Marketers are hopeful that this will be the year that they finally link social media marketing to ROI, a new survey says.
According to the report from Bazaarvoice, 74% of CMOs predict they will finally tie social efforts to hard ROI this year. The survey polled 175 CMOs from The CMO Club, including those from B2C and B2B companies in various industries.
In 2009, 84% of companies did not measure social media ROI — in 2011, that’s not an option. Business decisions are best made when they are based on hard numbers that measure success, and social media efforts are no longer an exception.
For the past few years, marketers have been content to measure “soft” metrics, such as the number of “Likes” or followers their brands have acquired. These numbers, though, are usually not indicators of an active community.
While those soft metrics still rank highly in importance, marketers are now turning to more traditional metrics that showcase true value. Site traffic tops the list as the most important factor for CMOs measuring social media ROI, as it did last year. In 2011, though, twice as many marketers plan on incorporating conversions — the total number of completed desired actions, such as “Likes” or clickthroughs, divided by the total number of impressions — as compared to 2010.
When asked which social activities resulted in the highest ROI, survey respondents identified Facebook as their platform of choice. Ratings and reviews sites ranked second on that list of high ROI performers. Notably, neither of these activities won hearty responses, as many respondents were more likely to say that they did not know which activities brought in the highest ROI. Another large chunk of respondents did not participate in the activities mentioned.
As ROI is increasingly used to assess the value of each social marketing activity, it seems inevitable that brands will begin to focus on the platforms that create the most added-value.
Which platforms pull in the most ROI for your business, and how do you measure social media ROI? Let us know in the comments.
COMMENTARY: It has only taken about two year's for CMO's to finally realize they needed to measure s0cial media ROI. I believe that the measurement metrics (see above) measure only two aspects of social media: likeability and influence. However, in order to properly measure the ROI of social media you need to calculate the financial return on investment from social media campaigns, or actual financial benefits versus the costs to implement, design, manage and track social media marketing activities.
One of my favorite articles on the subject of measuring financial returns from social media is by Content Marketing Institute titled, "How to Calculate the ROI from Social Media," by Tom Pisello, "The ROI Guy". Tom has an outstanding reputation for helping business executives calculate their ROIs in a broad range of industries not just media. He has written numerous articles on the subject of calculating ROI, and I am happy to show you how he does it.
Tom calculates the ROI of social media by comparing investments versus outcomes using the Social Media Value Chain.
In order to measure the financial ROI from social media you need to understand and track four key measurement components:
- Investments - Social media requires an investment in these areas:
- Marketing labor.
- Resources and tools to establish the social media presence.
- Content and campaign creation.
- Campaign monitoring.
- Social media collaboration and measurement.
- Engagement - Measure engagement by keeping tabs on the number of followers and advocates you have reached from your social media marketing efforts.
- Benefits - Measure the impact social media marketing has on the bottom line. Consider things such as:
- Generating incremental revenue with new prospects and existing customers
- Driving product / operational savings and innovation with collaborative partners
- Avoiding costs for other less effective, less efficient or redundant lead-generation programs.
- Derived Value and ROI - Compare the ratio of investments versus derived benefits to assure the social media efforts are generating enough value compared to other potential investments.
The Social Media Value chain as a model to determine costs and benefits, so that marketers will be able to calculate the financial ROI from social media.
Measuring the financial ROI of social media requires considerable discipline, strategies, procedures and a dedicated management system to track and capture the required cost and benefit information.
I like Tom's approach the most, because it is very simple to understand, even by a layman. If you have a financial background like I do, so much the better. Hope you find this valuable.
Courtesy of an article dated February 9, 2011 appearing in Masable
Comments