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Social media return on investment - does it add up for your business?

David Cowling's picture

Social media has had a meteoric rise in fortunes in the past couple of years, leaving many marketers and companies still trying to catch up. David Cowling shows how a well-run social media campaign can give a great return on investment, and sometimes surpass traditional media.

For any organisation, measuring the time and effort spent on your social media campaign is no easy task. You may have management approval to begin marketing via social channels - now you need to show them the return and benefit this new medium presents.

Looking at my latest reports on Australian social media statistics, specifically for November – we see that Australians are very much consumed by social networking websites. For example more than 45% of the total Australian population have a Facebook account. This is incredible considering those aged under 13 are prohibited from using the site.

So what are the key considerations when measuring your social media return on investment (ROI)?

  • Has there been a clear impact on sales or orders that specifically resulted from your social marketing activities?
  • Has the number of new business enquiries increased from using social media? Maybe you got other new enquiries too, such as media partnerships, educational information requests, companies offering you products, etc. How much are these worth to your business?
  • Since using social channels, have customers contacted you over these channels in the quest for customer support? Did you offer this support and satisfy your customers? If you created a positive impact, how much is this worth to your organisation?
  • Has social media raised your company brand name awareness?
  • What is your overall level of engagement from social media communities? Is it positive or negative?

When using social networks you want to be able to measure the results these sites are bringing. Management may have given you the go-ahead to commence promotion on social media sites, now you need to report and show them specific results from your campaigns.

You can easily track your campaign results with some basic measurements.

Firstly, look at whether or not you have you gained new followers on Twitter. How many followers did you have before you started social media marketing, how many do you have after your first month, quarter, etc? Has your engagement on Twitter increased? Are more people retweeting your comment or sending you @replies?

Secondly, record how many Facebook fans you had before you started the promotion. What was your 'talking about you' ratio? After marketing on social channels, how much did these two metrics grow?

And thirdly, look at how many people were clicking through from social networking sites to your company website or blog? Using tools like Google Analytics can help, but you can use free custom URLs for tracking, like Bitly. Bitly is a great free tool for providing advanced click through metrics to your content.  

The hard part comes in putting a dollar figure on all of this activity.

Considering that on Google Adwords (Google search advertising) you would generally pay between $0.50-$1.00 (on average) for each new website visitor.

How many new website visitors did social media promotion generate for you?
How many sales/ orders/ enquiries did social media promotion generate for you?
Add up these figures and calculate an approximate total this social media marketing generated.

Factor in your costs, looking at how much time you spend on social marketing. Many social media consultants change between $70-150 per hour.

Using this method will be transparent for your management and marketing teams, and will give your organisation as a whole the true ROI on your social marketing activities.

Social Media can be a powerful marketing tools for local, national, and multi-national businesses, but before you conduct any marketing on social media sites you need to determine where your customers will be, and where they are most likely to interact with you.

If your business already has a significant online presence, or uses current online marketing products to drive sales, then moving into social media is the logical next step. It’s important to understand the wide-scale impact social media has had on our everyday lives, but do remember that not every business will benefit from this new marketing medium. Move in cautiously, track your results and constantly review what is working best for you.

 

David Cowling is the founder of SocialMediaNews.com.au, an Australian website dedicated to covering social media news, tips, tutorials and industry statistics. He is based in Sydney and enjoys commenting on the social media landscape in Australia as well as major developments worldwide.