How to Get Better at Measuring Social Media ROI

 

Measuring the return on investment (ROI) of social media marketing continues to challenge both large and small companies, but many marketers think they’re getting better at it.

Only 42 percent of marketers surveyed by Social Media Examiner say they are able to measure their social media activities. Most say they are unable to measure ROI or are uncertain if they can. In 2014, 37 percent reported they could measure ROI, and 26 percent said they could in 2013.

On the other hand, most marketers (72 percent) say they regularly analyze their social media activities, while 14 percent don’t and another 14 percent are uncertain.

Other research also points to the challenge of measuring social media ROI. A CMO survey reported that only 15 percent of marketers reported they’ve been able to quantify the impact of social media on their businesses. Experts say the low percentage may not be surprising, considering the exacting requirements of marketing measurement and the fact that social media is relatively new marketing tool.

For measuring social media marketing, few companies used purchase activities or financial outcomes, such as profits or revenue, to judge the impact of social media marketing.  Most marketers chose engagement metrics rather than sales- and profit-oriented figures. The percentage of marketers using the number of friends/followers increased 88 percent, more than any other metric. Other metrics seeing gains were net promoter score (+71 percent), buzz indicators (+54 percent), and product/service ratings (+71 percent). “Hits/visits/page views” was the most popular measurement metric, followed by 60.7 percent of survey respondents.

Unfortunately, such vanity metrics provide little indication about how social media marketing is helping companies reach their business objectives.

Ironically, even while lacking solid measurement results and insights, most brands plan to spend more on social media marketing.

Tips for Social Media Measurement

To help judge how social media impacts financial objectives, experts recommend:

• Set specific goals for social media campaigns and select metrics that measure those goals.

• View metrics through a social media dashboard rather than trying to track metrics through different sources. An integrated dashboard of results saves time, provides real-time access, displays a comprehensive view of performance, and makes it easier to analyze and interpret data.

• Follow a few carefully-selected metrics consistently rather than shifting between different metrics, which hampers analysis and wastes resources.

• Invest in analytics, such as in-house staff, agencies, tools and technology, models and customer databases, to better understand the impact of social media. Companies spend just 2.3 percent of their marketing budgets on measuring social media ROI.

Contributing to the Sales Funnel

In order to convince company management that social media contributes to the bottom line, marketers must show how it brings customers into the sales funnel, argues digital marketer Michael Price in his article for the Huffington Post. Social media attracts consumers’ attention, increase awareness, and creates desire for a company’s goods or services, which can than lead to purchases.

“Social media unlike any other form of marketing gives brands the ability to drive customers and prospects into their marketing funnel in a way that feels authentic and builds real emotional connections with their brand,” Price asserts.

Using and tracking special coupons, purchase codes, inquiry forms and URLs used only in social media will help trace sales to social media activities.

Bottom Line: Although marketers’ ability to measure how social media contributes to ROI is gradually improving, the task remains challenging for most. More than half of marketers surveyed remain doubtful about their ability to link social media marketing to key business objectives. To measure the impact of social media on the company’s financial results, companies must develop methods to trace customer response to social media activities.

How do you measure the impact of social media activities on your company’s ROI? Please share your thoughts and suggestions in the space below.