Social Media ROI: What to Measure

Posted on 31. Dec, 2009 by in Blog

Social Media ROI continues to be a highly debated issue among small to large companies and it’s apparent that measuring Social Media ROI is still somewhat unrefined and even mystical.  Actually, Social Media ROI isn’t necessarily unmeasurable.  Ben Stratley (CEO of Meteor Solutions) does an excellent job of explaining his company’s methodology for quantifying Social Media ROI with his presentation Is Your Social Media Program A Boom or A Bust? How to Use Analytics to Find Out What’s Working & What’s Not.

A marketing team has to convince executives or managers of the benefit Social Media has in terms of ROI.  Many times that’s the only language those in charge of managing the bottom-line speak.  In the current economic situation it’s probably for good reason.  Can you blame them?  After watching this hour long presentation Phizz felt it was important to re-visit a few basic internet marketing metrics to help with proving ROI for Social Media.

Putting your money where your mouth Tweet is happens to be paramount.  Let’s be clear…

Everything you do via Social Media will revolve around one thing:  Driving Traffic To Your Website!

Actions you and your team desire once the consumer is there must be defined before any Social Media campaign is launched (which is another topic of it’s own).

Darren Rowse said in How I Use Social Media to Promote My Blogs regarding driving traffic to his blog a.k.a. Homebase:  “[Social Media] is there to build and reinforce the Homebase.”  and “…Homebase is where I put my primary focus.”

Ben Stratley’s team likes to refer to a Homebase as Owned Media.

To attain Social Media ROI you must be clear about what you want to achieve with your strategy. The slide show along with the terms below help explain metrics that define costs for calculations of ROI.

CPI or CPM = Cost Per Impression or Cost Per Thousand Impression: This metric tells you how much you’re paying per impression.  Each impression is defined as a single instance of that ad, better yet every time the ad loads on a users screen, with certain exceptions.  A each person that receives your Tweet would be an impression.

CTR = Click Through Rate: This metric measures relevance of a topic discussed or popularity of the defined topic, but more importantly its a way to determine if what you’re saying is grabbing the attention of the people within your Social Network(s).  Do your friends, clients or prospects care about what you’re saying?

CPC vs PPC = Cost Per Click vs. Pay Per Click: This metric eludes to the marketing dollars spent per click.  CPC represents the expense incurred for each click through, but is more organically grown via Social Media.  PPC represents the expense incurred from paying your host every time a click through happens on a predefined keyword.

CPA = Cost Per Action: This metric represents the expense incurred on any activity generated by the click through, usually predefined, but typically a sale or an order generated.

These are some metrics you can use to determine your expense throughout a campaign, particularly by using tools like:

bit.yl
twitt(url)ly
Google Analytics
Alexa

There are plenty of other tools you can find with simple Google Searches for SEO Tools, etc.

Next time Phizz we be focused on strategy for implementing Social Media so you can start measuring your ROI.