The Evolution of Social Media’s ROI

Conversations with customers of late have unearthed some interesting takes on measuring the value that social media and related marketing initiatives bring to a company, and how they’re changing the way in which marketers will be measuring their impact. There’s still something of a chasm between knowing that social media is important and actually justifying its use via qualitative results.

In order to understand the ROI, it’s important to understand how social media is driving a business. In a traditional sales funnel – such as selling something online – a marketing manager can simply measure how many sales are being driven via a particular social media application.

But what about a business where sales aren’t as clear cut, where sales aren’t being driven by specific channels or funnels? It’s impossible to measure the value that social media is driving via incremental sales. Instead it’s about measuring the value of different types of digital marketing.

In that context, a company is asking how is social media driving the brand, or perhaps purchase intent. In many cases, search and online advertising can be measured by tracking incremental volume, so metrics such as “social conversations” to leads or how many opportunities were originated via a social media source come into play. Finally, the percentage of times your brand pops up in keyword searches across particular social sites.

While the end goal is to make money, I think the key is not to expect sales conversion rates to improve necessarily. The key is to start thinking about the intangible benefits that social media is bringing to the table, and the metrics that can measure the indirect impact they’re having on your business.

3 thoughts on “The Evolution of Social Media’s ROI

  1. Great thought-provoking article. Picture perfect right up to, but not including the conclusion.

    ROI is a significant metric. Of course one’s specific mileage will vary according to the specific mission statement (assuming one can find the corporate Mission Statement to see how actions are measuring up against intent; but I digress).

    Talk of intangibles is so “dot com meltdownish” as to be just wrong. Marginal businesses are vanishing from the landscape at record speed. ROI is not a four letter word. Measuring “indirect impact” will have to wait until my business once again has excess money I do not know how to spend.


  2. I agree with this comment. ROI always has been and always will be important. From a social media perspective, it is still all about visibility and attention. Before social media, we used other tools to generate the attention and attract potential customers to our interaction points. Now, with social media, we just have different tools to create those interactions (and greater potential interaction points). The end goal is still more interactions that will convert to more sales. If your social media strategy is not increasing sales of your product, you have the wrong strategy.

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