There is no doubt that small businesses should have a social media
presence or not. If not for anything else, but the visibility and
connectivity which is offered by social media in todays’ time has
convinced most business owners that it is indispensible to have an
investment in the social media just for its undoubted returns.
But the curiosity which often might
arise for any businessman is how much time and effort will it consume to
give the best ROI? While most of the average small business owners have
an opinion that it’s worthwhile to be on Facebook, but again there is a
section of people who might agree monitoring it and posting 24/7 would
be a waste of resources. The only way to know how much social media is
enough for you is to have some sort of metrics on your return on
investment. In this way without any hitches you can keep a track of the
ROI and thus make necessary changes if and when required.
That’s not to say measuring ROI is a snap. Fast Company cites
an Adobe white paper that says 88% of 750 surveyed marketing
professionals didn’t feel they could accurately measure the
effectiveness of their social media campaigns. Fifty-two percent said
that dealing with social media ROI was their biggest frustration. Again
this doesn’t stop you from your own tracking but yes systematic and
methodical approach often defies strong logics.
Here are a few ways to ease that
annoyance. Though measuring social media ROI may not be perfect, it’s
not impossible either. These methods can help you gauge what your small
business is getting out of its social media investment.
Metric Tools
Facebook doesn’t limit page
administrators to the data on their own admin panel. One example is
“Facebook Conversion Tracking”, a Facebook tool that allows those who
advertise on the platform to record the behavior of those who click on
ads.
For example If a customer clicks and
then goes on your site to register, then you have proof that the ad was
at least effective for that particular product or service . No doubt the
ideal scenario is when a customer clicks through an ad and then buys
something on your site.
There are also tools which if used in
combination can be more powerful, such as Conversion Tracking
and OptimizedCPM, which helps Facebook ads target the right people. So
when you have track of the people who have clicked through your ads can
make future ads even more effective. But now what you might think is how
effective can it be? A survey reveals that the Company Fab used the
same pair of tools to cut its new customer acquisition cost by 39%.
Now if you are worried about setting up Facebook Conversion Tracking you can follow this post : How To Setup Facebook Conversion Tracking
Understanding the need for marketers to
measure their social media performance, many social media sites provide
built-in analytics tools for tracking engagement, likes, shares, etc.
There’s Facebook Insights, Twitter Analytics, LinkedIn Company Page
Insights, and Pinterest Web Analytics to name a few.
Often times you will find tools like
these are really handy at measuring your performance within the social
media platform, but do little to show how your social media actions
affect the bottom line or contribute to conversions, which usually
happen outside that platform and on your own site.
Calculate Your Reach
When it comes to social media ROI, first
you need to determine how many people you could potentially
reach/target with social media. Let’s say you are running a campaign on
Facebook & Twitter, this equates to the number of Facebook fans and
Twitter followers you have. However, this is not the end of the story.
Your content reach is limited only to the amount of friends and
followers that people who engage with your brand. For an example, if you
have 1000 followers on Facebook and Twitter and they have a combined
total of 20,000 followers, then your content reach is 21,000.
Sentiment
Measure of how your business is
perceived on different social media channels. It can be very difficult
to measure sentiment although you do need to compare the number of
positive and negative mentions. Fortunately, you don’t have to spend
hours painstakingly going through tweets to find out what people are
saying. It is possible to get natural language processing tools from a
variety of sites online that will quickly and effectively help you
discover whether mentions of your company are positive or negative.
Interactions
Once we would believe that interaction
was the only way to tell that your audience whether they could hear you
at all. But this measurement seems to have lost its weight between
impressions and likes. Interactions are still very relevant in social
media monitoring — particularly when you understand what each of them
means.
Every single comment, photo, video or
post takes a few seconds for a user to digest. It is estimated that the
average ‘like’ on Facebook takes seven seconds per person, while close
friends of this person will take an average of five seconds to digest
that ‘like.’ So there is no doubt about one thing that interactions do
have a great influence in pulling your crowd.
Analyzing these numbers by how many
likes were received, multiplied by how many friends of those likes
witnessed the action can give you a more accurate — not to mention
brighter — idea of how far your message reached your target audience.
Analyzing Traffic
Through your website’s analytics you can tell how often people find your page via Facebook or Twitter,
but again it’s not always easy to tell what actions on these social
media cites have driven that traffic, or how much that traffic truly
cost. This might seem to be a very frustrating situation but by
analyzing your website analytics against CPM or PPC campaigns, however
much more becomes clear. You gradually start to get a better picture of
your ROI.
Study the average cost of those PPC
campaigns per person then analyze that cost against how many visitors
you get from free social media placements. After that you can put a
dollar sign on the traffic you derive from Facebook pages, Twitter links
and the like.
Though no social media ROI measurement
is perfect or comprehensive, neither are many measurements of ROIs in
other PR and marketing efforts. Nevertheless using these methods, and
using them over time, will be best for revealing of your current ROI, as
well as create benchmarks against which to measure future social media
efforts and strategies. Thus nothing really goes into drain-neither your
effort on measuring nor the investment.
Marketing Channels
Another mistake which often many people
do is that they use social media metric to measure the returns. This is a
gross mistake. You should never talk in terms of fans, followers, likes
and retweets. You should dispose of all of this social media lingo and
start thinking in terms of other marketing channels and what you measure
there.
For example, if you focus on
pay-per-click advertising, you should measure cost per impression, cost
per click and sometimes cost per conversion. If you focus on public
relations, you should measure cost per impression and sometimes cost per
mention. The one thing that you can measure right now is how much you
spend on content; agency fees and total spend on social media marketing.
Once you start comparing all of that with the cost of whatever is
brought to your website or whatever the conversions are from social
media, then it’s easy for people to understand social media ROI. You are
free to use the terminology that executives are familiar with.
You Can Measure Performance
Most companies have a variety of
different website analytic tools; however, the majority use Google
Analytics. Let’s see how you first need to have a goal set up for your conversion page with a thank-you page. So you set up the goal on the thank-you page. Then with every link that you share, you add “custom URL parameters.” There
are three parameters you can append to the end of a URL to tell Google
Analytics the campaign, the medium and the source of where that link was
posted. The smooth application of these parameters can help you keep a
track and maintain them in a database. This tells you exactly which
status update generates a specific conversion because you have numbered
each status update and has it in a database. Pay minute attention to all
the conversions which are happening so that you can be happy that the
social media ROI has given good results.
Using The Data
This is where it gets complex and is
also where certain experts say that social media ROI can’t be accurately
measured. And this is because coming up with a monetary value of your
campaign is virtually impossible to nail down because there is some
guesswork involved. Nonetheless, you can give it a pretty good go.
For example, you can go back to your
goals. Let’s say you are measuring ROI through sales, now you need to
analyze the metrics from your monitoring tools to see if your level of
sales has increased or not. If it has, then you can dive into the number
of referrers on your e-commerce site from different social media
channels or the amount of coupons distributed in a Facebook offer. It is
also very important to look at trends. For an instance, did your
website store experience a spike in traffic soon after you posted on
Facebook? Is it the case where a high sentiment analysis on Twitter
results in better sales?
Conclusion
In the end, it is important to realize
that measuring social media ROI is far more complex than the usual cost
versus increase in sales equation we are familiar with. While you can
find out if social media is positively effecting your business, it isn’t
possible at this point to know its full effect.
Ultimately, there are far too many
variables to limit social media to a single fixed point. Additionally,
social ROI is inevitably delayed ROI because it takes time for a post to
resonate with your customers to the point where they go from visitors
to a paid customers. You can’t pinpoint when a certain customer decided
to make this switch either. What you can do is stop being so focused on
social media ROI and concentrate instead on finding out what you have
learned from your customers.
Hopefully you now understand a bit
about how the ROI of social media can – and can’t – be measured. What do
you think? What are your thoughts on measuring social media ROI?
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