Are you wondering if measuring social media return on investment (ROI) is important?
Do you cringe when you think about putting together another report?
You aren’t alone. But times are changing for social media and these reasons will show you why it’s time to get serious about measuring your results.
Do I Really Need to Measure ROI?
Let’s start by addressing the elephant in the room. Is ROI the right measure of success for social media?
There are many who would argue that a financial return doesn’t show the true value of social media for the organization. I would agree that ROI doesn’t paint the full picture.
However, the bottom line is that executives and business owners sleep, eat, and breathe ROI. It has been the measure of success since the beginning of their careers and while we can jump up and down and tell them it isn’t a complete picture, they aren’t going to believe it until they see it.
Therefore, it’s time to get serious about ROI, but that doesn’t mean that you should sacrifice other types of metrics that help to round out the story. You need both and this is why.
#1: ROI is a Necessary Evil
Regardless of whether ROI paints the pretty picture that we want for social media’s value to the organization, it is the universal measure of success for business.
We’ve seen new metrics like Return on Influence and Return on Engagement being talked about. Some marketers like these metrics because they feel they do a better job of telling the story of social media’s value.
I understand the need to have a holistic view on where social delivers; however, we can’t redefine ROI because it doesn’t suit our needs or it doesn’t paint the picture we want. If you don’t start to measure the real return on your efforts, someone is going to do it for you.
And if they do the measurement, you won’t have the opportunity to clarify what ROI isn’t showing and present metrics that help to round out the perspective. You’ll look like the person who was trying to hide a negative ROI to save your project. And yes, when you measure it the first time it will likely be negative.
So it’s time to embrace that ROI is a part of the story and it is our job to make sure we balance ROI with other metrics that show where social delivers incremental value.
#2: Your Boss Will Demand ROI
There is no denying that management teams and business owners are questioning whether your efforts are delivering results. The 2011 Jive Social Business Index Survey revealed that only 27% of executives with budget control for social media felt that social media is a top strategic priority. 47% of the respondents said a social plan was necessary but not a strategic priority.
This shows you that the jury is still out on whether social media is a mission-critical piece of the marketing mix, at least for those who control the purse strings.
The majority understands that social media is important at some level for the business, but it’s clear there’s still skepticism. I think we can all admit that if the people who control our budget still aren’t sold on whether social media can drive business results, they will continue to invest cautiously.
This means it’s important to be able to show quantifiable results from your efforts. If you aren’t able to demonstrate the strategy is delivering a financial return, you may find that optimism quickly turns to pessimism as other activities are shown to produce results, and your budget could just as quickly disappear.
#3: Social Media is Resource-Intensive
I think we can all agree that the days of saying that social media is FREE are over. We realize that a successful social media strategy takes a lot of time, and for many of us it’s time we simply don’t have.
The Social Media Marketing Industry Report revealed “a significant 59% of marketers are using social media for 6 hours or more and 33% for 11 or more hours weekly.” That’s a lot of time, considering that social media isn’t our only job. For many of us, social media is something that has been added to our already full plate.
This has led more people to start outsourcing aspects like content development because they simply can’t produce enough content to generate results in the time they have.
One of the first questions I get from executives is whether they should include the cost of employee time and/or salaries in their social media ROI calculations. They want to understand whether the time employees are spending is worth the expense.
It isn’t because they are trying to launch a war against social media. It is simply a matter of prioritizing resources to the highest-performing initiatives. And if social media can’t be quantified to show a return to the organization, it gets harder to justify the time and budget that is being dedicated to it.
#4: You Can’t Expand Without ROI
There are a lot of companies out there that have seen tremendous success in developing large followings and now they’re asking, “Now what?”
The smart marketers didn’t jump into every social media network right away; rather they tested and became awesome in a couple that matters to their business. But now they feel they have demonstrated that social media can work and want to expand into other social networks.
In other situations, marketers realize they need to produce more content because they see the most positive results around the release of new content, but they can’t handle any more internally.
Whatever your scenario is, you won’t be able to secure additional budget dollars to fund your expansion plans if you haven’t demonstrated that the budget that has already been invested delivered a positive return to the organization.
Return isn’t measured in fans and followers; it is measured in dollars and cents. If you want to expand, you need to get serious about measuring social media’s bottom line.
#5: Optimization is Critical to Success
While all the other reasons relate to why social media ROI is important for the needs of other people, this one is for you. You are spending time, energy and budget on making social media a success. If you really want it to be successful, it’s critical that you understand what’s actually working and what isn’t.
We all want to prioritize our efforts to the things that produce the highest result, but if you aren’t measuring what’s delivering, you have no idea what you should be doing more of. Further, you won’t be able to test how little tweaks impact important things like conversion rates.
If you truly want to show that social media is a mission-critical element to business, then you need to measure ROI so you can tell exactly what’s working or showing promise and then optimize it.
Optimize until you can’t optimize any more. Imagine if you knew which status update delivered the most conversions for the day. Or which path from social media to the website converted the most leads. Information like that would really help you show a positive ROI in no time.