Measure Your Money – Calculate Return of Investment on Social Media Marketing


Many companies and executives are finally starting to all join the social media network frenzy because of the effective reach that it has on consumers and the ability to touch thousands of people at one moment. However, in order for the social branding tools to really work for everyone, brands need to evaluate the impact that it is having on their company, and customers, in a tangible way. To accomplish this, the social media ROI (return on investment) needs to be measured, which can be somewhat difficult and confusing to do. As long as you can remember the steps and pointers that researchers have discovered, then you should be able to see exactly how effective the turn out of your investments in social media are.

ROI is defined as (gain on investment-cost of investment/cost of investment), with the expectation of investing less than you will actually get in return. ROI is a business metric, not a media metric, so it will prove legitimate results. Oliver Blanchard, a BrandBuilder Marketing principal and senior strategist has done extensive research into Social Media ROI and reveals some clarification into how this is possible to measure. Something important to remember that he points out is that social media is not free; it takes time, energy, people, and technology to be carried out. There are two large and fairly simple reasons why it is necessary to allocate money for spending on social networking within the company. First, it will result in cost reduction in customer service, business intelligence, and market research, just to name a few. On the other hand it will simultaneously generate greater revenue by yielding more transactions, more net new customers, enhanced customer loyalty, and brand awareness.

At first the generation of revenue from the allocated resources used on social media may not be visible from a business perspective, even with an increase of hits on the website, more Facebook fans, or twitter followers. The financial benefits may not appear overnight because there is a process that it must go through in order to reach this point. In order to measure ROI with social media you must first make the investment, then take action by utilising it, observe a reaction from consumers, experience the nonfinancial impact where there is potential (including website visitors, social mention, impressions, Facebook friends, YouTube videos, positive and negative press…) and then finally comes the financial impact where the ROI is measured and has actualised potential. It is important to not solely rely on numbers, but what they end up leading to. Finding trends and tracking them back to their point of origin is the key to measuring ROI.

According to Blanchard, it is necessary that you start with a proof of concept by showing growth in the company’s awareness, sales revenue, and number of transactions and net new customers since the implementation of social media. This can be accomplished with charts and time lines that show a before and after concept. Transaction data should be specific by showing the frequency, reach, and yield of the customers. By looking for patterns in the different fields that have changed since the execution of social media tools, it will be easy to see the impact. By stacking these time lines on top of one another, your company can create a picture of which efforts are working, and which ones aren’t. Watch for correlations between events, such as certain blog articles equalling more customer calls, or positive online mentions and a jump in site visitors By using what you know, you will be able to make it affect all aspects of your business, even traffic in your actual building.

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