I was feeling good about social media ROI, and how/whether people understand it. I figured, at least my people — marketers — get it. They understand how to measure social media, or at least the principles behind it.
eMarketer dashed those hopes to the ground with their December 20, 2011 article When Will Social Media Measurement Mature?.
Marketers know that counting fans, “likes” and followers is not the best way to measure success in social media marketing. Yet these metrics are often the top benchmarks for performance. It’s not surprising, then, that marketers consider calculating return on investment to be the biggest challenge of using social media, and that a majority of them believe they cannot measure social media campaigns effectively.
How to Calculate Social Media ROI
Calculating the ROI of anything is easy. Subtract how much you spent from how much you made, and that’s your answer. If you spent $10,000 on a social media marketing campaign, and you made $50,000, your social media ROI is $40,000.
$50,000 – $10,000 = $40,000.
So how do you know whether sales are coming from your social media efforts?
I’m not going to delve into the step-by-step process, but I’ll give you the tools and concepts you’re going to need to get started.
- Set up Google Analytics, and install the code on every page on your website. If you have a blog, it only needs to be part of the code. If it’s on a website with pre-built pages, it needs to be on every page.
- Set up a Bitly account. Bitly is a URL shortener that also lets you do some basic analytics on the number of people that have clicked your link.
- Create a Google Analytics tracking campaign for any and all major links you’re sending out. This is how you’re going to measure a particular blog post, tweet, Facebook status update, etc. If it’s just a basic link to the website, a campaign code is optional. But if it’s a blog post about a particular marketing campaign, set up the Google Analytics campaign.
- Put a hyperlinked call to action in your blog posts that take people directly to a sales page or order page. Make sure that the hyperlink is given a unique campaign code.
Here’s what will happen:
- You’ll send out a link to a blog post via Twitter, Facebook, etc. Let’s say that 10,000 people see that link on your various accounts.
- 1,000 people visit your page and read that blog post, all within a 6-hour span.
- Of that 1,000 people, 100 people actually make a purchase with a total of $10,000 in sales.
- Those 100 people also fill out their contact information, which gets placed into your CRM.
By looking at these numbers, you can determine a number of things.
- 1,000 visitors out of 10,000 social media followers, fans, and friends means you have a 10% click-through rate.
- 100 sales out of 1,000 visitors is a 10% close rate; out of a 10,000-person network, that’s a 1% close rate.
- By looking at the entrance and exit paths of that particular 6-hour period, or particular day, you can see that a majority of people were moved enough by the blog post to go directly to the order page. Compare that to another blog post that only lead to 30 sales out of 1,000 visitors, and you know it wasn’t as effective in moving people to act.
- You can then subtract the cost of that particular campaign from the amount of money you made to calculate the total ROI for the day/week/month.
Calculating social media ROI is not that difficult. It’s just a matter of having the right tools and knowing basic analytics and campaign creation. There are literally hundreds of articles and several books on each step I first described. It’s just a matter of reading, and then trying out what you’ve learned. With some trial and error, and constant measuring, you’ll soon learn what works and what you can stop doing.
Or you could just hire a social media professional to do it all for you.