Before social media made its grand debut into the advertising world, web analytics were safe, cozy and familiar. Success was measured by clicks, conversions and most importantly—sales. This was Return On Investment as the marketing world knew it. However, upon arrival of social media, this common metric used to evaluate the efficiency of an investment or to compare the effectiveness of a number of different investments was forever changed. It went from having one set meaning to having three, maybe more.
Social Media is Unstoppable
Consider this. The amount of time internet users spend on social networking sites is increasing. The time Facebook users spend on the site has tripled since August 2008, and one study actually shows they interact with their profiles more than 15 hours per week. YouTube is the third most visited site on the internet, and brings in nearly 82 million monthly visitors, while Twitter knocks in about 28 million monthly visitors.
In an attempt to reveal the multitude of benefits that social media can garner for a business, the traditional way of measuring success needs to be expanded. Marketers know that social media is growing at an exponential rate, and that they need to be a part of it. But there needs to be a way to prove the worth of social media—and in this particular case, the long-standing performance indicators don’t apply. Marketers want to know, what is the ROI of social media? (Where investment equals time and manpower to create and maintain a social media presence.)
Once people begin to accept the abstract notion that this measurement isn’t initially going to focus on the same metrics used for more conventional online advertising, they will begin to see the many faces of ROI emerge. When people begin to delve deeper into what type of return they may get from social media, they’ll begin to see how this will affect their business overall.
• Return on Investment. This traditional way of measuring success based solely on the monetary value of a given campaign is used to evaluate the efficiency of an investment or to compare the effectiveness of a number of different investments. It’s ROI = (X – Y) / Y, where X is your final dollar value and Y is your starting dollar value. However, this system becomes problematic when trying to assign ROI to social media. Social media is about human interaction—the back and forth, give and take relationships between brand and consumer. And trying to appoint a dollar value to conversation and human relationships isn’t the most straightforward task. So while many social media efforts will eventually result in quantifiable results at some point, it’s generally not the initial approach marketers should take when measuring the success of social media efforts.
• Return on Insight. Commonly referred to as the new “ROI”, return on insight refers to a new way of measuring the success of a brand’s social media efforts. Gone are the days when number crunching and counting clicks existed as the sole means of measuring social media success. Now, in order for a company to launch and maintain a successful social media presence, the qualitative data must be given as much acclaim as the quantitative data—if not more. Social media campaigns should be measured in terms of consumer engagement. It’s therefore critical for brands to create an environment that elicits customer feedback—and then intercept and interpret this feedback. Social media provides a unique way for businesses to interact with consumers while gaining valuable insight, creating brand awareness and consumer loyalty. Measuring return on insight provides an excellent indication of your social media campaign performance.
• Risk of Ignoring. This is along the same lines as return on insight—but it shifts focus to the potential risks of disregarding social media. By opting out of social media, a brand is automatically disqualifying itself from numerous benefits social media has to offer. The opportunity to obtain valuable customer feedback, connect with your consumers, build brand loyalty, respond in the case of a crisis, intercept and engage in conversations surrounding your brand and create possible sales is all lost when you choose to sit out on social media. And while it may not seem glaringly obvious at first, this could eventually translate into a dollar value. When it comes to ignoring social media, the stakes are high. Not a risk you should take.
Which Measurement is Best?
One is not necessarily better than another. It’s all in how it’s looked at and who’s looking. In order to establish a successful way of measuring the return from social media for your business, a goal must be established. Is that goal eliciting more feedback and developing stronger relationships with your consumers? Or is the goal to provide better customer service? After establishing this, set a specific time frame with which you hope to accomplish this goal. At the end of that time frame, look at your social media efforts and see if you are reaching what you initially had set out to accomplish. Setting small goals like this can enable you to have a clearer vision of whether or not you’re getting what you want from your social media efforts–and in the case that you’re not, what you need to do in order to change the outcome.
The world has changed, consumers expectations have changed and the way we market has changed too. Therefore, it’s essential to re-evaluate the ways that you’re measuring success in order to ensure that your efforts don’t go unnoticed.