Return on investment - at the end of the day it's what everyone wants to know. Clients are keen to make sure they are investing their money in the right places and agencies want to make sure they are getting the most out of what they are putting in.
But with a beast like social media, establishing your ROI can be difficult, as their is no common denominator by which to measure it. Because of this, a lot of the reporting and measuring carried out on social media doesn't accurately reflect what is going on.
Recent research found that 60% of marketers named demonstrating ROI as one of their top three challenges. So how do you tackle this challenge? This article has some great tips!
1. Identify your key performance indicators (KPIs): What are you looking to do with your brand - build awareness, increase revenue? It's these differences that determines success for your social marketing efforts.
2. Align you social media goals with your business objectives: Breakdown your main goal into smaller, easier to manage goals. This way the challenge won't seem so daunting and you'll be able to better understand your strategy.
3. Analyse to strategise! Google Analytics can seem daunting, but it allows you to be informed on who your audience base are and how they interact with your content. Analytics also provides an essential measuring tool - where you can track and monitor and better align your strategy to your goals.
4. Assign value to your KPIs: Once you have established your goals and how to track them, you need to assign them a monetary value. This is usually done in one of four ways:
- Lifetime value: How much on average do you earn from each customer?
- Lifetime value x conversion rate: How much is each visit worth to you based on the percentage it converts?
- Average sale: What is the average purchase cost through to your site?
- PPC: What would your spend be if you were to use pay-per-click ads to achieve your goals?
5. Benchmark against competitors: Compare your social media efforts to those of your competitors and see how you stack up. Do you stand out amongst the noise?
If you think you're achieving less - don't worry! Social media is all about learning and improving. What works one week may not the next and it's about adapting to consistently improve your ROI.
Even though social media spending is projected to account for 16% of the digital ad market by 2017, how many of us really understand what we're getting out of it? There's no shortage of metrics to gauge performance -- you could measure in terms of fans, followers, retweets and shares. Others look to referral traffic from social media platforms. Still others quantify success from purchases made from social media referrals.