Social Media ROI (Return on Investment) is the elusive 3rd-rail of social networking. It’s elusive in the sense that there is no absolutely agreed-upon industry-wide calculation to use. It’s the 3rd rail because that’s where all the power is. Social media managers don’t want to be judged by a set of metrics that might not reflect the true “value” of the social media channel(s). Social media brand managers are focused on building communities and building attention rather than focused on delivering to the bottom line.
Unfortunately, this leaves many executives with an uneasy feeling that all this tweeting, “liking”, and pinning is just an act of futility without anchoring anything to a real bottom line.
It’s clear that there is and ROI in there somewhere – but how can it be measured?
Building a Set of Success Metrics
I’ve chatted with many customers & friends (often from the SMMOC crowd) about the SMROI issue, and the first thing that becomes obvious is that for some reason basic marketing practices get tossed out the window. I don’t know why it is – but SM is merely an extension of the existing branding / PR / Sales / Advertising / Promotion channels that have existed in all businesses.
Advertising using Google Adwords is perhaps the antithesis of Social. Social is about building relationships, attending to customers on a one-on-one level, and fostering a sense of community within the social-sphere. Adwords is the opposite. It’s about reaching a customer at the crux of their decision-making process: At the point they’re searching. The website is responsible for the rest.
So, the challenge becomes building a set of metrics (quantifiable) that operate within a personalized space (qualifiable responses).
The easiest to measure is: Clicks to the website that result in X, Y, or Z goal(s). Your website is your conversion engine – it’s the space where browsers turn in to leads and customers. So, start with this simple goal: Measure the performance of links coming to your site from social channels.
Creating Custom Campaign Links
One of the most useful – but hardest to find – features of Google Analytics is the ability to generate customized Campaign URL’s for your site. The URL Builder tool can be found here on Google’s Analytics support documents and you should bookmark it!
The builder itself is pretty straightforward. You simply setup the fields that are provided in the “Step 2″ and it will automatically be tracked within your Google Analytics account.
For some reason, this tool seems to be common knowledge to advertising marketers, but for social media professionals these features aren’t as well known. But building the links provides you with amazingly good definition when it comes to targeted social campaigns. It’s quick and easy enough that you can build a link on the fly for virtually anything you need.
The most important facet of this type of linking structure is consistency. Unfortunately, Google doesn’t build a way to easily archive how those campaigns are being generated – which can become frustrating when using numerous links (to numerous pieces of content). You can create a Google doc or an Excel spreadsheet to coordinate how links are generated. The output will be like this:
Notice how you can use utm_source, utm_medium, utm_content, and utm_campaign to build your custom link. These can be set on the fly by your marketing team to coordinate links to specific content as you need it.
Viewing Results in Google Analytics
Google Analytics automatically reads a completed custom URL and adds those results into your Google Analytics – at which point you’ve got a little extra work to do to connect up all the pieces. You can find your new campaign results in your Analytics dashboard under Traffic Sources > Sources > Campaigns. Obviously, you’ll need to give it a day for results to come in from your new links.
Those results will be broken down in several dimensions – allowing you to incorporate your new link campaigns in to your social media efforts and loop it back in to your Goals for your site. Depending on your business and the various things your site can accomplish, this might include a goal of email signup, purchase, request for info, contact form submission, etc etc. That’s a different beast and beyond the scope of this article.
Tying it All Together – Basic SMROI
Obviously the final piece is applying a weighted value to the Investment and then realizing the result of the Return. In general, Social Media works better using relative values rather than absolutes: You should be able to see trends and spot recurring opportunities to tap your audience. For instance, if your goal is to book 20 new sales opportunities (lead form completed goal); build a campaign where the timing, audience, and impact is measured both on click-through but also the external social value (oftentimes intangible). That’s why the investment should typically be weighted… It’s not as clear as: “I paid you $1200 last week and we only received 80 clicks to the lead form and only 3 submissions. That’s a cost of $400 per lead!” While technically accurate it doesn’t reflect the true performance of the campaign. How many new followers, Fans, and “Friends” were added in that time frame? Were there multiple messages that were broadcast (ie: all campaigns should be measured)?
Over time, you’ll be able to acquire a rough understanding of the value of a new follower and/or an engaged social audience member. It requires measuring up-front and looking beyond the “click” to the long-term value of that engaged individual. But ultimately, with clear metrics for success – and consistent measurement performed on a regular basis using custom campaigns – your analytics should start to provide you a reasonable ROI structure to begin tuning and improving your SM program. Good luck & have fun!