While there are unquestionably many ways that social media marketing results can be measured, the debate rages on as to whether it’s truly possible to quantify the ROI from these activities. Some experts contend that because social media activity is rich in metrics, you can and should be measuring ROI constantly. Others argue that social media is a tool, not an event, so applying an ROI to social media is akin to calculating the ROI of your phone, or that at this point the business risks of ignoring social media are so great that ROI is immaterial.
Measuring the ROI of social media is challenging for several reasons, the most significant of which is the problem of “last click attribution;” just because a sale or lead “came from” Twitter or Facebook as the last click doesn’t necessarily mean that site deserves all the credit. The prospect or buyer likely had several other exposure points to your brand prior to that click (visiting your booth at a trade show, hearing someone from your company speak, seeing an ad, reading about your firm on a blog or an industry trade press article or analyst report, etc.). Assigning proper credit to each of these sources is impossible; assigning all of the credit to any one of them is inaccurate.
Still, much of what happens in social media is highly measurable, and these metrics can lead to an least indirect evaluation of the value of different media, activities, topics and tactics. Here are four areas of social media metrics worth tracking, even if they don’t provide direct ROI calculations.
Influence: a.k.a. “reach,” these are high-level measures of your brand or company’s presence in social media, such as number of Twitter followers, Facebook fans, LinkedIn group members, mentions across social media (you’ll want to pick one social media monitoring tool for this and stick with it for a while, for the sake of consistency of month-to-month comparisons). This category can also include metrics like blog visitors and RSS / email subscribers. While larger numbers are generally better, keep in mind that it’s easy to inflate a Twitter following (note all of the spammy “Internet marketers” with ridiculously large follower counts) and that in terms of generating business value, quality is more important than quantity.
Engagement: A level deeper than influence, these metrics include the number of RT’s and #followfriday recommendations you get on Twitter, posts to your company’s Facebook wall, questions answered on LinkedIn or Yahoo! Answers, comments posted on your blog, etc. Anything that measures social interaction. Again, more is generally better (spammy blog comments aside), as engagement is the “social” in social media.
Sentiment: Are the comments, posts etc. being made about your company, brand, product or service generally positive, negative or neutral? This is a very important metric to track, but accuracy can be a challenge, particularly for mid-sized companies. Small companies may have so few social mentions to track that the process can be done manually, leading to theoretically perfect accuracy. Mid-sized to large firms may rely on fee-based social media monitoring tools like Radian 6, Alterian SM2, Cision or Vocus which provide automated sentiment tracking, while global brands can use tools like Neilsen BuzzMetrics or Cymfony.
No automated sentiment tracking tool is perfect (for example, “It sucks having a cold but NyQuil is helping” may be tagged as a negative brand reference for Vicks because of the way that sentence started). Accuracy is most problematic for mid-sized firms that have too many brand mentions to track manually but can’t justify the cost of the most sophisticated tools. For large brands, the number of social media mentions is so large that errors in automated tracking tend to cancel each other out, meaning that overall sentiment analysis can be highly accurate even though individual items may be mis-flagged.
Activity: Most web analytics tools, such as Google Analytics, can be used to track the number of visits, traffic quality (e.g. average time spent on site, number of pages viewed, bounce rate) and even conversion (lead or sale) sources. Again, while this information is certainly helpful, it shouldn’t be relied upon as a precise ROI measurement for several reasons, including the last-click attribution issue noted above, and the fact that some analytics packages (Google included) don’t measure social media referrals accurately; Google Analytics dramatically undercounts Twitter visits, for example.
Particularly in this tough economic environment, where every expenditure is receiving even greater than normal scrutiny, numbers matter. The C-suite expects justification for every dollar spent, including investments in social media marketing. You can’t afford to ignore what customers and other influencers are saying about your brand, but need to quantify the benefits of social media monitoring and participation, in some manner, as well. Calculating ROI with any precision is problematic, but there are still many aspects of social media which can and should be measured. These provide a picture of the benefits of specific social media tools, tactics and activities which can justify expenses and help guide activities—even without perfect cost-benefit analyses.