Social Media Marketing Blog

Analyzing Social Media Marketing ROI

Return on Investment or ROI is one of many profitability measures that evaluates the performance of a business.  One of the most common ways to determine ROI is to divide net profit by cost of investment.  ROI on social media can be calculated by the dollars and time invested into different social media outlets and the business acquired in return.  ROI is not just based on the money you get from social media, it is the influence you gain and the connections you make, making it more complex to calculate your actual return in the world of Social Media Marketing.

When joining social media sites such as Twitter, Facebook and LinkedIn, you are expanding your company’s reach.  The further your “reach,” the more individuals are exposed to your company’s products and services. You now have a larger audience to address, and more potential clients to gain.  Social media success does not happen overnight.  If you are just starting to tread the waters of social media, do not expect the rewards to happen immediately.  It takes significant time and effort measured in months rather than hours or days before you can measure your Return On Investment from social media. 

At this time, there are not any tools to specifically measure the influence on your business from your involvement in the social media world.  However, if you are on several different sites, have your own blog, and you update them frequently, it is an excellent start.  For example, by just having a Twitter account, you are not going to reach new clients without any work.  It is necessary to Tweet often, and follow other important businesses to build a following and attract attention.  You want to get involved in conversations, make new connections, and build relationships.  These sites allow you to connect directly with current clients as well as potential clients, as well as get the “in” to gain first hand feedback directly from current and potential clients. 

Although it is difficult to measure the ROI for social media, Google Analytics is a tool to consider using when attempting to measure a company’s ROI on social media.  It basically analyzes the visitors to your sites and allows the admin the ability to see the number of clicks on the site per hour/day/week/etc, how long they stay on the site (stickiness), and how they got there.  In the end, if your social media efforts are leading people to your website, which allows the potential purchase of goods or services, and you have made new connections through additional real users, it is likely that you are on your way to a high ROI.