ROI or Return on Investment in simple words can be defined as the evidence to the fact that your marketing strategy is working. The main challenge in measuring ROI faced by companies today are keeping up with the changes in the algorithm, implementing the new tools that are offered in the market place and proving to your client that the investment they have made in you is worth their while.

Social Media ROI Cycle can be summarized in three main stages: the launching stage, the management stage and the optimization stage. In the first stage or the launching stage, organizations rush to get their social media campaigns up and running as soon as possible. This basically begins with the creation of a Facebook page, twitter pages, a board on Pininterest or a Linkedln company page without really thinking about their approach or strategy towards their goal. In the management stage, organizations tend to visit their social media campaigns and formalize their goals. The metrics around their social media campaigns are formalized which includes tracking of Facebook likes, twitter followers, website visitors and various other quantitative metrics. What most companies forget is that these metrics are wanting without the tracking of your social media ROI. During the final stage or the Optimization stage, split testing is performed to see which campaigns performed the best. The companies which reach this stage ultimately drop the campaigns that don’t work thereby increasing their ROI.

When it comes to measurement of ROI, there are several algorithms and formulas available. It can be measure it a variety of ways such as lead generation, clicks, revenue, customer acquisition etc., as mentioned earlier. But it all is directly related to the company’s goals so that one knows which factors are being measured and what success actually looks like. Marketers have usually struggled when it came to measuring social media ROI as it is unpredictable and still in transition when it comes to connecting social media to revenue. They need to look for alternatives which are feasible, fast and flexible.

The data one needs to calculate the relative ROI of your social media networks includes organic impressions from Twitter, Facebook and YouTube, the number of clicks on the different Facebook and twitter links found using the tracking links that one is using, the total count of organic YouTube views obtained from the YouTube analytics, page views on the blog from the analytics tool and the mentions of the brand online acquired from the monitoring tools.

ROI Calculation for your social media

1. Organic Impressions

Calculation of the value of impressions is done with a Cost Per thousand Model (CPM). For highly targeted impressions such as Facebook and twitter impressions a CPM of $10 is used.

Thus; Net Organic Impression = (Sum of daily total impressions – Sum of daily paid impressions)* $10 CPM

2. Calculation of the value of Clicks

Every year thousands of dollars are spent on Google’s pay per click advertising to attract our prospect customers to click over to our site. The significance of a click can be estimated as the same amount as what one pays for it. This value may seem cheap or expensive based on the types of keywords that have been utilized by you.

Value of Clicks = Clicks from posts * Average cost of PPC links

3. Organic YouTube Views

Through measurement of total count of organic YouTube views after deduction of the ones you’ve paid for, one can calculate the cost of generation of views via promotional videos on YouTube. The amount one pays for promotional videos can be used to calculate the net cost of organic YouTube views.

4. Calculation of the cost of brand page views and mentions of the brand online

Quantification of the number of people mentioning your brand over the network or visiting your branded blog is tough task. These activities may be regarded as deeper interactions when compared to page views but they still cannot be directly evaluated. The net cost of these can be simply obtained by multiplying by the average cost of PPC links that one has paid for with the number of brand page views and mentions of the brand online.

Thus using the above propaganda, one can calculate the total social media expenditure and hence the social media ROI.


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