4 steps for calculating ROI on social media
- 10 March, 2009
- 1 comments
Asked on LinkedIn: Your thoughts about ROI with social media would be appreciated
Your best bets for quantifying ROI are:
1. Direct sponsorship/revenue: Think beyond advertising and premium fees to other ways of earning revenue with social media (product sales, licensing fees, sponsorships). These can be priced by other examples; the dollars that you earn this way will be directly trackable.
2. Market research. Use your existing market research channels to track the impact of your social media efforts by measuring brand recognition, reputation etc among those who have visited your social media presences compared to others. Look also at data over time (pre- and post-social media launch) since a high-quality social media effort may also spillover into broader reputational effects.
3. Establish a conversion value, and track your inbound traffic religiously. It can actually be EASIER to establish the ROI of social media than other efforts, simply because any decent analytics program will be able to track the number of inbound visitors you get via social media efforts and links, and track those through to conversions.
4. Establish a dollar value for the attention you receive from social media, as follows:
a. Establish a benchmark "per eyeball" cost for earned media. Most large organizations have an established media relations operation that lets them benchmark the value of earned media mentions.
b. Establish a trust factor that looks at the dollars-per-mention number and marks it up based on context; small sites may actually have a higher dollar-per-eyeball value since the small number of views come from personal friends and acquaintances.
c. Use a social media monitoring program to track mentions; for smaller sites multiply that by the trust factor to get dollar-per-eyeball figures; run regular totals on the value of your social media mentions relative to equivalent offline earned media mentions.
This week I went on one of my periodic LinkedIn answering binges. Since LinkedIn doesn't provide me with a way of directly aggregating my own answers back onto our site (!!) I'm manually posting my answers back to this site.