Teaching SMM – METRICS #6 ROI of Social Media

Note: This is a continuing excerpt from what I teach my social media marketing classes on introduction to metrics and measurement…

Calculating the ROI of Social Media

In five previous posts the importance of measuring social media efforts and a broad array of metrics tied to social media activity have been discussed. All of these measures can potentially have value to assessing what is currently going on in the SM effort and trends for the organization’s social media presence. But what is the bottom line? What is the ROI of social media? As discussed in the next and final chapter of this text, organizational goals and objectives will be set based on the organization’s mission and strategy. Therefore the goals and measures used by different organizations will differ. In this section some of the possible return on investment or success metrics for a social media campaign will be discussed.

Advertising Measures

As discussed in Chapter 8, social media can be used as a complement as well as a substitute for advertising. Therefore it makes sense that some of the same measures used to compute success in advertising should apply to social media campaigns. Surveys can be conducted in the online community or randomly to measure advertising metrics such as:

•     Cost per impression

•     Reach

•     Frequency of impressions

•     Brand or product awareness

The cost of attaining these outcomes can be compared to standard advertising costs to get a comparative return on social media efforts in the form of any savings versus traditional advertising.

Other commonly used advertising and marketing survey measures such as customer satisfaction or purchase (or repurchase) intention should certainly apply to social media campaigns. As will be discussed in Chapter 14, Dave Evans (2012) argues that the net promoter score[i] (Reichheld 2003), based on the simple question, How likely are you to recommend this company/service to a friend?, should have special meaning for social media marketing as it is based on word of mouth[ii].

Based on the importance of WOM many organizations will closely monitor share of buzz as a success measure for a social media campaign.

Monetary ROI—Sales, Revenue, and Profits

For many B2B companies, quality leads are a scarce and valuable input. As discussed in Chapter 12, social media, particularly LinkedIn, has been shown to be good sources of B2B leads.[iii] Since many firms can assign an estimated monetary value to quality leads, lead generation through social media activity can be evaluated as a financial return on investment for some B2B companies.

In some circumstances companies may have good estimates of sales, revenues, or profits resulting from social media. As discussed earlier, through the use of custom links and/or alternative web landing pages, an organization engaging in e-commerce or fundraising can estimate revenue from social media efforts. Firms may also estimate the origin of sales by surveying customers, by asking at the point of sale (“where did you hear about us?”), or by using special coupons or discount codes on social media promotions. Social media managers should try all means to track and quantify the benefits of social media efforts.

Key Takeaways

•      Social media efforts can be assessed by metrics from surveys commonly used to measure the impact of advertising.

•      The net promoter score measures the likelihood of a community member recommending an organization or its services to a friend.

•      Revenue, sales, or profits due to social media can be estimated from survey or point-of-sale questions about where a purchaser learned of the offering, from observation of activity on a commercial web site, or for the implicit value of outcomes such as solid leads.


This is part #6 and the final excerpt about “Metrics” from an early draft of a text for teaching Social Media Marketing. Please do not copy without the approval of Flatworld Knowledge and Gary Schirr. I welcome thoughts on omissions, additions and corrections!!!

Other articles:

Teaching SMM: METRICS #1 Importance of Measurement

Teaching SMM – METRICS #2 Activity Measures

Teaching SMM – METRICS #3 Measuring Influence: Art or Science?

Teaching SMM – METRICS #4 Influence Scores

Teaching SMM – Metrics #5 Monitoring and Listening

Teaching Social Media Metrics – The Hangout (Video)

[i] Reichheld, Frederick F. (2003) “The One Number You Need to Grow,” Harvard Business Review, Vol. 81; No. 12, pages 46–55—online at http://hbr.org/2003/12/the-one-number-you-need-to-grow/ar/1

[ii] Evans, Dave (2012) Social Media Marketing: An Hour a Day, Indianapolis, Sybex, Wiley Publishing, 2nd Edition, Paperback: 432 pages.

[iii] Corliss, Rebecca (2012) “http://blog.hubspot.com/blog/tabid/6307/bid/30030/LinkedIn-277-More-Effective-for-Lead-Generation-Than-Facebook-Twitter-New-Data.aspx” Hubspot Blog http://blog.hubspot.com/blog/tabid/6307/bid/30030/LinkedIn-277-More-Effective-for-Lead-Generation-Than-Facebook-Twitter-New-Data.aspx.

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