Why You’re Looking At Social Media ROI All Wrong

The most recognizable approach to analyzing return on investment usually includes seeing black ink, a plus sign or an increased bottom line. You put a certain number of dollars into a project and calculate how many dollars that project brings in. That approach is deeply flawed when it comes to social media marketing.

Let’s leave the online medium alone for a minute and visit the farmer’s market. Let’s say you walked into your local market to buy apples with $2 in your pocket. One stall you walk by is selling apples at five for $1 and the another purveyor is selling the fruit at six for $1. It’s a fairly obvious assumption that you would give your business to the second farmer.

It is through this example that we can begin to truly understand how to truly and effectively measure social media ROI. In the apple story, the money you have in your pocket is your investment. The number of apples you can buy with that investment is the return. You receive a higher return with the second business than the first (12 apples to 10). Social media ROI is akin to this logic. The amount of money/time/resources you put into social media is your investment and the amount of engagement/reach/traffic you receive is your return.

Too often, we think of return on investment as a monetary figure. However, in the example above, you invest $2 and get food in return instead of money. This trade-off is still valuable and, ultimately, probably more valuable that cash (a person’s got to eat, right?). This is the mindset all organizations must have when parsing the data and determining social media ROI.

For example, your association should not try to figure out how much member dues revenue its Twitter account is bringing in. Nor should a small local coffee shop attempt to draw a correlation between its food sales and its Instagram efforts. Rather, these organizations need to calculate just how efficient their resources are and where they can maximize benefit while maintaining their investment.

Instead of measuring financial gains or losses from its financial investment in social media (which is often a misguided approach if you are not paying someone on a full-time dedicated basis or on a contract for social media), your organization should look to measure the impact of their online efforts compared to its content input.

For example, how many impressions are you generating on the average tweet over the period of a month? How much traffic is being directed from your Facebook links to your organization’s website on a daily basis? What is the conversion rate between mentions on Twitter and those people you mentioned interacting with or following the account?

Once you have determined these numbers and other similar stats, you must compare month to month and see where your strengths and weaknesses lie. After determining these elements, you need to determine why the successful periods were a success and why the numbers lagged at other times. Is it the hashtags or keywords you used? Was it the time of day you posted? Was it the type of content you posted about? Once you have determined the factors that went into the successful posts, it is time to duplicate their style, voice, intent, structure, etc in order to emulate the success.

If you follow this process, you are more likely to see a rise in engagement, reach, traffic and all the other indicators of a healthy social media presence while maintaining the amount of time, money, posts, staff, etc that go into your social media efforts. This is a valuable return on investment, one that doesn’t set unrealistic goals of making money off blog posts or YouTube videos.

So next time you visit the grocery store or take a bite out of an apple, remember this lesson about ROI and its moral of shifting your perspective.

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