ROI in social media marketing campaigns

MarketingSherpa.com has published a chart about how social media is perceived by companies at marketing budget time and that it is producing measureable ROI. The survey was made in November 2009 and the result is surprising.

There are a lot of discussions about if social media marketing is producing or not measureable ROI. As we can see from the chart below, 49% of companies think that social media is a promising tactic and will eventually produce ROI and only 7% consider that social media is producing measureable ROI, while 17% said that social media is basicaly free ans 27% do not know the value of social media.

For those who do not know, “ROI is the ratio of money gained or lost (whether realized or unrealized) on an investment relative to the amount of money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or net income/loss. The money invested may be referred to as the asset, capital, principal, or the cost basis of the investment.” (wikipedia)

To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment and the result is expressed as a percentage or a ratio (ROI=gains-cost of investment/cost of investment). ROI also becomes less trustworthy as a useful metric when the cost figures include allocated or indirect costs, which are probably not caused directly by the action or the investment.

I think that the ROI in social media marketing campaigns can be measuread only in line and in strenght connection with the marketing defined objectives and its achivements. That because this objectives can be translated in specific actions and those actions can be measuread. So, we have:

– objectives concerning sales: Opening new sales channels/Increase sales revenue;

– objectives concerning the customer acquisition: Reduce customer acquisition costs/Lead generation;

– objectives concerning the customer support: Reduce consumer support costs/Improve customer support quality/Improve customer support time of response;

– objectives concerning the search engine/seo: Improve ranking/Improve SERP/Link building from high PR websites;

– objectives concerning the web traffic: Increase number of visitors;

– objectives concerning the brand: Improuve brand awarness/Improve brand recognition ecc.

– objectives concerning the PR: Open new communication channels.

Measuring the achivements of those objectives, which can be achived on sort-term, or on long-term, we can measure the ROI of our social media marketing campaign.