A report from Forrester last year mentioned that only 8% of social marketers are satisfied with the ROI of their social marketing campaigns. We think the situation this year has not improved much. There are significant challenges: different conceptual definitions of social media ROI, lack of standard and agreed upon metrics, disagreements over methods of measurement and the wide variety of ways in which social media is used by various verticals and businesses.

Our advice is to start with a fundamental question: Are you trying to generate revenue from social media or are you engaged in social media to cut cost? Based on our work with social media insights we see tremendous opportunities for both. The strategies vary depending on if you are B2C or B2B and your target audience but the essentials remain the same. The critical element is to be identify and work towards  measuring what is important for your business. There are many ways to relate those measurements to a return but you can’t do that unless you have the right analytics setup.

There are plenty of good arguments against an over-emphasis on ROI for social media – see Risk Avoidance and the ROI of Social Media for example. Remember not to get carried away by ROI measurement but there’s no way that any business can brush the ROI question aside.

Here are the three key factors pointed out by Forrester report Justifying Social Marketing Spending. See the list of references at the end to get more information and case studies.:

Effective social marketing measurement remains elusive. Despite overwhelmingly favoring brand goals, 53% of social marketers rely on clicks — a traditional direct response metric — to measure their social marketing campaigns. Engagement metrics are catching on with more sophisticated social marketers, but marketers must align back-end metrics they really care about such as sales, lift in brand awareness, or lift in purchase intent with patterns in user engagement.

Efficiency and scale are problematic when using social tools to build awareness. Sixty-three percent of social marketers consider increasing brand awareness the primary goal of their social marketing campaigns. While some social tools such as viral videos and widgets can be effective at increasing awareness, these tools are typically relatively expensive compared with other social media tools and are very difficult to scale compared with traditional media buy campaigns.

Creating awareness virally is largely hit or miss — and mostly miss. Contrary to the belief of many social marketers, “going viral” is not a type of campaign but a side effect of successful social campaigns. While social marketers can increase the odds of viral pass-along by executing a campaign with great creative, a well-targeted audience, and proper empowerment of consumers to pass along messages, marketers should consider any viral pass-along as an added bonus to their campaign impressions, not a primary objective.


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