How to Measure a ROI on your Social Media Marketing

by Paul Wilson


Several years ago I worked for a large healthcare company managing their digital marketing needs. When I began the they had over a $1M+ set aside for paid search. However, this was the only internet marketing they were doing. For them doing Google Adwords and Bing Ads was an easy sell because paid search had baked into their systems an easy way to show a RIO.

During my time there I championed for the company to embrace SEO and social media marketing. By the time I left I had won the SEO battle, but social media was an entirely different story.

Yet, I know this story is not unusual for many other companies. Often it is hard for marketers to sell social media as a marketing channel to their corporate executives. There are intangibles around this type of marketing which makes tracking a social investment difficult. Things as branding, engagement, audience reach, sentiment, and community building are not transactional by nature.

Traditionally when measuring a marketing RIO you would lay it out like this:

Marketing RIO Equation

An example of this in action is:

Equation Example

Forbes has done an annual survey with CMOs for the past four years. One thing that really stood out to me in that time frame was that measuring a ROI by revenue had gone down by 27% (from 17.2% to a mere 12.5%).

To me that is a pretty sad statistic because it shows that companies are not tying their marketing success to what keeps them alive — money! Love it or hate it money (particularly profits) is the fuel that keeps the business machine moving.

Marketers, especially those who bill themselves as social media marketers, would be wise to understand this sound business principle. Neil Patel, over at QuickSprout, created an infographic (below) that shows how you can turn social intangibles into business transactions.

Do you think the success of social media marketing should directly be tied to revenues?


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