There is no doubt that social media now holds a spot along with print and broadcast as a key marketing and advertising channel for businesses. As a result, social media marketing now needs to be kept to the same standard as the two other aforementioned channels. This means your return on investment into social media must play a role in your business.
Having said that, “What is the ROI of social media?” remains to be one of my least favorite questions. Why? Because measuring social media return of investment is tricky. In essence, you can’t really measure it unless you have learned how to do it – which means you have to play with intangible metrics.
Measuring ROI using a textbook formula that works within a conventional business setting doesn’t really work with social media campaigns. Getting a precise answer is a difficult feat because not everything can be measured.
Measuring the Intangibles of Social Media
The intangibles of social media are very hard to measure. These intangibles include social media connections, brand awareness, and brand loyalty. Measuring these intangibles can be difficult because there are other factors involved that simply can’t be quantified. With social media marketing, you have to learn that you won’t be able to specifically assess your every activity.
As an example, let’s say you publish a weekly blog post. A potential customer reads it because a friend of his shared it on Facebook. Then, the interested prospect searches for you on Twitter, finds more interesting stuff, which causes him to look up your Yelp page. Seeing positive reviews, he now is much more receptive to that next cold call he receives or piece of print media he gets in the mail. This person eventually becomes a customer.
Now, was that a social media driven sale? It is in my book! But it may seem that it was driven by the cold call or the print media.
The point here is that your entire digital ecosystem works in concert with your other marketing efforts in a way that marketing collateral never could before.
That’s why I believe that the ROI of social media is a limited measurement that should be looked at over long periods of time and considering all efforts put in. Unless you are specifically using aid ad campaigns, like Facebook Ads, then the ROI from each particular piece of your online web will be difficult to identify.
You know what is a better measurement of social media ROI – revenue!
Is the business growing? Are you driving more sales than last year? There’s your ROI.
The [real] ROI of social media is that your business will still exist in 5 years.