{{ searchResult.published_at | date:'d MMMM yyyy' }}

Loading ...
Loading ...

Enter a search term such as “mobile analytics” or browse our content using the filters above.

No_results

That’s not only a poor Scrabble score but we also couldn’t find any results matching “”.
Check your spelling or try broadening your search.

Logo_distressed

Sorry about this, there is a problem with our search at the moment.
Please try again later.

Owing to the lack of KPIs for social media channels, businesses have struggled to define the metrics to measure return on investment. Although, measuring ROI of any communications effort is relative to the aims and objectives of your social media strategy, there are plenty of universal metrics applicable to the social channels.

This post highlights a few important metrics which help in formalising a marketing strategy for social media.

I have attended a number of digital and online marketing conferences and have witnessed a good deal of presentations by experts on social media marketing. A number of these presentations have devoted significant amounts of time to explain the quantification and measurement of social media channels from a business perspective. 

Clearly, social media channels do not immediately present themselves with a clear return on investment which makes it tricky for businesses to adapt a fully integrated social media strategy.

While the interest in participation grows exponentially, marketing managers are forced to quantify the investment into social media channels. I was present at Bigmouthmedia and Econsultancy’s Social Media Summit recently, which witnessed the launch of the Social Media and Online PR Report.

During the event, there were a number of references to businesses which are in the vanguard of creating social media models and have excelled in reaping the benefits. For businesses which have been skeptical, there are a few reasons why incorporating a social media channels can help their long term goals.

Social media can help strengthen the company’s brand perceptions among its stakeholders. Discovering measurement metrics for social media is a bit tricky as effective quantification challenges the traditional approaches of measuring return on investment.

Ever since Dell announced that its revenue from social media alone accounted for $6.5 million, it has remained the poster child for Social Media success. However, if you were to look at Dell’s overall revenue, which was recently announced as $60 billion, $6.5 represents an extremely diminutive share, but, important nonetheless.

So the key question here is how do you measure ROI for social media? Can this be associated with a monetary value?

The social media realm itself is extremely vast. From the earliest days of Delicious to the very recent Apple Ping, everything has been invented and re-invented to entice classes and masses. While some platforms have been pursued for creative interests, almost all platforms have gained commercial emphasis due to participation of businesses.

So rather than focus on every individual social platform, let’s look at some important metrics for a few prominent platforms in use today, which could eventually lead to a propitious ROI. Alternatively, you could mark these metrics as the ROI for each individual channel.

Social Media Measurement Metrics

Each of the highlighted metrics from the table above, are easy to quantify and establish and objective for. Based on these objectives, businesses can craft a strategy specifically to develop social media channels, which reinforces the company’s image gradually.

In summary, we might not see an increase in market share for a business due to an overwhelming social media presence, but on a long term, social media provides an opportunity or a platform where you can stand and deliver clear but concise messages about the brand.

How creative a business is while delivering these messages defines how lasting an impression it leaves among its customers. Eventually, it is on this impression, businesses gain an advantage to build those brand perceptions and awareness which can help to galvanize and sustain growth. ROI does matter for social media.

Adarsh Rangaswamy

Published 11 October, 2010 by Adarsh Rangaswamy

Adarsh Rangaswamy is a Digital Marketing Manager at Millennium & Copthorne Hotels and a contributor to Econsultancy. The views expressed in this article are those of the author and do not necessarily represent those of his employers.

1 more post from this author

Comments (24)

Comment
No-profile-pic
Save or Cancel
Guy Stephens

Guy Stephens, Social Customer Care Consultant at IBM Interactive Experience/GBS/MobileEnterprise

Enjoyed the article, many thanks for the insights. Just a quick thought. I'm wondering whether there is in fact a real or perceived lack of KPIs, or if we simply aren't sure how to apply what we've got, because we're unsure where social falls, depending on where we sit within a company. Do we apply too many layers to it, and end up trying to do too much and asking too much of our metrics/KPIs.

I come at social from a customer service perspective. There is absolutely no shortage of KPIs, metrics etc. What exists, however, is a lack of clarity on whether social media within this context is about customer service, PR, marketing, brand reputation etc.

Perhaps we simply need to be clearer in our minds what it is we are trying to do with social.

almost 6 years ago

Adarsh Rangaswamy

Adarsh Rangaswamy, Digital Marketing Manager at Millennium & Copthorne Hotels

Hello Guy, Absolutely. It's a clear lack of clarity when it comes to identifying the KPIs. One of the issues most businesses have is the lack of defined objectives. While pursuing a social media strategy, it's important that we identify the objectives and set benchmarks based on which we could measure. While the the list of KPIs itself is not exhaustive, I believe that it is a good starting point. Ciaran, many thanks for pointing this out. I agree IAB's measurement framework is much more detailed.

almost 6 years ago

Guy Stephens

Guy Stephens, Social Customer Care Consultant at IBM Interactive Experience/GBS/MobileEnterprise

Two to three years! Who knows what the landscape will look like then. If we translate that into cat years, that's about 24-28 human years. 

almost 6 years ago

Avatar-blank-50x50

Reuben

Nice article, Adam. IMO I believe the tie in for Social Media ROI is linking activity to revenue. By using campaign codes on links to your site you can see directly the revenue produced. If you also import data such as Facebook likes and Tweets you can trend and compare to other KPIs.

almost 6 years ago

Avatar-blank-50x50

Gabriele Maidecchi

Measuring the monetary returns of a social media activity has always been the most daunting task of social media, and a true nightmare for managers having to deal with it. A necessary evil but also a pain to justify to the management. The metrics you suggest are good but they are often not linked to a real return in money. Still good for managers with an open mindset, but people used to measure any investment with a tangible return might have some more problem accepting those numbers.

almost 6 years ago

Avatar-blank-50x50

Evan

I don't think companies should even try to quantify their social media efforts, they should do social media really well...period. I really liked the article. It's easier for a large retailer to do revenue through social media since they already have the loyal costumer base and if they get everyone in their social channel and then run some nice promotions or contests they will do revenue through those efforts. Smaller companies have to hustle harder to get revenue our of the social channels but should keep trying to do it bigger and better all the time. Doing social media right is worth it's weight in gold so stop trying to measure it and put good resources, staff, and funds in that direction. The people looking at the statistic should be posting content and interacting. I see a lot of companies putting interns on their social media, would you let them handle your PPC? Hell no. I personally love FB fan page advertising and for selling product if you convert well. Blogging and content is a must and having nice and friendly people managing it! Response is everything so it has to monitored for replies, likes, comments, retweets, so those people can be thanked and replied to asap. Building relationships though social media management is crucial otherwise it's a waste of time and money. I think content and friendly interaction are the most important aspects....

almost 6 years ago

Avatar-blank-50x50

James Hobbis

Case in point, movie fan sites. All major films have them, and because most films are effectively new brands they start with zero fans at some point prior to premier night and grow until the film becomes old news. For all that effort 40,000 likes at premier date is the (disappointing) norm. But should that be disappointing? Every like implies 130 mentions in the streams of friends (the average FB user has 130 friends). Every like improves the potency of social adds by raising the opportunity name a friend in the social ads presented to prospects. But despite this intrinsic value of likes, they are really a proxy for box office sales. Now if you could sell tickets of the fan page you'd have something close to a credible ROI. Could that approach apply to other goods?

almost 6 years ago

Avatar-blank-50x50

Stef

Hey Ciaran, thanks a lot for sharing the IAB presentation. This is finally a usable guide with meaningful and actionable insights/proposals - so actually what I hope to find in many the articles and reports on SMO these days here. It is quite interesting how many consultants today seem to think they can get away by the basic counting of raw numbers. However, I would appreciate some more insights in the opengraph protocol and how this might change the future of performance marketing and maybe even SEO.

almost 6 years ago

Avatar-blank-50x50

Brendan Cooper

I just don't 'get' this debate about ROI. Surely it's fairly simple? You just figure out how much business came in through social media and then divide that by the amount of time you spent on it. If you don't know either of these figures then you're not running your business properly.

I think the real problem lies in comms as a whole: for far too long people haven't been quantifying the return on their investment, whether in PR, advertising, etc.

One thing I definitely take issue with here is the metrics you're quoting. These are not KPIs. Until/unless you actually plough something back into the business, the number of followers you get on Twitter, or the number of subscribers to your blog, or the number of Likes in Facebook, means diddly squat.

almost 6 years ago

Adarsh Rangaswamy

Adarsh Rangaswamy, Digital Marketing Manager at Millennium & Copthorne Hotels

Evan, James, Brendan, many thanks for your thoughts. As, Chris Lake points out making meaningful sense of social media engagement will take time to evolve. Until then, the approach to measure social media is subjective to the strategies as it only associates intrinsic values. I am in complete agreement with your views, but measuring likes and mentions shows the awareness a business has been able to create, particularly when communicated in positive light. It's more of evangelist marketing where social influence plays a key role, hence the metrics is a starting point.

almost 6 years ago

Avatar-blank-50x50

Nan Dawkins

How do you measure the ROI of social media?  To build your measurement framework , start with your buy cycle.  What metrics do you normally look at to determine level of awareness, engagement with the brand, conversion to a purchase or lead, customer retention and finally, brand advocacy.  There are plenty of available metrics that are good indicators of social media success in each of these stages (however, you'll need several sources of data -- web analytics, monitoring data, and channel data, i.e., twitter data, fb data, etc.).

Can it be associated with a monetary value?  Yes...BUT:

1.) Tying a hard conversion to a marketing input is only one way of associating monetary value.  We've always looked at cost metrics that relate to brand and we can extend those same principals to social (cost per unit reached in various channels, cost per engagement, cost per mention, cost per active fan, etc.). 

2.) We are no longer living in a world (er...were we ever?) where the impact of a channel can be fully isolated.  We can't even truly do that with search.  That doesn't mean that measurement isn't possible.

I'll be giving a presentation on this exact topic to the Mutual Fund Education Alliance in Chicago next week.  Happy to share it with anyone who would like a copy.

almost 6 years ago

Tony Wood

Tony Wood, Director at X Factor Communications Ltd

Yep have to day I agree with Ciaron. This is all sensible enough stuff but I feel we're now at the point where far deeper analysis of social media marketing ROI is needed. Thanks to for link to IAB paper which I hadn't seen before

almost 6 years ago

Avatar-blank-50x50

Gareth Irvine, Head of E-commerce at Ted&MuffySmall Business

I think that if you begin Social Media activities with an ROI in mind then you're approaching it from completely the wrong angle and setting yourself up to fail. All that is important is:

1) Having a good product (because if you don't and you attempt to stick your head in Social, you will get found out).

2) Enabling conversations about your brand in the places where your customers are already talking.

3) Be utterly and authentically yourself. In exactly the same way as you would on your own Facebook page, or in your own tweets.

No number crunching, no "influencing", not even "brand building". Social Media is bigger than any one brand, and arguably bigger than internet retail. Just be there, and let the quality of your product do the work.

Gareth

almost 6 years ago

Joseph Buhler

Joseph Buhler, Principal at buhlerworks

The ROI issue keeps coming up in an increasing number of posts across sites dealing with the social web and at conferences. It certainly is a legitimate topic but I can't help but get the impression that social media is expected to produce immediate financial ROI when it really is an activity that - as Gareth correctly mentions above - is bigger than commerce. It's like asking what's the immediately measurable ROI of friendly customer service, attractive offices, a corporate culture and policies that are conducive to make employees happy about what they do, or even perish the thought the ROI of the CEO's compensation package? Engagement on the social web is about a long term commitment that produces results from a set of actions taken in concert with others based on overall objectives. The results from such an approach to doing business will be evident.

almost 6 years ago

Avatar-blank-50x50

Ehsan Khodarahmi

Great article and indeed insightful comments. 

Social Media needs us to have a different approach to it when it comes to marketing and business practice; as some of you put it very well too. If Social Media was about (purely) ROI and business KPIs, it would be named Business Media; so it is all about being social.

If one wants to be accepted in the society, he/she got to be honest, transparent and truthful in their communications - such behaviour/attitude would generate interest in others to do business with you. Then I think we can talk about ROI. The main issue in the Social Media real is, almost every business is handling the medium with traditional approach and techniques. It is a new era, we need to adopt a new approach.

almost 6 years ago

Joseph Buhler

Joseph Buhler, Principal at buhlerworks

Agree with Ehsan. We should resist the attempt to shoehorn social web engagement, and I use this expression rather than social media marketing on purpose, into the old measurement paradigm. I'm all for accountability of actions undertaken but the measurement needs to be tailored to the tasks. The results can and need to be measured against defined objectives but as we don't measure volume with a yardstick, we should use appropriate tolls to measure social web activities.

almost 6 years ago

Avatar-blank-50x50

Stuart Bruce

Good discussion on KPIs and metrics, but can someone explain to what it has got to do with ROI? Return on investment has a very specific meaning and it isn't to do with visitors, comments, fans or any the various metrics listed. ROI or return on investment is is the ratio of money gained or lost on an investment relative to the amount of money invested. It's MONEY. It's vital to measure and evaluate social media, it's no different to any other form of marketing communications, and there are lots of valuable KPIs that can provide insight and help us to do it better. But don't delude ourselves that it is ROI and worse lie to clients about it. We can't measure true ROI of social media anymore than you can from TV, billboard advertising or media coverage.

almost 6 years ago

Joseph Buhler

Joseph Buhler, Principal at buhlerworks

@Stuart: Agree completely. The term ROI is being used very liberally in connection with social web marketing or marketing in general. The ROI of marketing has been questioned by more than one CFO I have worked with and my response usually was, OK, let's stop all marketing activities for a year and see what the financial results look like then. That usually ended the ROI debate. All corporate marketing activities are conducted to ultimately generate sales and for some, e.g. direct mail, the effect is more immediate for others like brand advertising or PR - and now social media - it is less immediate. If there is no measurable effect whatsoever the activity won't be funded. To avoid that appropriate KPIs and metrics need to be developed and used.

almost 6 years ago

Adarsh Rangaswamy

Adarsh Rangaswamy, Digital Marketing Manager at Millennium & Copthorne Hotels

@Joseph, Absolutely right, traditional ROI measurement is insufficient in today's dynamic social media environment, which is why we need metrics that measure customer engagement. These Metrics, however, do not necessarily translate into immediate monetary benefits. Measuring customer motivations offers longer term returns as they shed light on marketing outcomes. Motivations through visits, tweets, likes etc show engagement levels that can easily be associated with the marketing strategies. These metrics are definitely debatable and vary with the objectives set for social media campaigns.

almost 6 years ago

Adam Lewis

Adam Lewis, Managing Director at immediate future

Adarsh, Thanks for your article - some good thinking there. I agree with Ciaran that the IAB model is a good place to start. Also agree with the comments about what ROI really means. I just wanted to throw something out there: Ultimately, the ROI measurement of ATL TV for a new FMCG product (for example) is partly about the correlation of potential audience viewership with an uplift in sales of x product. You hope to see a link between the two. The problem is that social media spend at the moment is so low in comparison with most ATL that it will not move the dial. Any uplift can't be very easily isolated to social media. However, if a brand replaced a £1m TV campaign with £1m investment in earned social media engagement would we be able to see a clearer correlation and hence a better sense of the financial ROI?

almost 6 years ago

Avatar-blank-50x50

Brett Relander

In my opinion branding is and should be a bi-product of your social media strategy. Branding is important long term, but let's be honest, no one wants to own a great brand that has shitty revenue & profit #'s. I would gladly own a brand that 99% of people have never heard of if it's revenue model is performing and the profit margin is through the roof. Is there a connection....sometimes......and "Yes" I would prefer both. ROI certainly does matter for social media and should matter for all marketing & advertising efforts. You must establish a "score card" that defines your core objectives and then measure your success against those metrics. In most cases a social media campaign is best evaluated by its reach and conversion of that audience to website visitors. Once you get them to your site it's your job to grab their attention, communicate the value of your product/service, and call them to action with a compelling buying proposition. Lastly, for those of you who want to know why it's important to be actively engaged in various social media sites, I'll tell you this. If you want to compete in the marketplace the need for a strong social media presence and tactical plan are as important as having a website. @BrettRelander

almost 6 years ago

Avatar-blank-50x50

40deuce

Great article Adarsh.

I agree that every company is going to have their own definition for ROI through social media as there are so many ways it can be used, so all goals will be different. The important thing that companies need to remember is that they need to decide on what means ROI to them and not use someone else's deffiition.

That said, in terms of measurement of social media efforts, while everyone will have different goals, you chart has some great metrics that almost everyone should be interested in for their company.

Cheers,

Sheldon, community manager for Sysomos

almost 6 years ago

Avatar-blank-50x50

Olivia Landolt

Good article and some great comments and conversation.

This debate does resurface all the time wherever you go, and I do think it’s an important one. I also think that we need to understand that there is a distinction between hard metrics and soft ones. Whether you are measuring income or return on engagement, if your goals aren’t clear the lines can get blurred and so can your measurement and your reporting.

From personal experience, the goals and objectives as well as the tools you use make all the difference. With that comes the need for clear processes and a comprehensive CRM system amongst others which can then work across marketing, PR and customer service. 

Olivia Landolt

@Olivia6C, Marketing and Community Manager

6Consulting | UK authorised Radian6 partner 

almost 6 years ago

Avatar-blank-50x50

Paul Herwarth

Dear Adarsh, great post! While some of the metrics you mentioned in the article are easy to measure, some are not. That's the hard part in social media measurement. ;-) As Chris mentioned above the analytics tools will improve over time and make it a lot easier for all the people out there. Greetz Paul TwentyFeet.com

almost 6 years ago

Comment
No-profile-pic
Save or Cancel
Daily_pulse_signup_wide

Enjoying this article?

Get more just like this, delivered to your inbox.

Keep up to date with the latest analysis, inspiration and learning from the Econsultancy blog with our free Daily Pulse newsletter. Each weekday, you ll receive a hand-picked digest of the latest and greatest articles, as well as snippets of new market data, best practice guides and trends research.