A Facebook marketing campaign seemed like a success, but was it worth its efforts? An executive’s blog is so time consuming but is it being anticipated by its eager fans? Social Media Marketing is now common practice and as such needs to be measured and tracked for efficiency. We need to understand when and to what degree social media metrics can be obtained.
A Financial Calculation
Quite simply put by Social Media Examiner, “Social media ROI is defined as a measure of the efficiency of a social media marketing campaign” (Fontein, 2016). As long as we have financial metrics to compare, we can use the formula:
Social media ROI = (SM return– SM investment) / SM investment percent
This is perfectly fine if we have the financials to support it. Costs or investment for a social media campaign are very similar to that of a typical campaign. Common list of social media costs could include labour, training, development, technology, third party consultants, paid advertising and general overhead. Now, you may have the financial return, or gain, already determined, in which case you can move forward on to complete your formula. But for most of us, finding the dollar association for the benefits obtained by your social media campaign is a challenge. This may need some discovery.
It’s hard to determine a value for an emotional response. Another method of determining ROI is to compare the changes in behavior before and after the campaign and measuring them against the campaigns goals. How did consumers act prior and how have they adapted afterwards? Has their motivation been altered? Aligning a set of values to these emotions is the best plan of action.
Return, or gain, can be measured directly, by its Estimated Value of Exposure (EVE) (Long, 2015), or what it would cost for the same amount of publicity if it were typical advertising. To calculate this type of gain, determine the cost to buy the reach earned in social media. For example, if you reached 100,000 impressions for free that would have ordinarily cost $1.50 per thousand impressions (Effective cost per thousand, or eCPM); your EVE at 100,000 impressions is $150 (Long, 2015).
EVE = Reach x eCPM = 100,000 impressions x $1.50 eCPM = $150. So, therefore,
This would give us a 50% ROI for that social media initiative.
Measure Benefits by Channel
Another way of looking at it is by using the Lifetime Value per customer to calculate the benefit. As Neil Patel’s Infographic explains, there are 6 steps to measure your social media ROI.
First, set your conversion goals, so there will be a measurable action that has monetary value. Actions such as making a purchase, completing a contact form or quote request, signing up for a newsletter, downloading a pdf or engaging in an interaction. Next, track the conversions with Google Analytics or similar, to determine reach, traffic, leads, new customers and conversion rate. The tricky part again is assigning a dollar value to each conversion. The Lifetime Value (LTV) per customer is important in this calculation and if it’s unknown, determine what a new customer is worth to your company. The conversion rate is how often the customer takes action, such as 1/10 download a pdf or watch a video. This calculation would be as follows:
Conversion Value = LTV x conversion rate = $175 x 1/10 = $17.50
Now you can use that value to determine the benefits of each conversion per channel. Another important step; to determine which channel, be it Facebook, Twitter, LinkedIn, is most efficient for you.
Neil’s last two steps are; determine the total costs and of course, plug in the benefits value to the familiar ROI calculation; ROI=(Benefits-Cost)/Cost x 100.
Don’t Forget to Blog
If we look at blogs, and specifically executive blogs, we can again determine the ROI based on assigning a value to multiple campaign benefits. But you might find blogging generates an impressive ROI. If you’ve followed the POST strategy method and have strategic goals to measure against, you’re ready.
Here are a few typical cost measurements for an executive blog (groundswell, 2011):
- Start-Up Costs: Planning, development and training
- Ongoing Costs: Platform, brand-monitoring service, IT support, content production (time), review/changes
And now a comprehensive list of potential benefits:
- Advertising value: Visibility, traffic
- PR value: press stories about/ driven from blog content
- Word-of-mouth value: referring from other blogs
- Support value: calls avoided due to info on blog
- Research value: customer insights
The cost item worth noting is the content production time, likely lengthy and therefore costly. But, the benefits such as PR value could be extraordinary, worth thousands of dollars per story, and the support value saving hundreds, with numerous calls avoided daily. The main point with an executive blog is that it really does take more education and time, but if done correctly, the gains can be huge. Blogs generate high visibility, are customer service driven, help in a PR crisis and can gain customer insight (groundswell, 2011).
Is It Really Worthwhile?
According to Ignite Social Media, “the most effective consideration drivers” are from “social media”.
Whatever method is chosen to determine Social Media ROI, it’s best to ensure it is reviewed continuously for improvements. Before you begin, you should have set clear long term strategic goals in order to prove that this type of campaign is worth pursuing. Choosing the right strategy will also help you in the long run by providing metrics to analyze your success and hopefully gain you more buy-in from executives and management to move forward.
There are multiple ways to find value in your social media program and campaign, you just need to find the one best suited to your organization and goals. Let’s not forget that typical advertising is usually seen as shouting, whereas social media is a more conversational. That aspect alone is a driver in the right direction…finding value in Social Media Marketing!
Charlene Li, J. B. (2011). groundswell. Forrester Research, Inc.
Fontein, D. (2016, 03 18). HootSuite Blogs. Retrieved from https://blog.hootsuite.com/measure-social-media-roi-business/
Ignite Social Media. (2012, 10 04). YouTube. Retrieved from https://youtu.be/JyKnt6BBhu8
Long, A. (2015, 04 09). Pagemodo. Retrieved from http://www.pagemodo.com/blog/social-media-roi-how-to-really-measure/
Patel, N. (2014, 06 27). quicksprout. Retrieved from https://www.quicksprout.com/2014/06/27/how-to-calculate-the-roi-of-your-social-media-campaigns/?display=wide
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