Spending on social media marketing continues to grow, but what are the metrics that could be measured and should they be benchmarked against return on investment (ROI)?
Businesses of all shapes and sizes have bought into the idea of social media marketing. With an estimated 1.7 billion users worldwide, the rise of the social media has provided commercial enterprises with a new and unique way to engage with existing and potential new customers.
When it comes to actually quantifying the benefits however, there's still a lot of corporate head scratching going on. A recent survey of chief marketing officers found that nearly half (49 percent) said they weren’t able to quantify whether social media had made a difference to their companies, while 36 percent said they had a good sense of qualitative – though not quantitative – results. Only 15 percent said they had seen a proven quantitative impact.
Despite this, spending on social media marketing continues to grow across the board. So, do businesses simply have to take it on trust that social media campaigns are actually beneficial or are there ways to actually measure their impact?
What Are the Benefits of Social Media?
The first thing to understand is what social media can actually do for your business. Many companies have realized that social media does not generally function as an engine for direct sales and are moving away from strict return on investment (ROI) metrics. Over the past three years the proportion of marketers using a revenue-per-customer metric on social media fell from 17 percent to just 9 percent.
This doesn't mean that metrics cannot and should not be used, or that ROI can't be measured for certain aspects of social media marketing. But a holistic view should take into account all the benefits of an individual social campaign or ongoing presence and strategy.
A strong social presence can help build brand awareness. Companies can engage directly with customers, helping to build brand loyalty. They can monitor the online conversation about their products and services, garner feedback and respond to criticism. It can boost SEO and traffic to your main corporate website. Using social media effectively can also be an essential part of the localization process if you are reaching out to foreign markets.
Social Media Examiner's 2013 Social Media Marketing Industry Report found that 89 percent of marketers surveyed said that their social media efforts had generated more exposure for their businesses. The second major benefit was an increase in traffic, reported by 75 percent of respondents. 69 percent used social media to gain marketplace intelligence and 65 percent used it to increase the loyalty of fans and customers.
What Can Be Measured?
Some of these benefits can be difficult to quantify objectively but others, such as increased website traffic, are relatively easy to measure. For smaller businesses without the resources to plough into their own analytics software or systems, Google Analytics is a great free tool. You can use it to track how many people clicked through to your website via a link on any of your social media channels. Even better, you can also track conversions related to these visitors. In order to do this you have to define or set up goals for various conversion types, which could be sales, a subscription to your business's e-newsletter, a downloaded coupon or anything that requires a specific action.
It's also relatively easy to track social media metrics such as numbers of fans, followers, retweets and likes. This won't necessarily give you figures that can be translated directly into ROI but it will give you an idea of how well your strategy is working in terms of customer engagement.
It is often possible to measure ROI if you limit the parameters, looking at specific social media campaigns and with predefined goals in mind.
Here are some examples:
Using the textbook definition of ROI as the exact dollar profit netted for every dollar spent, it can be difficult to pin down the precise benefits of an ongoing social media strategy. It is often possible to measure certain aspects of social media ROI for specific campaigns. However, companies should also take a more holistic look, and consider the possible benefits that don't always lend themselves to such a tangible definition.
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