Social Media ROI

 Social Media ROI – Can you measure it fully?

Most of the businesses realize the Social Media Benefits, however how much to spend and its trade-off with money is debatable. Infact, finding return on investment (ROI) itself is a tough job. Let us look at it a little closer.

Worried about Social Media ROI?

Returns on investment are measured in monitory terms most of the times. Marketers usually measure it as Net present value of stream of revenues vs monitory expenditure.

In terms of percentage it is

ROI= [(Amount Gained from Investment – Cost of Investment)/Cost of Investment] x 100

ROI of Social Media doesn’t change much in its definition. After all, a business is a business is a business. It must earn more than it spends. However, most of the times Net Present Value of revenues is difficult to measure when it is Social Media, mainly because it revolves around Brand Awareness and conversations more than anything else.

Many companies fear that there’s no true way to measure the ROI of social media activities. In comparison to other marketing channels such as e-mail, SEO, and display advertising, social media doesn’t offer a very direct or concrete ROI measurement.

This is partly due to the fact that social media interactions revolve mostly around online conversations, which are not as easy to measure quantitatively as click-throughs and CPMs. Because social media is very much about the qualitative and not quantitative, this result in much debate about what metrics are truly useful and accurate when it comes to social media marketing.

Just because measuring social media ROI is a challenge doesn’t mean it’s impossible. The world of social media ROI is still evolving. We may have to rethink traditional metrics to include the ways that people interact with social media. The measurement of returns through social media isn’t done the mathematical way!

For example, the standard metrics for e-mail marketing include delivery, open and click-through rates. While it’s still possible to find value in measuring click-throughs from specific URLs on sites such as Twitter or YouTube, social media also lends itself to new categories of measurement, such as activity and engagement.

Now, how can we measure engagement? Let’s consider engagement to be a category of interaction that includes posts/threads, comments, tags, votes, bookmarks, and more. This can be done quantitatively (for metric lovers); however categorizing them under positive, negative and neutral heads makes more sense before we could realize the returns. This accounts for qualitative measures where extent of positive conversations should outnumber the negative and neutral. Viral content is a blessing!

Another important area of measurement for social media is brand awareness. Traditional media might measure brand and awareness through reach and frequency: how many people have seen an ad and how many times they’ve seen it. For Social Media, there are technologies that measure posts for positive and negative sentiments, and which measure “share of voice” (i.e. the number of articles, tweets, posts, etc. in which a specific brand is mentioned in comparison to its competitors).

Although the world of social media brings with it new ways of measuring activities and interactions, the traditional ROI metrics of revenue – cost savings, conversions, cost per lead, etc.– are still what matters when it comes to proving the value of your social media marketing initiatives. Try categorizing leads into Inbound Vs Outbound leads to start measuring returns.

An inbound lead may get to know about your business via Tweet, then read your blog, and later contact you via email. Therefore, try not to get more granular that Inbound leads as it will add up to time and efforts.

By establishing a baseline and measuring progress over time, companies can begin to see the effects of social media on growth and revenue.

Web behavior: Insight Report

New trends in Web behavior
Now, social networking sites share turf with Net search engines..

In the not too distant future, the famed browser wars will be consigned to history books and whatever needs to be accessed can be done so with a single use app or via a chosen social networking site.

It observed that there are two ways the Web is being consumed. Early adopters of the Web typically surf it via search engines, URLs saved as favourites, and/or keying in the closest approximation to the domain name. Later adopters, who typically embraced the Web in the last few years, started off using Facebook or some other Social Networking Site (SNS), and since such sites have an overpowering stickiness, use such SNS to sate their information needs too. Coincidentally, around the same time we were discussing this topic, Facebook overtaking Google in terms of page views and time spent was announced.

These developments, together with the emergence of mobile devices such as smart phones, book readers, etc, — and the integration of SNS with them — have significant implications for paradigms of information consumption and interaction with the Web, and hence the emerging economic opportunities.

It's ‘App'ening

Likely to be first affected is the browser as a source of technological competitive edge on users' screens. With later entrants using an SNS as an entry point and the emergence of apps, more and more content on the Web can be directly accessed through apps, either on mobile devices or on desktops. And, since even social networking sites are in the process of being ‘appified', it is conceivable that in the not too distant future, the famed browser wars will be consigned to history books and whatever needs to be accessed can be done so with a single-use app or via a chosen SNS.

Does this mean that the browser as the means to access the Web will wither away? Clearly, the answer is not in the near future. However, a metric such as ‘share of Web access', which measures the different access points of the Web, is likely to become a reality sooner rather than later. This metric will be a key influencer of the multiplicity of digital assets that would need to be created to ensure that participants can derive the full benefit of the Internet.

Transformation in ‘search'

Search is the second area that is likely to undergo a profound transformation. Those who keep their SNS opened up or are mobile are more than likely to ‘ask around' their network via the SNS site, rather than use a search engine, as in the old days. Such ‘asking around' is not only analogous to a normal human practice but also comes bundled with intrinsically credible recommendations, since the answer is being provided by those the searcher ‘trusts'. That a network effect exists can be validated anecdotally by several incidents that have reported the spread of angst amongst teenagers and the youth. These are largely negative currently. However, it is unlikely that it will not be long before the positive impact of the network effect will be in the ascendant, as Groupon and its clones demonstrate.

Specificity in advertising

The network effect of search on SNS has the potential to challenge Google's leadership in the search advertising market. Quite simply, keyword targeting on SNS can be filtered by profiles and targeted to specific individuals. Quite the opposite of keyword targeting on search engines, where specificity is restricted to the keyword, rather than the individual. This greater specificity will lead to higher response rates to the advertising. In fact, it is surprising that SNS has not as yet exploited this potential, since it does not currently offer keyword-based advertising options. But this has not stopped savvy marketers. For example, in the US, at the start of the college season this year, a broker created pages on Facebook for the incoming student population. The broker then went on to advertise room-sharing arrangements based on profile for a small fee on these pages.

On cusp of change

So, what is likely to happen to browsers in general and search engines in particular? As earlier observed, the early generation of Web users is likely to continue using browsers for their Web needs. Even among the later generation, even if accessing the SNS, the browser will continue to be an important interface. Additionally, a large number of Web applications, e.g. online shopping, data aggregation, etc, would be more conveniently accessible via a computer screen. 

At the current moment a browser is the most appropriate technology for these purposes.

Similarly, the network effect of ‘asking around' is likely to be most applicable to search for immediate solutions, such as a product, a beauty tip, a cooking recipe or a formula. More involved information seeking will certainly be via search engines given their depth of data and ability to return a large volume of information to choose from.

This view is supported, notwithstanding recent data reporting that Web users spend more time on Facebook than on Google. Parsing the data shows this. In October, for instance, 26.2 per cent of India's Web users visited Facebook. However, what is significant is that 91 per cent of them also visited Google. On second thoughts, then, the two data are not at variance with each other.

Intuitively, a Facebook visit is likely to take a longer time since the visitor would be going through all the activities of the network. On the other hand, a visit to the search engine is restricted to the time taken to key in the search term and for the search results to be generated. In the light of this, perhaps a more appropriate metric for measuring Web site visits should be the number of times a site is visited by each unique visitor to the Internet and the agent (i.e. mail client, app, bookreader, etc) used.

All told, it would seem that 2011 is yet another cusp in the evolution of the Web that will perhaps lead to newer paradigms, newer challenges and newer opportunities.