as more than just another marketing channel. You need to look at your whole brand. In our experience working with major organisations, we have observed how measuring the impact of social media on customer service, product development, human resources and internal communications in addition to marketing and PR determines the true ROI of social media activity.
Dirk Singer, Head Bunny, Rabbit
When it comes to social media I’m reminded of the saying that it’s dead easy to measure...especially when it comes to measuring the wrong things! The key problems are two-fold. First of all standardisation, everyone uses tools and criteria that are slightly different. Secondly, all too often offline thinking is still applied online.
To take the first point, when someone once asked me to put together the list of 100 European influencers in their area, my reply was that I’d give them *a* list of 100 influencers I consider to be influential based on the tools I use. Rather than being a definitive right answer, I told the client that there were a combination of right answers, mine just happened to be more right than the others! Secondly, too many brands still think in terms of the big number. How many people visited my site and so on? As anyone in this space knows, far better to have 100 people who come and check you out and then do something with the information you give them than 10,000 views that result in nothing.
Adam Parker, Chief Executive, RealWire
Too often calculations of ROI seem to focus on “counting”, not “measuring” and certainly not “valuing”. The number of tweets, views, fans etc are all potentially of value, but in themselves they can’t be used as a sensible measure any more than AVE can. It is how these actions, and their resulting impact, relate back to the organisation’s objectives that must be measured. This means acceptance of the need to invest significantly in planning and evaluation not just engagement itself.
Karl Havard, Founder, Somatica
There has been a lot of talk about what the "I" in ROI should stand for with regards to Social Media. Fluffy terms like "innovation" and "interaction" have been used, most probably to skirt around the real issue, which is payback. It is now very possible to measure financial return due to the advancement of measurement technology.
If an organisation can track the investment associated with time, effort, resources and spend, then return can be accurately associated with this. One caveat is, return is not campaign based, it is a more strategic and hence longer term.
Steve Richards, MD, Yomego
Social media’s contribution should be gauged in tune with a client’s existing measures of marketing effectiveness. In this way, the ROI can be appreciated in tune with other marketing disciplines. This integration will help it to become a longstanding and consistent member of the marketing mix. (So if what matters to you is reach into the right target audience, then measure social media CPM in the way you measure your ad campaigns.
For example, if you want to drive sales, use tools like voucher redemptions to track impact.) Probably the most useful non-traditional measurement tool is tracking a brand’s reputation in social media channels. This will provide a useful barometer for a brand’s popularity among 16-24s. Our Social Media Reputation audits analyse what are people saying about a brand, whether it’s positive and what’s driving those conversations... both good and bad. We know from our customers that brands which have improved their social media reputation scores have seen a commensurate increase in sales performance.
(Image credit: Chris Breeze)