Social Media ROI: Why Are Most Companies Still Not Measuring It?

Posted on October 8th 2013

Social Media ROI: Why Are Most Companies Still Not Measuring It?

ImageReturn on investment (or ROI) isn't a concept with which the business world is unfamiliar. People are always searching for smarter ways to invest (which explains the popularity of investment services like Betterment). But according to Fast Company, a surprising 88% of a sizable sample of marketing professionals feel they couldn't accurately measure their social media campaigns' effectiveness. Of the individuals surveyed Fifty-two percent said that dealing with social media ROI was their biggest frustration.

However, learning how to drive ROI with social media is almost immeasurably important for companies today. It all begins with learning to measure it properly, so it's astounding that marketers aren't doing everything in their power to make this happen. Here are a few reasons why many companies aren't making an effort to measure their efforts.  

Fearing What It Will Say About Company Effectiveness

This would be the ostrich-inspired, head-in-the-sand phenomenon where a company fails to question its social media efforts simply because it doesn't want to hear the answers. This sort of social media denial seems to be particularly common in larger, more entrenched firms that don't really understand social media's potential in the first place. Of all the roadblocks preventing companies from measuring their social media ROI, this is the first (and possibly most difficult) one to get past. 

Lacking the the Right Tools for Collecting the Data

Many marketers seem to be surprisingly unaware of the correct tools required to measure the effectiveness of their efforts. Fortunately, however, there are innumerable tools out there for collecting data regarding your social media ROI. Some of them need to be used in conjunction with others for maximum effectiveness — using Conversion Measurement and OptimizedCPM together, for example.

Other well-regarded and effective tools include Viralheat, Spredfast, Sysomos, Sprout Social, and UberVu. And from a content creation perspective, a tool like Curation Reports is an excellent option for tracking the entire life-cycle of a link as it's shared across multiple social media platforms.   

Lacking Will or Resources to Collect & Analyze Data

In this instance, the company either doesn't feel it's important to collect and analyze the data, or it simply doesn't think it has the resources to do so. Under most circumstances, the former case is much more likely than the latter. With a little planning and the proper insight, all you really need is an Internet connection and the proper tools to collect the necessary data. 

Failing to Understand what Data is Relevant

It can be hard to know exactly what data is relevant in terms of maximizing your social media return. After all, it's often difficult to determine the difference between causation and correlation in social media. For example, if you're looking at search rankings, you'll probably see that content with the most social signals also tends to rank highly in search. 

But as Matt Cutts and Google have said time and time again, social signals are not a part of the ranking algorithm. So what does this mean? It only tends to indicate that content that ranks highly on social platforms tends to have the same characteristics that cause it to rank well in search. Thus we have a correlation between these two things, but not a causation. 

Having the Data But Not Knowing Where to Start

This is really an instance of data overload, where inaction is being caused by the sheer volume of data that's available. By learning what data is important, though, you'll be able to narrow down your focus. With Facebook for instance, the number of fans you have is really irrelevant versus the amount of engagement you're getting. Overcoming this particular obstacle is really very simple: Don't get sidetracked by the white noise and, instead, train yourself to look only at what matters. 

There are some good formulas for measuring your social media benefits, but it all begins by recognizing that taking a "Field Of Dreams" attitude toward your social media efforts is a self-defeating mentality. It's a losing game to simply trust that if you build it, they will come. Instead, it's in your company's best interest to take a concerted and meticulous approach to how you measure your social media strategies.

Is your company currently under-performing in how it measures social media ROI? If so, then why do you think this is happening?

image: return on investment/shutterstock

philcohen4

Philip Cohen

Phil Cohen is a graduate from San Diego State University, with a Bachelor’s in Computer Science and Public Relations. He is currently working with a computer firm in Tampa, Florida. In his free time he enjoys freelance writing about technology products, as well as Scuba Diving, White Water Rafting, and taking Road Trips.

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Comments

Dave_Thompson
Posted on October 8th 2013 at 3:27PM

Social Media ROI may not be of much concern for some companies, to be specific companies which are purely looking out for branding through Social Media. But some businesses particularly small and local businesses are more keen on knowing the ROI through social media, though social media is not a platform for direct leads but one does get them. Tools are a must when Social Media ROI is in the centre of the topic. A great tool will give a precise and accurate ROI of your Social Media Investment.

jason_huntrods
Posted on October 8th 2013 at 4:49PM

Social Media isn't a game of numbers. Many aspects like building relationships and branding don't allow for a precisely calculated ROI. The best social branding/advertising is done in a way where ROI can't be accurately tracked. Because often methods of tracking interfere with the user experience.

Companies set on understanding their ROI are going into social media with the wrong perspective. Not being present on social media, and marketing to potential customers when customers are can cause potential loss in revenues. For many brands there is an expense associated with simply not being on social media.

To isolate ROI and base social media related decisions from it is a huge mistake. There's just too many factors that play into social media. Remember, it's SOCIAL media, not SALES media.

Robert Mansson
Posted on December 13th 2013 at 3:35PM

Your reasoning is so wrong! 

You are using the same reasoning that was used before for "normal" marketing activities. Today nobody question the demand of ROI for this "normal" marketing. I mean lets say that you buy an advertisment at a bus, should you not request that you could understand the result of that? And for social media, why should that be different?

Fact1 -  everything that involves use of resources like time and money have to be measureble.
If not, you will never be able to understand where your efforts shows the best value. I mean even the different activities within different channels should be measured. 

Fact2 - Social media involves use of resources.
Now with that said it is not the easiest thing to understand how to do this. The easiest is divide it into phases or even better into campaigns - you have to have a start and an end.

Fact3 - You should strive to measure ROI in sales revenue.
Not doing that you are not company that has to show profit.I admit though sometimes it is not possible show direct revenue, but then always indirect. 

I love to hear your comments.

http://socialmediatoday.com/comment/reply/1801656/127781

DJCoonan
Posted on October 8th 2013 at 11:34PM

I would certainly agree on many of the aspects you mentioned, but there seems to be a common factor in the responses of the comments I'm seeing here. A lot of intangible benefits are realised from the introduction of social media platforms in business. Yes, you can quantify a number of these benefits using some in-depth equations based on numbers generated through straight improvements since the implementation, but how can you put a direct value on the increased insights gained from better understanding of coworkers and their roles through social media? 

Faaast Cash
Posted on October 9th 2013 at 8:01AM

Online social network marketing has become the best and most successful way for businesses to create a social media ROI. It is a very important channel to promote anything one creates. Whether it is Facebook, Twitter, Pinterest or Yelp, it provides a source for business owners to discuss business plans, send quality deals and receive immediate feedback through social media reporting.
 

Baruni Shiva
Posted on January 30th 2014 at 5:55PM

One main reason could possibly be that organizations don't define what success on social media means clearly. As a result, they aren't sure what to measure and often get frustrated worrying about the wrong metrics. Brands definitely need to decide what yardstick they will use to measue success beforehand.