Many people are not familiar how social media marketing has to be implemented and the manner in which it can be measured in relation to business organizations ROI (return on investment).
Simply stated, “ROI is a profitability measure that evaluates the performance of a company by dividing net profit by net worth”. In still simpler terms – ROI pertains to the money that is lost or gained as a result of the money invested.
However, measuring ROI for social media can be tricky as there is no direct tangible result available for measurement. Social media principally acts as a form of word of mouth marketing. It is therefore important to consider that social media ROI measurement is not just financial implications, but also the quality and value delivered through meticulously cultivated customer relationships.
Thus most businesses find it difficult to measure the intangible results of social media marketing.
The popularity of social media has continued to rapidly grow in size. Businesses have come to recognize its growing importance, but measuring progress on social media has proven to be an intimidating task.
One way to decide is by counting the number of recommendations your product receives. This is suggested by many professionals as a means to measure social media ROI as social media is essentially user generated content.
It is said that a prospect is more likely to buy a product as a result of a recommendation made by a friend or a social contact. Research studies show that a high-impact recommendation from a trusted friend is up to 54 times more likely to trigger a purchase than mere advertisements.
Social media ROI can be measured in terms of likes, comments, shares, etc through popular tools and software analytics such as Google Analytics, Facebook Insights, Hootsuite etc.
Social media marketing success cannot be directly measured for purposes of ROI but it can demonstrate a positive correlation between sales and brand awareness through social media.
Marketing analysis statistics enables you to establish what part of your marketing strategy has contributed most to your ROI. Social Media campaigns managers can establish positive correlation between social media engagement and brand preference by customers.
ROI can be measured in a variety of ways: through customer acquisition, lead generation, clicks, revenue, contest entries, etc. While in the short term ROI is crucial for SMMcampaign, in the long term it is less about monetary gains and more about brand building.