INside Performance Marketing
The Challenge of Measuring Social Media ROI

The Challenge of Measuring Social Media ROI

This year, tech pundits' gaze may be fixed on VR - but social is still the boom trend. Most marketers hiked social spending last year, as paid ads on social networks yielded an expected $23 billion worldwide, according to eMarketer.

We know, instinctively, that social can move the needle. But, for those brands, what does it actually all add up to? What are the returns from social media marketing investment?

To answer that question, spenders deploy one of two main methods to ascertain the return on their investment (ROI). The trouble is, both are problematic.

Measuring what?

The first fallacy of social media ROI is that it is discernible at all. Classical business dynamics dictate that investment return is a product of sales gained as a result of spend made. But, in social media, the situation is not so clear-cut.

Social networks are not storefronts, transactions don’t usually take place there. You can’t always measure social by sales made.

Instead, social is all about capturing attention, building brand equity and delivering quality content - and, if you do those well enough, move traffic from one place to another - your e-commerce store, for example. This much is proved by social having overtaken search for web traffic referral just over a year ago.

But, whilst social awareness can result in click-throughs to sites, aligning social media spend with top-line sales is hard.

Vanity metrics

In lieu of hard-and-fast data, most of our industry has settled down to focus on available, intrinsic social media metrics.

Follows, Likes, comments, clicks-through… these have become the barometers of social media success. If your investment is employing two people at £40,000 a year each, your return is the trail of amorphous “engagement” that adds up to an attention return and, hopefully, one at the cash register, too.

Vanity metrics like these are nice to look at, to ensure you are fulfilling your obligations. But, again, it is not straighforward to take these data points and connect them to actual sales.

But, although some have carried out work to map the monetary value of, for example, a Facebook Like, it is likely a black box, and always different for every brand.

Meeting in the middle

The best way to approach the challenge of social media ROI is somewhere between these two paradigms - accepting that an ultimate answer is a holy grail, but going beyond social proxy metrics that don’t give enough insight into real business performance.

For example, we know that 71% of social media users are more likely to purchase from a brand they follow. That makes developing a relationship with a customer important, even if it does not yield a sale on day one.

When I attended the recent Takeaway Innovation Expo to learn how the food industry is marketing itself in the digital age, I was dismayed to find many restauranteurs offering drive-by social media offers one day, and, the next, lamenting the lack of take-up. That is misunderstanding the medium.

Social goes beyond this purely sales-focused concept of a one-dimensional relationship. It’s important that your goal is not financial in the first instance, but relational and conversational.

Put simply, engagement is not a moment, but a funnel. Put ROI on the shelf until you have built relationships you can convert - then you may get to join the dots, from investment via engagement - to return.

Continue the conversation

Got a question or comment – post on Twitter, Facebook or LinkedIN.

Marc Mühlenbach

Marc Mühlenbach

CMO, Flapit. 
Marc has a broad background in market research and consulting; he has also branched out into several entrepreneurial ventures wearing various marketing and branding hats. He works on Flapit’s marketing & communications strategies to make sure your customers can count on you to Flapit.

Read more from Marc

Related Articles

Join over 10,000 performance marketers for the ultimate weekly update on industry news