ROI of Social Media: Myths, Truths and How to Measure

ROI of Social Media Myths, Truths and How to Measure

Are You Wondering How To Calculate the ROI of Social Media?

If you have downloaded my ebook you probably want to know how your social media initiative could or is providing value to your organization.  And you might have heard a range of things on social networks, on webinars or at conferences questioning why you would calculate the return on investment (ROI) of social media.

  • Would you calculate the ROI of a phone?
  • Would you calculate the ROI of your mom?
  • Would you calculate ROI of your pants?

And you might have also heard that social media ROI can’t be calculated, but you can track things. Or that

the ROI of social media is that you will be in business in 5 years, or that social media ROI is that your customer satisfaction score went up 5 points because of your online community.

And while some of these statements might make you chuckle and others might seem like they are true, they don’t really help you in a business meeting with peers and executives who want real business answers.

If you are a skeptic about social media, it may seem like an unstructured stream of consciousness. Why would you dive into what seems immeasurable? And without a way to obtain benchmarks, how could you tell when something works? How could you track the progress and gather the right metrics or do more of the right things? And now when to stop doing the wrong things? How could you articulate the business case for social media?

If you are on the front lines doing social media, you may be witnessing your customers making purchase decisions based on what other customers write in e-reviews or clicking on your deal links in Twitter. You may be seeing the sentiment towards your brand went from being pretty negative, to now more favorable because you are reaching out to unhappy customers and making things right. You might be gaining share of voice online over your competitors or seeing that customer advocacy for the brand is building online with key influencers and brand advocates.

Whether you fall into the first or second group, the issue of justifying the business case for social media is the B-I-G question. How would you justify what you want to try or are currently doing? How do you ask for budget for people, process and technology? How do you speak intelligently about a field where people are comparing the ROI of wearing your pants to the ROI of social media?

Research Study: Marketers Are Unsure How to Calculate Social Media ROI

The fact is there is an ROI of your mom, a phone and wearing your pants. There is an ROI of anything that provides value. And that’s the point I want to make. However, how one would calculate social media ROI is not always obvious. A study by Lenskold Group[i] assessed social media ROI measurement best practices compared to traditional marketing ROI measurement. This study found less than 20% of marketers feel they can measure social media ROI (see Figure 1).

Marketers for whom social media is a high priority (55%), said the reasons why measurement is a priority (see Figure 2) are because:

  • 65% need to improve effectiveness
  • 59% need to improve integration with other marketing
  • 48% feel pressure to report quantified outcomes.

Figure 2 also shows, for marketers who ranks social media as a low priority (45%), the study found that:

  • 41% are still experimenting with social media
  • 19% don’t have defined metrics or objectives and
  • 18% currently have very low social media budgets.


Stay tuned, as I’ll be diving deeper into this topic. Impatient? Feel free to download my ebook here.

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