calculate social media ROIIt’s the million dollar question (or questions?) – can you get a return on investment on your social media activities, and can it be measured?
Before I get into my answer, watch this video, mainly because it’s just so enjoyable to see marketing people (that aren’t us) getting slapped… and it also reminds me of the slap bet from How I met your mother (and HIMYM references are always good). So watch.

Ahh, don’t you feel better now? It seems providers like Adobe Social would have you believe that it is indeed possible to measure ROI from Facebook, Twitter, YouTube etc – but is this just a sales pitch or is it true?
It’s true. Well, to an extent. The real answer is probably somewhere around ‘it depends’, because there are some things that can be accurately measured and others that are not so easy. It also depends on what you see as ‘return’.
Probably your finance department (and maybe your senior management team) see ROI in the traditional sense of the word – financial return on your investment, because obviously this is what it is originally meant to mean. And typically this means in a direct-response, measurable way. So you spend $X on a campaign, and you then see a direct gain of $Y in revenue as a result. Implement a bit of Maths101 and there’s your return (hopefully it’s more than 100%).
Can you do this with social media? Of course you can. Well… when you’re dealing with direct-response initiatives within the channel. For example, if you implement a Facebook advertising campaign – you might spend $1,000 and by implementing some tracking or using a unique landing page or a promo code etc, you can directly attribute the resultant revenue from the campaign and thus calculate ROI. You can also do this via campaigns on your Facebook Page – implement a Facebook deal, or offer a unique promo code to your fans, or post a link to a unique landing page etc – it can easily be done. The same is true for advertising on other social media sites – just like advertising on any websites in general. All can be tracked, measured and calculated.
However what about the more hazy area of engagement and customer service? Can ROI be tracked here? Yes it can, but it’s not as clear-cut. It always depends on what resources you have at your disposal for starters. For example if you have 24/7 Twitter customer service and this is linked to a good CRM system you can probably track to some degree customer retention and acquisition. I can tell you from my years of social media response (oh the good old days) that there were plenty of times I knew I’d saved a customer or gained one from the social interaction. Maybe you can’t get this absolutely 100% right, but you can get a pretty good idea from your staff in the field if you’ve got the right systems in place. Then you just apply the average worth of a customer (which you should know!) and you can get a good idea of what social media is gaining you in terms of acquisition and retention per year. Now you might think well what is the spend on this so that I can work out the return – you could look at the salaries of the people doing the work, but you also have to factor in that their sole job may not be acquisition/retention, it may also be general customer service (saving you time/money in other customer service areas like phone/email), brand management, marketing etc. So if you wanted to get scientific, you could breakdown and quantify all aspects of their job responsibility and figure out what percentage of their time (or what percentage of their overall job description) is attributed to customer acquisition/retention – then you apply that to their overall salary to see what it’s costing you, to figure out ROI.
It’s all a bit complicated I know, but it can be done! There are also ways to try to establish the value of a Facebook fan or like, but these are almost more for show than really useful, in my opinion.
Of course there are some things that just can’t be adequately quantified – for example social media is not all about sales. As much as your CEO might like it to be – it is a fair amount to do with general customer service and brand reputation. So if your business doesn’t apply ROI metrics to your customer service department or receptionist, then perhaps it’s not fair to apply them completely to social media either. Some social media activity can be tracked, measured and evaluated, other activity isn’t designed to be so straight forward.
Do you measure the ROI of your social media activity? Do you think it works?


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