Social Media’s Return on Investment

Posted At: September 2, 2011 11:51 AM
by Amandeep Judge and Hannah McDaniel

Social media’s impact on communication has been phenomenal. Many social media experts say that it will be the main way people communicate and interact in the near future. Although social media is becoming popular and extremely necessary to brand-building, the questions of how to measure social media and why measurement is important are ever evolving ones.

“Return on investment is the buzz word right now,” said Stefany Sanders, director of social media at Jackson Spalding. “But it’s just one of several useful metrics for measuring social media impact.”

In its truest form, return on investment is only good for measuring monetary sales and growth, said Sanders.

“Measuring social media ROI is difficult because there is potential for positive outcomes beyond just an increase in the bottom line. There are numerous customer relations and relationship building opportunities,” said Kristen Heflin, University of Alabama assistant professor and fellow of The Plank Center for Leadership in Public Relations.

There are many tools and platforms available online to assist any practitioner with measuring social media trends and impact. These platforms help to assess different complex business strategies.

“We work with our clients to articulate their overall business goals and define their social media objectives in that context. Then we have the metrics discussion — what indicators represent achievement of the objective?” said Sanders.

“You should continually conduct research: keyword research, trend analysis, social media monitoring. It’s at the core of an effective social media campaign,” said Heflin.

According to a Social Media Biz article by J.D. Lasica and Kim Bale, there are more than 200 different platforms to use to measure social media, and they all serve different business strategies and audiences. Some platforms are designed for larger businesses, and others are better suited for small businesses. Lasica and Bale suggested that for social media plans to flourish, brands and companies need to evaluate their social media and engage with their audiences.

The article stresses the importance of measuring: “Born as a way to respond to crises and manage brand reputation, social media monitoring, or brand monitoring — which ties into social media measurement and analysis — is finally maturing into a business process that helps the bottom line.”

Maria Ogneva wrote a Mashable.com article on how companies and brands should invest in tools that monitor and measure their social media activities. She notes that monitoring is important because a company needs to know how people are talking about it. This process consists of picking keywords related to your brand and allowing for a tool to gather all online information related to those keywords, in an easy-to-interpret format.

“Clients love proof of success,” Sanders said. “It makes everyone look good, and gives meaning to everyone’s hard work.”

Heflin said that “monitoring the social media ecosystem” as a whole is much easier to do with apps like Radian6, Lithium, Google Alerts and Social Mention. She added that applications like Technorati and Google Blog Search are great for monitoring blogs; Tweetdeck, Twitter Advanced Search and Seesmic Desktop are useful when monitoring Twitter.

Sanders said Facebook Insights is great for monitoring Facebook traffic. She said Jackson Spalding uses Google Analytics to monitor social media impact as well.

According to Ogneva, “Measurement is crucial for benchmarking and tracking your success over time. It’s what helps you draw comparisons to your peers, analyze the huge ocean of tweets and blog posts, and distill them to a list of actionable insights.”

Ogneva explained the similarities between monitoring and measuring, but also emphasized the need for both. She said the main difference between the two is that measuring your social media responses is more detailed and contains the date, source and dimensions of the data. The importance of measuring social media is all about the return on investment.

To get the most social media impact, Heflin believes “a good rule of thumb is to use at least one platform from each branch of the social media trinity — blogs, microblogs and social networks.”

Sanders reminds us that we should first determine if a social media strategy is an appropriate choice for the client.

“We always make sure the objective drives the strategy and not the other way around,” said Sanders. “We tell clients that it is not a good idea to start with the tool you want to use and work backward from there.”

Once a social media strategy is adopted to meet a specific objective, measuring itsROI is key. Social media not only can benefit a company’s bottom line but also provide a different type of return on investment. This new media must be measured to determine what kind of relationships are being built online, and these relationships, whether good or bad, help determine the success of a company.