HOW TO: Measure Social Media ROI

84% of social media programs don’t measure return on investment (ROI). The comments in that post indicated that a lot of individuals and businesses want to be able to measure the ROI of their social media strategies and campaigns, but they don’t know where to start.

Companies and executives are finally beginning to really jump on the social media bandwagon, and that’s fantastic. However, for social media to fully work (for everyone), businesses and brands need to be able to evaluate the impact their social media use is having, both positive and negative. Measuring social media ROI isn’t impossible, but it can be difficult because many of the pieces that need to be evaluated are difficult to track. This guide is designed to help you track down those pieces and determine the ROI you’re getting on social media.

Defining Clear Goals

As a standard formula, ROI is pretty basic, ROI = (X – Y) / Y, where X is your final value and Y is your starting value. In other words, if you invest $5 and get back $20, your ROI is (20 – 5) / 5 = 3 times your initial investment. In the financial sense, ROI is measured purely in the context of dollars and cents, however, the principles can really apply to any type of investment — monetary or not.

Having concrete goals and concrete baselines is crucial to calculating your return on investment. So before you set out to measure and monitor your social media returns, you need to have a clear idea of what it is you want to accomplish.

Once you have your goals defined, you need to gauge the baseline for your levels before starting or changing your social media strategy. For example, if your goal is to increase social media mentions of your company, in order to measure the ROI of any actions taken toward that goal, you need to know where you stand now. You can’t evaluate the ROI accurately without a baseline.
Metrics Tools





Although ROI ≠ metrics, traditional web metrics like traffic counts, number of comments, Twitter followers, Facebook fans, etc. are an important component when calculating your ROI.

The trick is to not rely solely on the numbers, but on what the numbers end up leading to. For instance, does your increase in website visitors correlate with higher sales? Are people that find your website from Twitter or Facebook then clicking on your product pages or going to the e-Commerce section of your site? That’s the sort of data you want to be able to look for.

Back in January, we did a round-up of 50+ Tools for Measuring Web Traffic. Here are some of our favorites and some additional social media related measuring options:

Google Analytics — It’s free and it can provide a really powerful baseline for a variety of different factors. You can track incoming links and then the activities of the users they send, which can be helpful.

Omniture — Omniture has a slew of services available for businesses, including components that track Facebook and Twitter metrics.

TweetMeme Analytics — This is useful if you use TweetMeme’s retweet buttons on your sites. It’s a lot like Google Analytics, but focused on TweetMeme.

PostRank Analytics — This suite of tools measures social engagement on other platforms and services. What’s nice about PostRank is that instead of just a raw number, you can actually see the messages and comments from other sites that contribute to your stats. This can be really important for sentiment analysis (more on that later).

HootSuite — HootSuite is a great Twitter manager but also offers impressive analytics. The nice thing about the click data you get from an app like HootSuite (or bit.ly) is by looking deeper you can more easily see if those clicks translate into transactions or impressions on your other sites.

Be sure to check out our post on Tracking Social Media Analytics for help with these tools and for the type of data you want to look for. Also check out some other reasons to use a URL shortener.
Sentiment Analysis






Having a metric for something like Twitter mentions is pretty meaningless if you don’t know if those mentions are positive or negative. This is where sentiment analysis is interesting. Sentiment is also a useful baseline to look at before implementing or changing a social media strategy and calculating your ROI.

We’ve written a lot about different sentiment analysis tools for Twitter and here are some highlights:

Viral Heat — Viral Heat is an affordable social media monitoring service that includes a sentiment breakdown for Twitter mentions.

Twendz — Twendz is a very basic real-time Twitter sentiments tool.

Tweet Feel — Tweet Feel is another real-time Twitter sentiments search-engine.

Crimson Hexagon — Crimson Hexagon is an Enterprise-level social media tracking tool. The algorithm they use for their VoxTrot Opinion Monitor is really impressive stuff, and will help you determine what consumer sentiment is toward your brand based on social media mentions.

Sentiment Metrics — Sentiment Metrics is another tool aimed at enterprises or larger businesses. We mentioned them in our round-up of reputation tracking tools last year.
Social Media Product Suites





These products can be extremely useful in measuring ROI on social networks but are primarily designed for bigger brands and corporations. Still, in terms of all-encompassing tool sets, these tools have the edge.

Vitrue SRM — We’ve covered the Twitter Pages component of Vitrue SRM (Social Relationship Manager) before, but the whole suite is really dedicated to managing and getting the most information out of your social media accounts. Vitrue does analytics for links posted on Twitter or Facebook and can also plug into third-party services like Omniture and Google Analytics. Vitrue SRM is basically a CMS for controlling and monitoring your Twitter and Facebook accounts.

ContextOptional — ContextOptional offers both a Social Reporting Dashboard for monitoring engagement and activity and a Social Moderation Console for Facebook.

Salesforce.com — Salesforce.com’s Service Cloud 2 line of products is really designed to integrate Twitter and Facebook results and pages directly into a company’s CRM. Although this isn’t ROI in the most clear-cut terms, by improving customer service and getting a handle on problems quickly, brands can save themselves from potentially costly mistakes. Those savings can be taken into account when computing your ROI.
Making the Data Usable

This is the hard part. After you have defined your baseline, you need to take the metrics from your monitoring tools and see how they correlate to higher sales, better customer retention, or whatever your primary markers for output are.

If your ultimate measurement is sales for instance, look at your sales level. If it has increased, look at the number of referrers on your e-commerce site (assuming you can track this data) from your website or Twitter or the number of coupons used that were given away in a Facebook campaign to start calculating which sales stemmed from your social media campaigns.

Do you see any trends? Is traffic up to your store after posting on Facebook? What about Twitter? Does store traffic correlate with more sales when evaluating that same data? Does a higher sentiment analysis on Twitter lead to more sales or more visits?

Finding trends and tracking them back to their point of origin is the key to measuring ROI.
What do you think?

What do you use when measuring social media ROI? Is ROI the best term for measuring impact of social media, or should something else be used? What have you found to be good indicators of things that work and don’t work when using social media?

All Technology predictions for 2009, and beyond

• A.J. Kohn, 2009 Internet and Technology Predictions on Blind Five Year Old
• 1. Facebook Becomes A Portal
• 2. Identity Systems Fail
• 3. Video Advertising Succeeds
• 4. Microformats Go Mainstream
• 5. Banner CTR Becomes Obsolete
• 6. RSS Adoption Spikes
• 7. Kindle 2.0 Flops
• 8. Google Search Share Stalls
• 9. FriendFeed Surpasses Twitter
• 10. Someone ‘Dies’
• Jo Best, Five tech predictions for 2009 on Silicon.com
• 1. The rise of 'free as in beer' software
• 2. iPlayer ushers in the death of the TV licence
• 3. Big boys feel the pain
• 4. Google reveals another surprise
• 5. Mobile broadband beats fixed
• Jeremy Liew, Consumer Internet predictions for 2009 on Vator
• 1. Consumers seek cheap thrills
• 2. Trading real money for virtual goods
• 3. Web 2.0 leaders pull further away from the pack
• 4. on line ad prices continue to fall, alternatives help make up some of the ground
• 5. Getting serious about monetizing non U.S. traffic
• Dion Hinchcliffe, The Top Internet Predictions for 2009 on Social Computing Magazine
• 1. Site mergers/acquisitions for some of the weaker social network platforms
• 2. Stronger push towards identity portability and friend (social graph) portability.
• 3. The future of social media is user's owning their data, deciding who to send it to.
• 4. Companies finally building for revenue in the social and any other space on line.
• 5. Social Media will cease to be such an 'experimental' field in marketing and will start to become part of the main core of good campaigns.
• 6. The opening of social networks so that they can exchange profiles, social relationships, and applications.
• 7. Social media in 2009 becoming more and more accessible to mainstream audiences.
• 8. Much richer integration of location-aware services with a variety of devices.
• 9. Collaborative mapping - people working together with friends and colleagues to build shared maps of places they care about.
• 10. Location based services will proliferate and become more useful to the end user.
• 11. We'll see the tech take shape and make more money in 2009.
• 12. Aggregation services will change from just drinking from the fire hose to become very specific aggregation tools, perhaps with very specific use cases.
• 13. The pace of evolution may really slow down by comparison, but the user experience will be far better.
• Ori Fishler, Top 5 Web Technology Trends for 2009 on Edgewater Technology Weblog
• 1. Actionable Web Analytics as part of Enterprise BI and Dashboards.
• 2. Phone Browser Compatibility
• 3. Location based services
• 4. Increased reliance on open source infrastructure products and technologies
• 5. Free is always a powerful word. Strong and reliable open source environments allow
• Richard MacManus et al., 2009 Web Predictions on ReadWriteWeb (added 2008-12-31)
• 1. Twitter announces they have a plan to make money.
• 2. New real-time web app launches that integrates Twitter, FriendFeed & more.
• 3. Professional twitterer becomes a real job.
• 4. Twitter will start to embed advertising into its users streams.
• 5. Twitter will be acquired (probably by Facebook).
• 6. Twitter is going to continue to grow and eventually get acquired, while Facebook is going to see further decline.
• 7. Facebook signs up to OpenSocial.
• 8. Facebook will continue to surprise.
• 9. Big companies will have incentive to give OpenID more support because of Facebook's domination.
• 10. Facebook Connect becomes new de facto way to login to web sites.
• 11. Facebook Connect authentication will become dominant method.
• 12. Facebook has one security incident too many, leading to a decline in popularity.
• 13. Microsoft will double-down on its Facebook investment, garnering more control of the company - and more access to the data.
• 14. Microsoft resurrects WebTV after buying out Netflix.
• 15. Microsoft will launch a competing platform with Apple's App Store.
• 16. Microsoft releases a cool online version of Office, but then Google releases an amazing new version of Google Docs.
• 17. Gmail will be the de facto login credential on the Web.
• 18. Google Reader gets themes.
• 19. The browser wars will further heat up.
• 20. Google Chrome adds plugins....
• 21. Google backlash begins.
• 22. Google will finally offer a comprehensive online storage solution and some kind of travel product.
• 23. Google loses goodwill, Yahoo gains.
• 24. Yahoo sells to a big media company, but it won't be Microsoft.
• 25. Amazon will further strengthen its position in the cloud computing market.
• 26. eBay oscillates between break-up and acquisition; it will eventually be acquired by Amazon.
• 27. The usual suspects will remain unacquired in '09: Digg, Twitter, Technorati. The one that does get bought is FriendFeed - by Google probably.
• 28. Lifestreams will continue to evolve.
• 29. iTunes adds social networking features; but it's still a closed development system.
• 30. If Apple finally enables its push server, mobile social networks and geolocation enabled apps will become a major topic.
• 31. New iPods released...now with VOIP app built-in.
• 32. New iPhone is released with video recording capabilities.
• 33. One of the major gaming platform companies will acquire iPhone development shops to corner the market on iPhone gaming.
• 34. Under pressure from iPhone, Android, Symbian, and RIM; Windows Mobile will attempt to reinvent itself.
• 35. Digg still not acquired by anyone.
• 36. Lifestreaming apps like FriendFeed will remain niche products.
• 37. Mixx concentrates on usability and starts gaining ground on Digg.
• 38. LinkedIn will grow in the public's consciousness and grow their revenue dramatically.
• 39. Apps that do filtering, inferring and recommendation have a great year.
• 40. The value of data portability and single sign-in becomes unmistakable after a privacy breach.
• 41. Consumer and regulatory backlash make online privacy into a key differentiator for major players.
• 42. Have cake and eat it too solutions will emerge as a strong option.
• 43. Exciting new open source projects will emerge and grow.
• 44. More contextual browsing technologies will hit the market.
• 45. Streaming web video to the living room will go mainstream.
• 46. P2P shows value for reducing cost of server farms.
• 47. VCs jump onto the SAAS bandwagon, but most ventures don't need the cash.
• 48. 2009 will be like 2002 for raising money or exiting.
• 49. More Indian start-ups go global with price-smashing strategy.
• 50. Health web apps start getting attention from mainstream people and media.
• 51. Netbooks stay hot...get lighter, faster, thinner, line between notebooks and netbooks blurs.
• 52. Media properties prominently experiment with different and innovative types of online advertising.
• 53. One or two interface developments will blow us away.
• 54. Out of work journalists band together and create some killer blogs.
• 10 Predictions for the Internet for 2009 on Trade Radar (added 01-01-2009)
• 1. More blogs!
• 2. Google will continue to dominate.
• 3. Linked-In will soar as waves of unemployed try to bolster their personal networks.
• 4. Amazon will take its place beside Google as one of the two technology leaders on the Internet.
• 5. Facebook will surpass MySpace in unique traffic and begin to pull away.
• 6. E*Trade will be acquired.
• 7. Advertisers will push publishers to accept CPA versus CPC.
• 8. With location awareness becoming ubiquitous, anonymity on the web will be degraded.
• 9. Monetization of certain popular sites will stall.
• 10. Yahoo will sell its search capability to Microsoft and Google will buy what's left.
• Ryan Lawler, Contentinople's Top 10 Predictions for 2009 on Contentinople (added 2009-01-03)
• 1. Hulu will hit 1 billion streams worldwide
• 2. Online video ad units will look more like broadcast units
• 3. Users will start to ditch pay TV for broadband
• 4. Behavioral ads will be 'targeted' by Congress
• 5. CDN consolidation will begin in earnest
• 6. Digital 3-D will go mainstream
• 7. Twitter will pull in 'significant' revenue
• 8. Online ad spend will start catching up to eyeballs
• 9. Royalty issues will kill streaming music sites
• 10. Internet video will be stuck on PCs - for now
• Mary Meeker,Technology / Internet Trends [PDF] on MorganStanley.com (added 2008-01-05)
• 1. Undermonetized Internet Usage Growth Drivers – Video + Social Networking + VoIP + Payments
• 2. Broadband + Mobile + Internet = Especially High Global Growers
• 3. Lots of Retail Share to Gain Amazon.com Should Continue to Gain Share USA; Online Penetration = 6% and Rising
• 4. Lots of Ad Share to Gain $288 Per Home vs. $818 for Newspapers Implies Upside
• 5. Search Should Continue to Become More Important
• 6. While CPMs / CPCs May be Under Near-Term Pressure, If Targeting / ROI
• 7. Continue to Improve (as they should) There Should Be Long-Term Upside
• 8. Best News = History Proves That Ads Follow Eyeballs, It Just Takes Time
• Sharon Besser, One 2009 Prediction you can count on on Imperva Blog (added 2008-01-05)
• 1. Companies with cogent business models that provide consumer value should survive / thrive
• Stanley Tang, 5 Internet Marketing & Social Media Predictions For 2009 on Stanleytang.com
• 1. Twitter Will Get Bought Out
• 2. Mobile Applications Will Take-Off
• 3. A New Tool To Help Us With Organization
• 4. Videos - Interactive And Live Streaming
• 5. Social Media Continues To Grow
• Jeff Nolan, 2009 Predictions on MyVenturePad (added 01-01-2009)
• 1. Consumers re-evaluate the notion of value.
• 2. Word of mouth marketing increases in importance.
• 3. A major American city will be without a daily newspaper.
• 4. Advertising as a primary business model for consumer web services will be abandoned.
• 5. Enterprise software nuclear winter
• 6. What SMB gives, SMB takes away
• 7. Role of government in business
• 8. Younger employees will simply be thankful to have a job
• Adam Weinroth, Nine E-Commerce Predictions for 2009 on Shop.org
• 1. Real-Time Customer Service
• 2. Communal Conversion
• 3. TWOM = Trusted Word of Mouth
• 4. E-Commerce Sovereignty
• 5. Focus on Per-Customer Value
• 6. Widespread UGC
• 7. Growth Through Accountability
• 8. International Intensity
• 9. User Experience Innovation
• What’s coming in on line retail and technology on Guidance.com
• 1. Mobile will NOT be the killer app for eCommerce…
• 2. The lines between on line and offline shopping will blur
• 3. Consumers will create their own personal shopping malls
• 4. “Smart” retail sites will treat shoppers as individuals
• 5. Commerce will become even more collaborative
• 6. The next wave for video? Customer reviews
• 7. Configuration: beyond the product, configure the entire purchase
• 8. Use tweets to capitalize on buzz
• 9. Corporations will “become” social
• 10. People might increasingly turn to social networks
• 11. Retailers will need to have someone (or a team) designated to be the “personality” of the company on line