How Is the ROI of Social Media Marketing Measured?

The speed with which companies have been moving to market through social media platforms and social networking sites has come at break-neck speeds over the past couple of years. Large organizations, like Coca Cola and Nike have doubled down on their spending budgets just this past year, and are expected to increase it once again for 2012. With all the paid experts at their disposal, clearly they know something about current and future trends in marketing.

Small business owners, I believe, genuinely want to do the same. I think most feel they need to begin marketing via social media and try by dipping their toe in the water (so to speak) in the form of a page on Facebook or a Twitter account. But then what? How do they know whether or not their initiative is working?

Unfortunately, most are used to the way traditional marketing campaigns are run: a commercial (or print ad) is created and broadcast about a specific service, topic, product or initiative, and then customers respond in some manner. Social media is different. Very different.

And so when small business owners don’t see the crowds come storming in after they half-heartedly post for a few months, they neglect their Facebook and Twitter accounts altogether, ruining any chance they might have had of actually using them effectively.

The truth is the Return on Investment (ROI) of social media marketing depends on understanding what social media can and cannot do, and then setting your own expectations accordingly.

For example, social media is NOT a sales conversion platform (here I mean the continued platforms, such as Facebook pages, not Facebook ads). In other words, they really are not best used to drive customers to buy a product or service.

Social media is likewise NOT a “campaign” driven mechanism. Unlike television advertising where a business can market a single thing, event or service for a short amount of time, social media initiatives are long-term and generate success over time.

Social media IS a relationship builder. Why bother building relationships, you ask? Well, for starters through social media you can create a huge pool of the most valuable thing a business can have: regulars! These are repeat customers that return to you time and again instead of going to a competitor. Not only that, they bring their friends and family with them and refer people to you every chance they get. This is done purely through relationships, nothing else.

Social media CAN create brand awareness. By keeping your name in front of people who follow or like your brand, you keep yourself at the forefront of their mind. They might not buy from you today, but every time they read a post or a message, they are mentally creating a bridge to your product or service. And when they, or someone they know, needs that product or service, you are at the top of the list for getting their business.

There are of course many, many more considerations, but these four differences are a good start. After knowing this, you need to define your goals: what is it you want to do? What will indicate a successful social media marketing program for your business?

One quick and dirty indicator is the number of followers and likes you accumulate on these various channels. However, I’ve found this to be an artificial and somewhat shallow metric. After all, what good are 90,000 fans when none of them bother to read your posts or eventually buy from you? In this case, it would be better to have 2000 fans that hang on your every word.

A good indicator I have been using is the number of interactions I receive from status updates or tweets. If a brand I manage sends out a status update, and within minutes we receive a huge number of comments or likes, it tells me I’m in line with what my customers want and are expecting. As long as they are responding, I continue to be invited to (virtually) socialize with them and my name stays in front of them. To me, that’s a win.

You’ll have to invent your own metric of course, and many will find what works for others will not work for them. However, the key is to understand what you are trying to accomplish before you jump into social media marketing in the first place. Then you’ll be able to honestly measure an ROI.

Word One Consulting
clint @
2263 S. Main
Las Cruces, NM 88005