Understanding the Importance of Social Media ROI

In a recent column, I discussed the methodology around discovering ROI for corporate social media efforts. While this has yet to become an exact science, it’s one of this year’s most desired objectives for digital marketers.

In fact, according to the report, “State of Marketing Measurement,” published in December 2011 by Ifbyphone, 82 percent of those surveyed said that executives expect every campaign to be measured. And with such heavy expectations, digital marketers are under increased pressure to make gains with social media. And only 26 percent of the marketers think they can effectively measure ROI for social media, according to the survey. Consider the Ifbyphone survey results reported by eMarketer:

measuringmarketingroi

Despite heavy expectations, marketers are accepting the challenge to prove their worth and working out ways to connect all marketing programs back to sales in some manner. With measurement tools now at their disposal, marketers are looking at a variety of metrics, including an overall net increase in sales, new customers acquired, new leads generated, increased retention rates, and a quantified increase in awareness.

Looking at the overall impact of marketing has always been a struggle for companies, and now that social media is center stage in nearly everyone’ s efforts, the challenges have grown.

Measuring Social Media Success

In an October 2011 report, Chief Marketer noted that the top method to measure the success of social media marketing campaigns was tracking the number of people linking to social profiles, such as friends, followers, and “likes.” Consider the Chief Marketer survey results, reported by eMarketer, in the chart below:

measuringsocialroi

As you see above, tracking incremental sales to social media was much further down on the priority list. But now that 2012 is in full motion, marketers will need to focus much more sharply on hard metrics to gauge overall digital and social media ROI. The bottom line is more important then ever in a time when economic and competitive forces are at a high stress point across every brand’s initiative. Gone are the days where social media was just a creative experimentation where marketers were “interested” in trying. Now, the stakes have risen, and direct business benefits are becoming a must.

So what does this information do for most digital marketers? Well, besides trying to scare you a bit into filtering your strategy into more direct results, this opens the door for us to begin talking about how we will act upon this. This means diving into the social technology discussion head-on and walking through key steps that an organization must take to choose the right technology vendor in helping them understand and better evaluate overall social media ROI.

In my next column, I’ll kickstart a series that discusses the key steps a social marketer must take to understand what they are trying to achieve with social technologies. It will review issues such as how to evaluate technologies, assessing what application feature sets are necessary, how to integrate with customer support, and identifying organizational training and what’s needed to execute social media ROI on a high level.

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