How to derive measurable ROI from Social Media?

Random metrics to measure Social ROI

A decade after the advent of social media, there is a lot of ambiguity on the actual effectiveness or rather in quantitative terms the ROI from social media spends. We come across several performance indicators yet there aren’t any integrated metrics components available that can measure all components and derive a realistic ROI number.

According to The CMO Survey (a recently-released survey of 410 CMOs by Christine Moorman from Duke University’s Fuqua School of Business and a Forbes contributor), almost half (49%) said they aren’t able to quantify whether social media has made a difference for their companies, while 36% said they had a good sense of qualitative – though not quantitative – results. Only a meager 15% said they’ve seen a proven quantitative impact.

All these forecasts and insights point in one direction and that is -> “How effectively we have leveraged advertising platforms of social media channels?” Not surprisingly, in a Big Data-driven era, that lack of clarity is coming under increased scrutiny; 66% of respondents say their boards and CEOs are tightening pressure to measure ROI.

Let us explore how a holistic social media performance evaluation metrics should be created and what metrics should be analyzed for each of them:

There are two main objectives to calculate the ROI from social media that need to be considered:

  1. ROI from the perspective of social media tools i.e. likes, shares, engagement, reach etc.
  2. ROI from sociocommerce perspective i.e. how much traffic was driven to the website and how many of these converted into sale.

Let us start with the first objective of analyzing metrics to calculate ROI from social engagement.

1. To calculate content reach among total fan/followers base

People you can potentially interact with when you use social media are simply the maximum number of people you can reach through your social networks i.e.

  • Brand reach = Total number of fans and followers on different social media sites – 30-35% of the total followers.

(The absolute number would always be the total number of your brand followers across all your social channels, but to calculate the net reach; we should reduce 30-35% of the total count and not consider the common profiles that are following your brand on different social channels)

Every piece of content you share can also be shared by your fans and followers. When they do so, even more people see your content. This results in the following equation for content reach:

  • Content reach = Brand reach + ∑ (Shares) x (Reach of each sharer)

E.g. Let’s say you tweet a link of your press release to your 100 Twitter followers, and one of them finds it interesting enough to share with their network. They then re-tweet it to their 1,000 followers. This is how you would calculate both your brand reach and your content reach:

  • Brand reach = 100
  • Content reach = 100 + ∑ (1 Share) x (1,000 Twitter followers) = 1,100

2. To calculate content engagement and then brand engagement

Content engagement can be measured by social media shares (i.e., retweets, likes, shares, comments etc.). The level of your content engagement helps you understand if your content resonates with your audience. For example, did your audience feel connected with your content enough to share it with their networks?

  • Content engagement = (Shares + Comments) / Total number of posts OR Clicks/Content reach

This will help in analyzing the kind of content your followers base prefer reading and interacting with i.e. highest engagement.

On similar lines, we can also take into account what is being talked about your brand on the social space that is not published by you.

  • Brand engagement = Likes + Tweets + Comments + Mentions

As we all are aware, here the standard Online Reputation Management Analytics tools such as Radian6, Attentio, Brandeye etc. comes into play to analyze the health of these social mentions i.e. positive, negative or neutral.

3. To calculate the impact of your content strategy vis-à-vis acquisition of new fans & followers

You need to analyze and gain a clear insight on how your actions had an impact on the increase/acquisition of new fans and followers. You have to look at your social media efforts holistically and to tie them back to the goals you are looking to achieve. Let’s discuss this with an example:

Day 1: 100 Followers on Twitter -> 2 post on a new offer

Day 2: 102 Followers on Twitter -> 2 posts (1 on offer and other one with a TVC ad)




Day 10: 125 Followers on Twitter -> Asking for a product feedback

On similar lines, the impact of your content can also be evaluated as well as best performing content approach can be identified during a targeted campaign that is using paid promotions.

You can also come up with real insights by clubbing it with the analysis of the standard CTR, CPM, CPI, CPC etc. on best performing banners and ads through the advertising platforms of Facebook, LinkedIn, Twitter, and Slideshare etc.

Now the role of the second objective comes into play i.e. “ROI from sociocommerce perspective i.e. how much traffic was driven to the website and how many of these converted into sale.”

=> Tie the performance metrics with sales to calculate ROI driven through SocioCommerce

For this, there are several parameters to be monitored and analyzed (Here Google adwords, webmaster and analytics kind of tools play an effective role):

  1.  From adwords platform: Clicks, Impressions, CTR, Avg. CPC, Conversion (through goals), Cost / conversion, Conversion rates (from visitor to buyers), Sale & Revenue per visit, Abandoned shopping carts etc.
  2. From Analytics/Webmaster: Audience demographics & psychographics, technology, channel/campaign  performance, traffic, keywords, visits and referrals from social channels,

For detailed metrics, please evaluate or take recommendations from your digital media agency to choose from tools by Google, Adobe Omniture, Compete, Crazy Egg, Optimizely etc.

Ref. Source: iContact

Recommended reading for more information:

Info graphic by MDG Advertising on “The ROI of Social Media”

Info graphic on “10 examples of social media ROI”

the_roi_of_social_media_mdg_advertising_infographic (1)10-examples-social-media-roi




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