Social media ROI measurement an imprecise science
Measuring the returns on social media investment (ROI) is tricky, and a single formula can't be applied across the board, says Lara-Lee Magnus, MD of Second Floor Consulting, which specialises in social business and marketing strategy.
Magnus says the financial departments of organisations tend to want to see the exact returns on social media investment. However, ROI will be measured differently according to each campaign and its desired outcomes, and an overall ROI is difficult to track and quantify.
"We need re-education in the business world," says Magnus. "Business is the result of a transaction, which is always the result of an interaction. These interactions are fundamentally social. So, at its core, business is fundamentally social."
Magnus notes that many organisations view social media with suspicion. "Social media may appear 'fluffy' to them. It is very new, and they need to develop an understanding of the value these platforms of engagement can offer. Our focus is always on engagement value - having a place where people using your product can contact you easily without using their phones. It's about customer engagement, satisfaction and delivering interesting content."
The investments required for social media presence and campaigns include the cost of staff, and paying for advertising and promoted statuses, graphic design, and content generation, Magnus says. It may also include the cost of partnering with an agency to drive the campaigns.
To measure social media impact, companies need to have predefined goals. "Your objectives must be clearly defined," Magnus says. "Was the campaign intended to grow a following, drive people to your site, increase sales or simply create awareness? In some cases, such as a campaign staged only on social media for a limited time, relating to a competition or special offer, it is relatively easy to assess its impact. With a longer term, general social media presence, it is more difficult to assess ROI."
Magnus says while some organisations may be able to ignore social media in the short term, "in the long term, nobody can afford to ignore it. Generation Y will soon make up the majority of the buying market, and they expect immediate responses, exceptional customer service and engagement with brands. Social media extends to internal business communications too, with traditional hierarchies breaking down and immediate interaction increasingly important. So whether companies can see the potential ROI or not, they cannot afford to ignore social media."
Magnus will address the upcoming ITWeb Social Media Summit on the subject of "Measuring the magic that social media can deliver", with insights into ways to measure the impact of campaigns on various platforms, and advice on defining social media objectives. For more information about this event, click here.