ROI of Social Media: Wrangling the Elusive

Everyone and their marketing mother wants to slap a hard ROI to their social media campaigns. Is what I'm doing on social worth the cost? What's the value of my effort?While this is certainly a topic that requires more than a simple blog post to tease out, let's take a second to discuss a couple "low lift" implementations that'll help you get started. Social media ROI is real. And it's here.

ROI in Regards to the Marketing Funnel

In order to answer the question of marketing ROI, we must first address the purpose of a particular marketing effort. For example, the way you might calculate an ROI figure for awareness will differ greatly compared to your purchase efforts. This is key when setting expectations with stakeholders. If the client is expecting an uptick in sales during a campaign meant to increase "Interest" in your brand, they might be easily disappointed. But during a campaign meant to drive evaluation? That sales increase expectation is more warranted.

Remember, ROI shouldn't have a static definition, but rather a relative one.

It's this concept of relativity that we'll be invoking as we look at defining the social media ROI of two campaign types: Awareness & Purchase.

Social Media ROI of Awareness Campaigns

Clients are often nervous to run Awareness campaigns as they want to see more for their money than just brand lift. By highlighting the difference between paid and organic impressions, though, we can supply the client with an Awareness ROI figure. Every campaign gathers impressions, but they also gather "bonus" impressions in the form of social media shares. This bonus media gets your content in front of extra eyeballs for free! In other words, an added return on your initial investment.

Next time you report on how many impressions your media spend brought in, split out the impressions you directly bought and the impressions you earned - this data will already be differentiated between "paid" and "organic" (the activity acquired via user shares). By doing that, your report can be greatly transformed.

• Without ROI Calculation: "We garnered 1.6M impressions with $100 media spend."
• With ROI Calculation: "We garnered 1.0M impressions with $100 media spend. We also earned 600K additional impressions via social shares. By using the campaign's $10 CPM, our $100 media spend brought in $160 worth of media - meaning an Awareness ROI of 60%."

The difference is clear. One report tells the client that a campaign simply occurred, while the other report tells them that the agency's efforts to create an engaging, strategic campaign got them extra bang for their buck.

Social Media ROI of Conversion Campaigns

Conversion ROI is a bit more straightforward with revenue being the KPI for product-based businesses and the average value of a lead for service-based businesses. So instead of focusing on the conceptual details, I'll focus on the logistics of tracking these KPIs. There are two ways to make sure your social media campaign gets all the credit it deserves: hard coding your pixel or using a pixel-friendly website builder.

Most major social sites have created step-by-step guides to help you hard code your pixel into your website (e.g. Facebook, Twitter and Pinterest). No need to be scared of code :) When implementing this code, take your time and make sure all possible events are tracked (Site Visits, Add to Cart, etc.). Are there multiple ways for a user to add to their cart? Does your pixel grab the revenue figure off the site or just account for a purchase?

It's much wiser to take the time to get your pixels right before launching your campaign, than wishing you had done more when you're looking at your final data.

If you happened to build your site on a website builder like Squarespace, there's great news! You can simply insert your code into the site using their Advanced options. These sites are getting better and better at playing well with social platforms. For example, Shopify not only built the functionality into their site to automatically recognize standard Facebook events like View Content, Add to Cart, and Purchase, but plug-ins are available to easily create dynamic product feeds used to build dynamic re-targeting campaigns. But more on that in a different post...

In Conclusion

Social media ROI doesn't have to be some scary, intangible idea. The technology is here. We just have to know how to wield it to our advantage. By implementing these practices, and building a few of your own, your clients will no longer see social media as a nice-to-have platform for play, but a need-to-have platform with serious business implication.