ROI cannot be measured on Social Media Marketing – FALSE

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social media marketing

Attributed to various individuals (but quite possibly apocryphal) is the well-worn phrase ‘Half of my advertising spend is wasted. Unfortunately I don’t know which half’. It’s the sort of thing you might hear from a cynical Financial Director; and unfortunately it typifies the belief that is held in some business circles about social media spending.

It is especially untrue because in fact there is no excuse for not knowing what elements of your social media campaign are effective. Yes, there is an explosion of data – and yes, it is immensely complex: but with data has come new analytical tools and as a result of them we have more insight than ever before into the journey taken by each type of customer.

The bad old days

In traditional offline media, you might possibly be running a solus TV, radio, poster or magazine campaign and be able to see if there is an uplift in sales during that period – but even then, what lasting impact does it have? Were any other seasonal or competitive factors in play? In reality, there were probably various media in use and often the only way to try to attribute the effect of each is to carry out market research on a tiny sample of respondents and see if significant indications can be found. Often they cannot.

Whereas with an AdWords PPC campaign there is a direct and measurable result: and the same can be true of, say, a Facebook posting, a tweet or a LinkedIn Pulse article. Specific individuals respond, and there exist a set of real and clearly measurable types of engagement that you can evaluate against business outcomes.

Yet according to Oracle, only 15% of CMOs say they can report the quantified impacts of their social media activity. That simply is not good enough. I suspect that too many people are trying to look at their markets in the traditional way, from the aggregate inwards. In social media, you have to start from the individual and work outwards.

Valuing one customer

As a simple starting point, you will have data on what an average customer is worth to you in a year. How long is that person or business likely to carry on buying? If you know that from existing records, then you can assign to them a Customer Lifetime Value (CLV).

Now analyse the data on the new customers that are identified as (at least in part) arriving as a result of an interaction with your social media campaigns, and you will be able to assign a cost to each one that is acquired – the Customer Acquisition Cost (CAC). Divide the CLV by the CAC and you can carry out an informed financial analysis on whether the current social activity percentage of the lifetime sales value is a worthwhile investment.

You may point out to me that a lot of advertising is aimed not at an immediate sales response, but is designed to build a brand persona that people will feel good about. That of course is measured by market research in terms of awareness and brand affiliation – but increasingly those factors are generated through interactive media and can be measured not just with traditional panel research but by cold hard numbers recording likes, shares and downloads.

When we at Hannon Digital run a Social Media Management service for one of our clients, we provide monthly report data including the Key Performance Indicators (KPIs) for each social and website activity that is taking place. We correlate this against target outcomes and against historical trends.

With acknowledgment to the aforementioned Oracle report, it is also valid to correlate specifically Social KPIs with the overall Business KPIs, and examples include:

Social KPIs                                                                      

  • Conversations
  • Likes/Followers
  • Customer service requests
  • Reach
  • Demographics & Location                                  

Business KPIs

  • Number of customers or requests
  • Customer retention or advocacy
  • Customer satisfaction, issue resolution cost and/or time to resolve
  • Brand value or engagement
  • Market expansion

Attribution solutions

The most difficult task is to sort out the multiple strands that characterise our appearances on the Internet. We tend to use it as an online catalogue before visiting a store (on or offline), and to compare prices and brands. Two-thirds of B2B buyers have checked out potential suppliers online before they ever contact a sales person. All the different cross-channel activities, possibly involving different email IDs, have to be monitored if we are to truly know the attribution of how a sale is made nowadays. That’s not to say it is totally impossible: it is just an imperfect science. As each new analytical tool becomes available, rest assured – we’re on it.

A customer’s journey runs from initial awareness, to considering the options, then making a choice and ultimately recommending the supplier to others. U.S. research data indicates that those corporations characterised as being the most ‘digitally aware’ achieve greater revenue, profitability and market value than their peers. This falls short of being a definite cause and effect – it could be that the most digital-savvy companies are also more fleet of foot in other areas of their operation – but it does indicate that an essential tool in the corporate repair kit is a fully-functioning digital machine.

If you are running a B2B business and you know you need to get more competitive in the digital domain but are hesitant about hiring internally, then you are like many existing Hannon Digital clients. We will supply you with a dedicated 24-hour, 7-day Social Media Management service with a people power that you would never match in-house. Let’s talk about the measurable effects that we can create for your operation.  Email me: or call me on 0845 056 3446.