How to measure social media marketing ROI: Making metrics meaningfulby
Social media marketing may be one of the newer business disciplines, but as the saying goes: “you can’t manage what you don’t measure”. And if social media is to meet its potential as part of the marketing and communications mix, proper measurement is essential.
“Using social media but not measuring the results in any way is a bit like advertising your business in a magazine and not measuring the results – time and money are potentially wasted,” warns Lynsey Sweales, member of the DMA Social Media Council and CEO of SocialB UK.
“Social media, if carried out correctly, offers a great cost-effective way of marketing (amongst other things) your business. However, many businesses get caught up in social media but never measure the value (enquiries, website traffic or business). Basically, what you don’t measure, you don’t know. And if you don’t know, you could be just wasting your time.
“Measuring social media marketing ROI is therefore crucial so that businesses know exactly what they’re getting as a return for their investment and efforts. They will be able to know what is working and what is not working, where they should invest more or less of their time, if their social media channels are bringing them website traffic, and other information it’s relevant for them to know. In order to understand if your social media strategy is working, you need to measure its results.”
In fact, having the dubious honour of still being a ‘shiny new thing’, it is arguably more important to monitor social media’s ROI than other more traditional disciplines.
“Measuring the value of social media is important because, many marketing practitioners from both sides of the fence have historically a tendency to invest in the new and untested merely because of their novelty,” says Neil Major, strategy director at Yomego. “This isn’t in itself as foolish a ploy as one would think – humans find novelty interesting and appealing often so use of new media can provide more cut through that more established means.
“But as social media is now an established, mainstream technology with huge audiences and profitable mature businesses behind it and its days of relying on novelty are over. Using the many tools, good practices and data sources delivered during the initial boom all provide ways of effectively measuring the media as it makes its final steps along the Gartner Hype Cycle.”
A tough nut to crack
However, while it is a necessity, measurement of social media marketing return on investment has proven to be something of a struggle for many organisations.
“Many companies fear that there’s no true way to measure the ROI of social marketing activities,” says Elizabeth Smyth, area vice president marketing, at Marketo EMEA. “In comparison to other marketing channels such as email, SEO and display advertising, social media doesn’t offer as direct or concrete of a ROI measurement.
“This is partly due to the fact that social media interactions revolve mostly around conversations and brand awareness, which are not as easy to measure quantitatively as clickthroughs and CPMs. Because social marketing is very much about the qualitative not the quantitative, this results in much debate about what metrics are truly useful and accurate when it comes to social marketing.”
Major agrees, noting that this is a challenge that isn’t unique to social channels: “What’s the value of someone seeing a message - and how do you know for sure how many people have seen it? This is the classic advertising problem and social media faces this dilemma just as much as any other media.
“Related to that, is the issue of what ‘awareness’ actually means? It’s not an equal thing – many people who see an advertising message will never buy the product - and if awareness never leads to purchase, then by itself it’s never worth anything. Even the much heralded brand equity has to ultimately impact on propensity to purchase at some point by someone for it to deliver return on investment.”
Smyth continues: “Much of the difficulty in measuring social marketing efforts stems from the inbound lead. While it’s revered for its high level of qualification, interest and sales readiness, it is also difficult to attribute it to any specific marketing campaign. Many inbound leads can be attributed to ‘word of mouth’ and partner or employee referrals. For inbound leads arriving via a website or phone call, attribution to a single referral source can be even more difficult.
“Moreover, the idea of ‘first touch’ and ‘last touch’ (meaning an original lead source versus the campaign that really closed the deal) is even more complex when it comes to social media. As any B2B marketer knows, it takes multiple touches to convert a lead into a sale. This means even those prospects that were attributed to a PPC or email campaign may have also read your corporate blog and tweets before making the decision to purchase your product or service. Even though you may not be able to get any more granular than ‘inbound call’ or ‘word of mouth’ as referral sources for some of your leads, you are still making a case for social marketing in your organisation.”
But just because measuring social media marketing ROI is a challenge doesn’t mean it’s impossible. The evolution of social media marketing requires that traditional metrics are re-evaluated, to incorporate the ways that people interact with social. Therefore, while it’s still possible to find value in measuring clickthroughs from specific URLs on sites such as Twitter or YouTube, social marketing lends itself to new categories of measurement, such as activity and engagement.
“Social media has changed the game of marketing, so traditional metrics must be re-imagined,” says Smyth. “Not only must traditional ROI metrics be looked at such as cost savings, conversions, cost per lead, etc, but marketers must also look at non-traditional metrics such as brand lift and social engagement. And as social marketing continues to evolve, the gap to attributing leads to specific social marketing sources is becoming smaller. Through many available tools you can make useful correlations between social marketing and improvements at your organisation in revenue, website traffic and other areas.”
So what models of ROI measurement are organisations adopting? To date, companies have tended to adopt one of three methods: by tracking website conversions; the opportunity cost model; or the Five Aspects model.
The Five Aspects model
“In this method a professional will measure five meaningful variables, adding a monetary value to each based on its contribution to sales and revenue,” explains Paul Bridge, membership director of PR Gym. “Unlike traditional advertising, this is possible because each click can be tracked from a source.”
If, however, there is no visible increase in revenue, then the professional can substitute for an advertising equivalent monetary value to each of the following:
- Awareness: an indication of how many people are reached with the brand message (measured in audience impressions and reach).
- Appreciation: a measure of how many people show an initial interest in brand content (measured in posts, shares, re-shares, etc).
- Actions: speak louder as they indicate an active interest in the brand/product (measured in clicks, downloads, enquiries, purchases, etc).
- Advocacy: signifies intent to keep in touch (measured in likes, followers, circles, subscriptions, etc).
- Domino effect: reaching audiences through their network (measured in friends of friends, followers of followers, viral reach, etc).
Bridge continues: “This method gives the company a clear return on investment for the social media campaign in place, which allows for forecast campaign revenue. This rationale, along with the visible increases in revenue can provide PR professionals and their client confidence in investing in future campaigns.
“However, the validity of this calculation relies on accurate input data, and as social media is such a new platform many PR professionals do not have the experience in measuring it which can result in these mistakes.”
The opportunity cost model
In this method the professional will work out the return on investment by assessing the opportunity cost of the campaign, where they will compare how much it would cost to achieve an objective through social media compared to other forms of marketing. For example, a social media campaign that aims to push visitors to the company’s website could be compared to the cost of a banner advertising campaign which has the same goal.
Bridge explains: “Although comparing opportunity cost can provide a good basis to decide what route to go down with a campaign, this method makes it difficult to measure he return on investment in multichannel campaigns. This is particularly relevant where a PR professional wants to use social media alongside other forms of marketing. “
Tracking website conversions
The final method is tracking the number of website conversions that come from your social media accounts using classic website analytics. This can be done by using online metric tools such as Google Analytics. After a professional has shared a link that drives customers to a particular website via social media channels, Google Analytics will track how many people clicked, shared or commented on the link.
Bridge explains: “This method provides a quick and easy technique for compiling basic performance reports which can be combined with goals and conversion rates to assess the success of a social media campaign. However, as this is a post-campaign measurement tool, it limits forecasting or planning of social media campaigns. Also, with a non-human approach like this there is also room for error in identifying reasoning behind shares of clickthrough.”
Six ways of measuring revenue impact of social media
Elsewhere, in the Altimeter report ‘The Social Media ROI Cookbook’, authors Susan Etlinger, Jeremiah Owyang and Andrew Jones, propose six ways of measuring the revenue impact of social media.
- Anecdote. Use specific examples where social media was known to influence sales.
- Correlation. Compare two data sets (i.e. number of likes vs revenue) to determine whether there may be a relationship.
- Multivariate testing. Compare one group exposed to social media content with another that was exposed to different or no content.
- Links and tagging. Use short links such as bit.ly, goo.gl or customer links embedded into content, or tags embedded into links or URLs to attribute conversion.
- Integrated. Use apps or software as a service offerings that have integrated analytics, such as those offered by Buddy Media in the Salesforce Marketing Cloud, or Wildfire by Google.
- Direct commerce. Add ecommerce storefronts to social platforms.
In addition to these models, there are a variety of best practices that are recommended to help your organisation get a good grasp on the issue of measurement.
- Agree on your specific goals. It is based on those very specific social media goals that an organisation can effectively measure their efforts. Sweales says: “Those goals can be reach, site traffic, leads generated, brand awareness, or others. These goals should be aligned with your overall business objectives to ensure consistency in message throughout your business. For example, if one of your goals is to increase landing page conversion by 10%, ensure that you’re tracking the conversion rate of people who land on the page through social media channels.”
- Set clear measurable metrics and educate people as to what these measures mean. “Not everyone will be socially literate or savvy,” says Mike Hepburn, content marketing director at Jaywing. “Communicate these measures and successes in a way that means something to the relevant internal stakeholders. Don’t kill them with data or jargon. Tell the right story.”
- Research the best measurements tools and metric models to use. “The goals will define the KPIs that will define the rest of the measurements techniques, such as knowing the information you need to know or which analytics to use,” says Sweales. “There many available, from free to paid tools, and you want to use the ones that will tell you exactly what you need to know. One of the most important tools which is free but goes unused or under-utilised too often is Google Analytics and the metric tools within the platforms themselves – Facebook and Twitter have great metrics facilities both are free but again both often never get looked at by businesses.”
- Set up tracking wherever you can. “Tracking URLs, website analytics, app analytics, social network dashboards all have their places and try to make sure you have this set up in as much of the customer journey as possible,” says Major.
- Listen. “Don’t just collect interaction and numbers, collect opinions, sentiment and look at how much a conversation is growing as well as how it’s growing,” Major adds.
- Set up A/B and multivariate tests wherever possible.
- Integrate what you’re doing with the rest of the marketing plan and digital strategy – this is probably the most vital thing of all.
What this should demonstrate, is that despite the innate challenges of measuring social media marketing ROI, there are a whole range of different approaches and tactics that can be utilised. The key thing, Smyth emphasises, is to ensure that the challenge of measuring social marketing ROI doesn’t deter you from finding value in it.
“Even if you’re wondering what ‘engagement’ means for your business and how you’re going to measure it, you can still prove the value of social marketing by establishing baselines and tracking your progress,” she advises.
“In his popular presentation, The Basics of Social Media ROI, social marketing consultant Olivier Blanchard recommends an easy way to start measuring the impact of social media. First set up a timeline and draw a line to signify the point in time in which you started to use social marketing
in your marketing efforts. Then map onto this timeline the various social marketing activities in which you’re participating, as well as the results (e.g. opportunity creation, new customers, sales revenue, etc.) that your company has experienced since implementing its social marketing strategy.
“This will show what type of overall impact social marketing has had, and whether or not it has helped you increase your goals over the baseline. Even with numerous marketing activities occurring at the same time, you’ll still be able to prove that social marketing has had a positive impact on your overall business ROI.”
Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 20 years, including Internet Works, CXO magazine and Business Management. He joined MyCustomer in 2007.