Just like in every aspect of business, money spent must be justifiable and measured against utility, otherwise, we are basically throwing money to the wind. This is the same for digital media spend and all social media campaigns. At the end of every campaign or media-spend, there should be a metric to determine the returns on that investment.
Social media seems to be evolving faster than most marketers and digital agencies can keep up with. It has never been harder to stay ahead of the curve of the digital evolution. Social media spend by corporations and small firms is at an all time high, creating huge opportunities for individuals and agencies who do not necessarily understand the effects of changes in the mechanics of social media networks on digital spend.
In the early days of social media marketing, before Facebook pages had to pay for their fans to see their posts, before Instagram was launched and before Snapchat was a thing, you could actually place a value on Facebook Likes. This value still exists but is significantly lower than before.
The pitch for marketers and agencies was mostly around how large they could grow a brand’s community and reach a larger online audience. The communities would most likely be made up of actual fans or followers of a brand due to the organic nature of campaigns and likes. It was very prudent to consider Likes/followers, Shares and retweets as very good indications of performance. Some marketers employed bottom-line metrics such as Return on Influence or Return on Engagement to determine profitability since it was easier to correlate Likes/followers to conversion rate.
Engagement was more organic and less expensive. Marketers could just spend on building communities around brands and not have to worry about additional spending to reach members of their own network. As long as the content was great, “virality” was assured.
As the digital landscape grows, a whole new dynamic comes into play. People are following more pages and increasing their friends networks. Pages are not only competing with each other for attention but also with increasing number of friends’ feeds. This creates a hurdle for brands while providing a huge opportunity for the social networks. Brands have to make extra effort to be seen by even their followers/fans or risk getting lost in the ocean of feeds flooding the timelines of their target audience.
Besides spending money to build a community, brands now have to spend additional cash to get their content seen by that same community. This changes a lot of things. For one, the value in building a community is significantly lower. Having 2 million fans does not necessarily mean having an audience of 2 million. It also means you can have a 100 fans and reach a targeted audience of 2 million. Raw likes/followers are now vanity metrics because they do not correlate to the metric that really matters — conversion rate! The industry has moved from acquiring and engaging communities to more complex combinations of community building, engagement, reach and most importantly, conversion. To stay ahead of the curve, brands have to get creative, grow strategically and have conversion modules at all times to help measure returns on media spend.
How do we measure Social Media ROI? Social media objectives vary from one brand to the other, making it tricky to measure outcomes. Some outcomes such as building brand reputation cannot be directly quantifiable but because it cannot be measured doesn’t mean it’s not important. Engagement is very important and it should translate to some form of tangible outcome eventually.
The easiest way to effectively measure social media efforts is to identify good indicators of revenue/profitability such as Sales, User Acquisition, Sign Ups, Reservations, etc., and factor it into the overall strategy. A revenue indicator can be in the form of a call to action that leads to sales. At unQut Inc. we try as much as possible to complement the efforts of social media agencies and brands through deployment of social media web services or applications that directly convert social media community members to actual consumers. The application usually is the beginning of the social media journey for the audience.
Take, for instance, banks. Their primary social media objective is to increase their number of account holders while providing efficient customer support to existing clients. Therefore, the social media strategy of such brands should have a two-part approach: Growth + Customer Support/Engagement. Customer support is achieved through brand engagement and interaction. This is usually intangible but very valuable. Most marketers and social media agencies tend to focus on this and have difficulty justifying the value of their social media effort to executives and financial managers. The other part of the strategy, which is equally as valuable, would usually be a call to action that seeks to convert social media audiences into account holders. We achieve this through a service called Social Banking that allows online audiences to initiate their bank account opening process on social media channels. We can then correlate social media spend directly to sales to determine ROI. The entire social media spend even for brand engagement can be justifiable through this means.
There is no hard and fast rule to measuring social media ROI but it is important that marketers understand the objectives of brands and identify ways of quantifying their efforts because if it’s not measurable, it is likely not manageable.