Social Media ROI: How can I prove that social media affects my business?

“Forrester Research estimates that social media will make up 3% of overall interactive marketing spend in the US in 2010 with the highest delta of growth in any channel over the next four years. As social media’s channel grows so will the pressure to quantify” (Djambazov, 2010).

However, investing in Social Media or in any other field require the following:

  1. Know Your End Game: Know what are you trying to accomplish and how you want to try keep track of it all.
  2. Define Your Metrics: What metrics do you need to track to quantify results: Leads, Registration, Sales?
  3. Check Your Tracking:  If your success metric is sales make sure you’re not just tracking leads. This requires testing.
  4. Set Expectations: Benchmarking is great way for you and your
  5. Have a Chief marketing officer: to have realistic expectations from a campaign.

Okay, after doing the above 4 steps what come next? How can I calculate numbers or dollars?

ROI %= [(Gains – Costs)/ Costs] X 100

This useful video gives a practical examples of turning metrics into the amount of saved dollars

The following table I create is another example that shows how to calculate ROI of Enterprise social media by focusing on the important business drivers (Hetrick, 2010): 

Press on the table to enlarge it

Some useful Metrics Tools:

Google Analytics — It’s free and it can provide a really powerful baseline for a variety of different factors. You can track incoming links and then the activities of the users they send, which can be helpful.

Omniture — Omniture has a slew of services available for businesses, including components that track Facebook and Twitter metrics.

TweetMeme Analytics — This is useful if you use TweetMeme’s retweet buttons on your sites. It’s a lot like Google Analytics, but focused on TweetMeme.

PostRank Analytics — This suite of tools measures social engagement on other platforms and services. What’s nice about PostRank is that instead of just a raw number, you can actually see the messages and comments from other sites that contribute to your stats. This can be really important for sentiment analysis (more on that later).

HootSuite — HootSuite is a great Twitter manager but also offers impressive analytics. The nice thing about the click data you get from an app like HootSuite (or bit.ly) is by looking deeper you can more easily see if those clicks translate into transactions or impressions on your other sites.

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Recommended Materials:

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Reference:

1. Sexy Numbers: Measuring ROI in Social Media Campaigns

2. Gallup Engagement metrics

3. Journal of Management and Marketing Research 

5. Gartner’s 2011 CEO and Business Executive Survey

6. Hetrick, C. (2010). How To Calculate the ROI of Enterprise 2.0. Retrieved September 12, 2011.

7. How to calculate the ROI of E2.0 or Social Business projects

About Morohen
This blog is created for INN346 Enterprise 2.0 subject | Queensland University of Technology

6 Responses to Social Media ROI: How can I prove that social media affects my business?

  1. weiweihou says:

    You provide a very logical procedure on analyzing the investment of social media and use both video and table to show how to calculate the ROI. It is very clear and easy to understand. By the way, I like the video.

  2. angjer says:

    Defining metrics is a complicated one to be honest. What do you use to quantify your ROI such that it represents monetary value? The tools you provided are very useful and specific to various social media platforms. Question now is, what do we do with all these statistics that we tracked or compare them against what? Great post by the way!

    Do read my post on social media ROI too.🙂

  3. chienju says:

    I totally agree that these four steps you mentioned are important for organisations using social network tools in their business. If a company did not follow these steps, it would waste its time and money on these Web 2.0 platforms. Nice post!

  4. whellmuth says:

    I’m surprised the total spent on Social Media will only be 3%. I wonder what the ROI comparison is for traditional media V social media?

  5. Pingback: Social Network: implementation strategy « MOROHEN

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