If 2010 is the year for social media ROI, then I say that it is high time we think about the true measure of social media and how to measure it. In the quest for calculating social media ROI, marketers have yet to fulfill the age old need to measure total marketing ROI. We, at Terametric, are tackling just that under the premise that social media ROI on its own is impossible to calculate because it is an integral part of the overall marketing strategy. One cannot exist without the other and therefore to try and measure the effectiveness, it must be taken as a whole.
Social media is a subset of your overall marketing strategy and therefore is impossible to measure the true value of social media without looking at the total performance of your marketing efforts – both online and offline. It is at the intersection of traditional with non-traditional media where we find the ROI.
Social Media ROI
In order to measure the true value of social media, a marketer needs to look at data from all channels (web, search, social media, blogs, email, CRM, offline, & PR) because everything that these channels generate in the way of contact with prospects and customers resonates in the social web. A tweet could show up in search results that goes to a blog post and then to a white paper download, and then to a contact us form, a few more direct Facebook interactions and then to a sales conversion. If you are not measuring all of those activities, you are not measuring the impact and influence of all channel activity in generating sales. There is no straight line between tweets and conversions although the simplistic approach of measuring it that way is all that has been attempted – until now.
One Dimensional Social Media ROI:
Social Media Investment + Social Media Return = Social Media ROI
Multi-Dimensional Total Marketing ROI:
Channel Investment + Channel Return = Total Marketing ROI
Social media forces a marketer to change its strategy so that it moves away from siloed campaigns and allow content to flow consistently from channel to channel. Without consistency through all points of contact, channel conversion drops off, sentiment and engagement is low and your overall brand suffers. This is why we’ve assembled a top ten list to put the argument that social media ROI is possible — through the measurement of all marketing activity. Without a holistic approach with SM integration into the larger marketing objectives, it is not possible.
Here are the fundamental components of measuring total marketing ROI:
1. Channel Integration: Each channel must allow content to be pushed out to the social web and attract visitors back through the channels for conversion activities (white paper downloads, event registrations, and purchasing activities – see #2 and #3). Channels include your website, blog, social networks, CRM, direct mail, offline, and so forth. Social media and marketing messaging content should be consistently displayed on all channels so that no matter where your customers and prospect, you’re messaging is reinforced.
2. Hard Conversions: Hard conversions are defined as actual sales (dollars and cents) that come through online and offline channels. CRM is at the heart of calculating this metric based on online and offline interactions in the sales process. If well integrated, overall marketing activities should map to shorter sales cycles, referrals from all channels and higher sales.
3. Soft Conversions: Soft conversions are defined as any other marketing or sales conversion that does not generate actual dollars and cents but contributes towards that end. White paper downloads, email subscriptions, Facebook “likes”, blog comments, forum subscriptions, etc. are all signs that your sales and customer support practices are healthy and you’re building social intelligence into your overall marketing.
4. Social Intelligence: Social intelligence is a measure of your ability to generate engagement, loyalty, sentiment, retention, influence, reach and rich demographics from online and offline marketing channels. If you’re measuring activity from these channels, you can get an accurate picture of how your brand is positioned in the marketplace specific to different products and industries.
5. Outbound Metrics: Outbound metrics represent metrics that are used in your channels that tracks the consistency of your messaging and user experience. These metrics are used to measure how well you construct your channels and that you have control over.
6. Inbound Metrics: Inbound metrics track the performance of your channels – how many visitors you attract from the social web and how many you convert. If your outbound metrics are tracking high, then in turn your channels will attract and convert.
7. Competitive Analysis: Without knowing how your competitors messaging is resonating in the social web, and how successful you are at competing for the hearts and minds of your prospects and customers, then all of this marketing effort is for nothing. You can craft the cleverest marketing campaign but doing so without understanding what is current, relevant and how your competitors are positioning themselves, and then you cannot truly measure the effectiveness and value of your work. All measurement should be benchmarked against the competitive online marketplace.
8. Sentiment by Channel: Luckily, with the advent of social media, there is a plethora of intelligence to mine in the way of unsolicited fodder about your brand, your products and the industry you compete within. Sentiment should be tracked on these basic levels as well as how your channels are influencing it. Sentiment on its own is good but tracking how well your channels are influencing it is better.
9. Influencers by Channel: Sentiment is generated by a whole host of individuals and some command more attention than others depending upon whether they fall into the brand, product or industry buckets and they should be weighted differently as such.
10. Social Media vs. Marketing ROI: Once you are tracking your outbound vs. inbound metrics, your total marketing ROI can be calculated on an ongoing basis (the amount you spend improving your outbound performance vs. the return you get on inbound conversions). If your social media marketing campaigns are truly cross-channel, then you’ll have highest return and you’ll be tracking the channel activity holistically to get the true value and ROI of your social media activities. Just because you tweeted up a storm, the result of that activity might have landed you high conversions through your website (subscription, purchases, etc.) and blog (participation, followers, etc.).
And there you have it all wrapped up in a nutshell! This is how it is possible to measure social media and marketing ROI. We welcome your thoughts and comments!
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