ROI of Social Media

The world of social media advisers is a small one.

Due to the new aspect of it, and that people are still learning how to correctly market using social media, there are few players in our market segment.  There is one large principle all of us agree on: you must use social media in the coming years to effectively market your brand.

There are however many disagreements on items such as how to best use twitter, should you friend everyone on Facebook, how many and what social media sites should you engage in, etc.  However, there is one larger item on which most of the other players agree and we disagree, namely that there is no way to track the return on investment of social media in a brand’s marketing at the present time.  This specific topic is something that companies are forming to try to capitalize on.

Engaging in social media marketing is an art, not a science.

Individuals that do it well know how to move the conversation from family, kids, and activities to “Do you know anyone that might be interested in our product?” without harming that relationship.  The more people you create a relationship with, the more potential customers you have, it’s basic sales 101.  But many other individuals argue that with social media, people send links around and so you never really know where clicks and purchases are coming from.

However, there are plenty of tools out there that let the brand manager track where these “viral clicks.”

The first all encompassing tool is Google Analytics.  This free service from Google allows any website administrator to track where their clicks are coming from, and what those users are viewing.  It even offers a sales valuation system for tracking what someone has purchased.  This tool alone offers almost all of the required metrics for tracking ROI of social media. If you know that someone visiting your website spends on average $50 a quarter and that $50 yields your brand on average $10 in profit, you know that each buying customer created $40 a year of profit.  You can then track the value of each click around your brand’s website.  This is technology that has been used for years.

The only other item necessary to help in tracking social media clicks is to use specific “transfer URLs.”  For example, a Social Media marketer can create an account at www.BudURL.com .  The site offers users a way of translating their clicks from long URLs such as http://marketwithsocialmedia.com/2009/01/04/video-get-ahead-of-the-curve/ into something shorter like: http://budurl.com/5lam

Most of the original idea behind services like BudURL is to make creating links easy in services like Twitter, where you can only use 140 characters.  Consider that the above link took up over half of a potential allotted message where the budurl only took 22 characters.  However, the real value to ROI trackers is the link tracking system.  BudURL offers the ability for a user to see how many clicks that link has received, where the clicks came from (email, Twitter, Facebook, IM, etc.) and in what geographic location the clicker is.

BudURL’s service can be free for the most basic users, but for just $12 a month, a user can received ultra detailed stats that are up to the second.  These clicks can then be matched up with the data in Google Analytics to find out exactly what the value of them came out to be, both in the short and long run.

This process is just one way that ROI can be measured using social media.  It’s not a 100% perfect solution, and it will never calculate the full value of the non revenue based value, such as goodwill, it creates for your company.  There are other methods as well.  When we put together a consultation package for a client we utilize suggest the utilization of these systems to track the value, because we are sure that anyone will see the ROI of using social media over ANY other media format even with paid staff in place to do nothing but monitor these sites.

Tags: analytics, ROI, social media