Download - Measuring the ROI of Social Media
Image: Rachel Chapdelaine on Flickr
Marketing Measurement Has Come A Long Way
The Old WaySpray & pray
Fuzzy picture of what success looked like
Unsure which marketing tactics contributed to which outcomes
Started Getting Smarter
Coupon redemption codes
Customer reviews & ratings
Now We’re Talkin’Link Shorteners & UTM Codes
Goal Completion
Conversions
Assisted Attribution Models
-Bernard Baruch
“If all you have is a hammer in the toolbox, everything
looks like a nail.”
Return On Investment (ROI)
“A performance measure used to evaluate the efficiency of an investment or to compare the
efficiency of a number of different investments.”
-Investopedia Definition
Social Media ROI
The quantitative measurement of social media marketing in terms of tangible results (results) relative
to the cost (investment).
Two Basic Formulas
ROI - Return On Investment
(Benefit - Cost) x 100——————————
Cost
ROMI - Return on Marketing Investment
Incremental Revenue—————————
Marketing Cost
If the formula is so easy…
Why do we still struggle to measure social media ROI?
Vanity Metrics & Other General Fuzziness
• Likes
• RTs
• Awareness
• Conversations
• Multiple touchpoints
• Influencer, well, influence
Where’s my easy button?
There is no easy button.
The Basic Process1. Choose your goals
2. Track your goals
3. Assign monetary value
4. Measure results
5. Calculate costs
6. Analyze & improve
Understand Your Sales Funnel
To accurately measure social media ROI, we have to understand our sales funnel and our business goals.
McKinsey & Company
Buffer
Possible Conversion Goals
• Make a purchase
• Watch a video
• Register for a webinar
• Click on a link
• Sign up for a newsletter
• Download a white paper
Other Types of Goals
• Brand Awareness & Recognition
• Customer/User Loyalty
• Traffic
Assigning $$ Values: Three Methods
Method #1: Guesstimate
If you don’t have historical data to analyze, you’ve got to start somewhere.
Method #2: Correlation
Compare your baseline to your social media activities and look for correlation.
Establish Your Baseline
What would happen anyway even if you don’t invest in social?
Timeline Your Social Activities
• July 15th: Launched Facebook Page
• July 20th: Launched Twitter Account
• July 25th: First Facebook Ad Campaign
Overlay, Analyze, & Prove/Disprove
Note any apparent correlations
Investigate to prove or disprove if they are related
Don’t forget to check for non-social influences
Draw Data-Driven Conclusions
Example: During the month of July, we saw a 10% increase in new visitors to our landing page. Accounting for our 5% baseline estimate for increased organic traffic, we can attribute the remaining 5% lift to our Facebook advertising campaign.
Method #3: Use Past Values
Use existing data to calculate the value of your social media ROI.
LTV: Lifetime Value
If you know your LTV, you can work backwards to determine your conversion value.
Example: Puppy Dewormer
Other Measurements You Can Calculate
Conversion RateNumber of checkouts / Number of unique visitors
(within same time period) 100,000 visitors
2,000 checkouts
2% Conversion Rate
Average Order ValueTotal revenue/Number of Checkouts
$20,000 revenue
2,000 checkouts
$10 Average Order Value
Average Visitor ValueNew revenue generated / Number of website visitors
$20,000 new revenue in July
100,000 total visitors
$20,000 / 100,000 = $0.20 per visitor
Calculations By Activity/Channel
Using overall site values can only get us so far.
Segmenting social channels, campaigns, and audiences provides far more accurate data for ROI calculations.
Use Your Calculations to Assign Value to Results
Measure Results By Channel
Channel Clicks to Site Value (Return)*
Facebook 2000 400
Twitter 1500 300
Instagram 500 100
*Clicks x Average Visitor Value of $0.20
Image: Mykl Roventine on Flickr
Calculate All Costs• Time/Resources/Personnel
• Fixed Costs (Tools, Ongoing Maintenance)
• Variable Costs (Social Campaigns, Integrated Campaigns)
• Management/Oversite
Calculate ROIIf you spent $1000 on a Facebook campaign (total cost) and it
resulted in 1,000 new visits, what was the campaign ROI?
In our previous example, we know that each new visit is worth $0.20.
1,000 * $0.20 = $2,000
$2,000 / $1,000 = 100%
Calculate ROMI• Facebook ad campaign cost: $1000 (ad spend + labor)
• July revenue: $50,000
• Incremental Revenue: $2,500 ($50K x 5%)
• ROMI: 250% ($2,500/$1,000)
Creating a Measurable Social Media Strategy
Who > Why > What > How• Scope: Who’s involved?
• Business Objectives & Purpose: Why are we doing this?
• Goals & KPIs: What are we trying to accomplish?
• Tactics & Metrics: How are we getting sh*t done?
Who’s (Potentially) Involved
• Marketing
• Sales
• R&D
• Customer Service
• Human Resources
• Technical Support
Why Do These Folks Care?
Customer Service Sales Marketing
Reduce call volume Increase qualified leads Improve brand image
Because social media can help each department meet their business goals!
Turning Business Goals Into Social Media Goals
Customer Service Sales Marketing
Reduce call volume Increase qualified leads Improve brand image
Resolve social media support & customer service inquiries
Drive new visitors to targeted landing pages
Identify and recruit brand advocates to build our image
Every Objective Needs A KPI
Customer Service Sales Marketing
Reduce call volume Increase qualified leads Improve brand image
Resolve social media support & customer service inquiries
Drive new visitors to targeted landing pages
Identify and recruit brand advocates to build our image
# of posts/tweets resolved # of conversions from social media channels
Reach and frequency of influencer-generated content
Value-Driven Social Media Marketing
Now when your boss asks “How’s that Facebook stuff doing?” you have the tools to demonstrate
tangible benefits to the company.