4 Tips for Marketers for Measuring the "Return on Investment" of Social Media (infographic)

As your customer demographics evolve in this digital age, your marketing tactics must change to keep up, stay relevant, and maximize your return on investment (ROI). If you don’t adjust your advertising practices, you run the risk of not being able to reach all of your potential customers.

Marketing efforts today are branching out into and depending heavily on a strong and active social media presence. While this isn’t a surprise because social media has been ubiquitous for years, the younger customer base uses it like never before. One study showed that there are around 3.35 billion people on social media. This number is projected to grow in the next year, and it has huge marketing potential.

That means if you don’t pay attention and maximize each platform’s marketing potential, your ROI can suffer. This can quickly eat into your profit margin, and you’ll find yourself pouring far more money into it than you’re getting in return. But, how and why do you measure ROI? Why is this important, and what is ROI? To help answer those questions and more, the team at MDG Advertising created a fact-filled infographic, How to Measure Social Media ROI: A 4-Step Plan for Marketers.

Generally speaking, social media-based ROI is the sum of all of your company’s social media interactions that create value for your company. Your company invests time, resources, and money, but what does it get back in return? This return is your ROI.

It’s important to note that not every company will attribute revenue to its social media marketing. Instead, they may focus on creating brand awareness and expansion. With social media, you want to get as much value out of it as you possibly can, and it can be difficult to tie ROI to one single objective.

Why Measuring Social Media Results Is Important

You want to be able to see the impact of your firm’s social media marketing efforts, and ROI is one way to do this. Additionally, social media offers other benefits, including:

• Helps you understand your customers’ preferences, perceptions, motivations, and conversations.
• Shifts your brand’s social media perception.
• Gives you a clearer picture of where you should use your resources and efforts more productively. 
• Lets you adjust your marketing tactics to maximize your ROI.
• Allows you to see holes or gaps in your current strategy, content, and key messages.

Deciding on a Social Media Platform

Now that you know what ROI is and why it’s important to dedicate time, money, and resources to it, you have to decide on a platform or two. Your brand can’t be everywhere at once, and it’s best to pick one or two platforms and concentrate on them.

Weighing Each Platform’s Pros and Cons: Each social media platform will have pros and cons associated with using it. The best practice is to learn everything there is to know about each different social media platform. Check to see how easy and user-friendly the network is to use, and determine where the majority of your audience is.

Locate Your Audience: This is the single most important factor in choosing a social media platform. Is your target audience using this network? Is there a large enough customer pool to make it worth your company’s effort to advertise there?

How Much Time Do You Have? If you don’t plan to outsource your social media management, you have to consider how much time you have to dedicate to it to boost your social media ROI. If you plan to focus on three or four networks, do you have the time? It will likely be more manageable to focus on one or two if you don’t plan to outsource.

If you’re pitching your brand’s social media plan to others in your company, it’s important to make a solid case since it’s a newer business practice and not one that many people fully understand.

1. Consider their Objectives

Depending on the person you’re talking to, you should present social media ROI in terms that will make sense to them. For example, if you’re talking to the chief marketing officer, speak to whatever they place value on. It’s much more compelling if you say to the CMO, “I know your goal is to increase the company’s pipeline generation by 15 percent, and this is how marketing on social media can help achieve this,” rather than telling them, “Here’s how many shares the company’s Facebook page got this week.”

2. Be Honest with Your Limitations

Everyone needs to know what you can and can’t do with measuring your company's ROI. Take the data you have and make a clear case. It’s very important to be clear about what’s not possible to achieve, so others don’t have unrealistic expectations.

3. Back Up Your Claims

Don't expect your colleagues to take your word for it when it comes to social media ROI. Be sure to cite statistics, studies, and sources from neutral third parties. The goal is to use these sources to boost your rationale and argument.

Now that you know what ROI is, what it can do for your company, how to decide on a platform, and how to present your idea, you can start implementing. If you’re trying to figure out the ROI on your brand’ social media, but have no idea where to start, MDG’s helpful infographic will give you a jumpstart.