There are two schools of thought that have varying opinions when it comes to measuring return on investment (ROI) in social media. On the one side of the fence you have those who say you cannot measure it, but that's okay because you experience value in different ways. On the other side of the fence you have those who are saying that social media ROI can indeed be measured, but it's about applying monetary worth to certain milestones, lengths of effort and valuable interactions. It appears that it's highly dependent on your perspective and exactly what you would class as a "return".
ROI is measured in many different ways that don't necessarily equal cash values and profits. A lot of returns are based solely on goal achievements in conversions - newsletter signups, product purchases, enquiries and so on. So where does social media fit into this schematic? And is it something that can be tabulated in a set of books that will contribute to the end of year financials?
Let's have a look at those who think you can measure ROI in social media. Understanding the journey a user takes to end up converting by buying a product or signing up for a newsletter is paramount to realizing returns. The user first has to follow you, like your page or be in your circles. Perhaps he or she engages with you on your page and possibly even goes so far as to share your content, encouraging more users to follow? The ultimate goal is to get them to convert and each step is a milestone that needs to be recognized as an integral part of the journey towards conversion and ROI.
Assigning a monetary value to the volume of followers, clicks, shares, scope of reach, likes and comments is one way to quantify your social media efforts. Or perhaps value can only be assigned once the user has converted and actually bought into what you're selling? The answers here are relative, but it's important to consider that each milestone along the way has value, even if it isn't represented by a number.
That brings us to the other group of individuals who say that social media can't really be measured in a monetary manner, because value is experienced in different ways. I find myself leaning towards this side of the fence because it isn't about cold, hard cash at the end of the day, it's about brand awareness and building up an audience of loyal supporters who feel a sense of trust when it comes to your brand. This is invaluable when it comes to trying to sell your product and brings back that elusive human element that is often forgotten.
It's Not All About the Numbers
Value versus revenue = two very different things, and value is something that can be measured in many ways, including the following:
• Brand recognition and awareness
• User engagement, likes, shares, comments etc
• Brand mentions with positive sentiment
• Overall reach of your social media content
• Increase in followers
• Amount of traffic generated by your social media content
If you're looking for numbers - definite figures that can be deducted from hours spent to determine what you're making off your social media efforts - then you may be a little disappointed when you do the calculations at the end of the day.
There are those who are still trying to understand the value in social media and maybe it's not for them in that case. Perhaps they're more suited to email marketing or PPC campaigns that can be measured, tracked and represented by a figure of profit at the end of the day. On the flipside, if you view a positive brand mention as value, or a photo that reached 1,000 people as a measurement of worth, then you might also be a person that regards social media as an important marketing tool, and the ROI it delivers as invaluable.
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