By Sue Brady
ROI is a key performance indicator (KPI) that most marketers hold near and dear. Why? Because most brands use marketing to generate product/service sales. And typically, a marketer will spend fully in the most efficient resource before allocating funds to the next channel. I know what you’re thinking: My campaign wasn’t about sales, it was about ‘likes’ on Facebook. And to that I would ask: Why did you want likes? And you would say: To get sales! So there you go.
The standard definition of Return on Investment, or ROI, is ‘dollars made’ minus cost divided by cost:
$$s generated – investment (to generate those $$s)
Basically, what did you get for what you spent, and was it worth it?
For social media this is admittedly a difficult task. It’s hard to track the steps involved that moved your customer to the final click. But it’s not impossible. I wrote this post last year on attribution, and the field is ever changing. Earlier this year, Google bought an attribution company called Adometry and they’re now happy to help you determine what steps your customer took in their buying journey.
Attribution modeling is probably the trickiest part of figuring out your social media ROI, but it’s really important. Let’s say someone saw your ad while they were on Facebook and clicked. They read your landing page but decided they weren’t ready to buy. The next day they saw a tweet that you or a fan posted and clicked on that to continue with their research. But they still weren’t ready to buy. Then perhaps they saw an email from you, they clicked and made a purchase. Attribution companies can tag each of those touches so that they can tie them together. It’s not perfect, but it’s better than giving all of the revenue attribution to the email campaign.
To figure out what your social media is worth, you’ll want to track the purchase behavior from those who ‘liked’ your page, the click/purchase behavior from those who clicked through on your tweeted link, buying behavior from those who watched your YouTube video, and any other action you have prompted. As you can see, it’s much more complicated than figuring out your ROI on that last direct mail piece you sent. And speaking of direct mail, that can also impact your social ROI, along with TV advertising, radio etc. etc. etc. Some things you’ll be able to directly track, and some things you won’t.
Story: I used to work for a company that ran a lot of TV advertising, and also sent steady direct mail. Over time it was clear, even to management, that if we had to scale back the TV, the direct mail rates would suffer. So we were eventually able to establish how much the ‘halo’ of TV was worth. It improved the ROI of our TV ad campaign.
Your first step is to figure out what you hope to gain from your social media, and then make sure you can measure and track it. Do this by tagging your media, making sure your coupons offered via Facebook are coded, tracking all clicks from that consumer and having analytics in place.
And even though I said at the beginning of this article that it’s all about revenue, I realize that sometimes your content really is not about that. If that’s the case, know what the goal of your content is to determine if you’re achieving what you wanted to achieve. This might be engagement via answers to posed questions, or it may be shares…or in fact, it may be revenue.