ROI & Social Media

So here we are again, pondering this concept of ROI and the role it plays in social media. ROI is perhaps the one most important performance measure that explicitly captures the impact of an organization’s marketing efforts. Thus, it is also critical to the organization’s monitoring and expense control efforts.

Because of its explicit nature, ROI also serves to readily relate the value of the organization’s activities to employees and shareholders.

Is Social Media a Separate Discipline?
Some argue that social media requires completely different consideration from the “typical marketing strategy” as it is separate from the discipline of marketing. There are some differences; however, social media is not a separate discipline. It is composed of separate and distinct moving pieces, which fall into several categories or across disciplines. The Social Media Strategy should be considered as the organization discusses the marketing strategy, specifically concerning the use of blogs, micro-blogs, social networks, and email campaigns. While the aforementioned outlets can be considered as part of a marketing strategy others such as instant messaging and VOIP should be considered during the discussion of the technology strategy.

SEE: 50 New Social Media Stats to Kick-start Your Slide Deck

Finance, Marketing, and ROI
ROI is an appropriate measure for any investment the company makes.

As a student of the disciplines of both finance and marketing, this discussion of ROI focuses on where these two meet; not where they diverge. I want to know the data driven qualitative and quantitative ROI (or results) of interacting with customers and potential customers via social media outlets specific to the marketing discipline. Furthermore, I want a forecast to compare to my actual results for decision making purposes. This helps me to measure and monitor the net impact of my organization’s marketing efforts, and to control monetary outlays for those efforts. This is a reasonable expectation, in business.

It’s More Than Likes and Followers
Social Media, for business purposes, must translate into something tangible other than just large numbers of fans and followers. Are your followers and fans engaged with your brand? Are you experiencing increased brand loyalty and increased revenue or did your fan base increase solely as a function of a one time freebie? 

In business, we want to know the following:

- What percentage of new fans and followers became lifetime customers?
- What % or $ volume increase is attributable to project/investment A vs. project/investment B?
- In the future, which project(s)/investment(s) should we continue, alter, or discontinue altogether?

This is ROI! This is what moves the organization forward.

SEE: ROI: Old & New

Estimate ROI for Social Media
The business case for social media should neither be underestimated nor overestimated. There is value in engaging a social media strategy:

- 80% of Americans use a social network.
- 51% of Facebook users and 64% of Twitter users are more likely to buy from the brands they follow.
- There are over 200,000,000 blogs.
- 34% of bloggers post opinions about products & brands.
- 78% of consumers trust peer recommendations.

However, without consideration of the individual organization and strategy they intend to engage, it is impossible to state the plausible impact that social media will have on an organization. Statics show that only 34% of businesses actively measure the impact to the bottom line. Without backup data proving the value of the business’ investment, it becomes difficult for the business to ensure that it engages in the most value additive activities.

What happens when a strategy is arbitrarily implemented and changed, without tracking the degree of effectiveness of campaign/investment A vs. campaign/investment B? ROI is the key measure to ensure that the organization continues to place its energy into the most effective activities - including social media efforts.

About the Author

Maisha Smart, MBA founded Finance and Marketing to help small businesses excel, by bridging the gap between finance and marketing processes. Some of her favorite activities include fine arts, a good debate, and social engagement.

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