Browse through the web. You’ll find a flood of results from surveys that show that over 60% of digital marketers cannot, really, measure the ROI around their digital marketing activities.
ROI OF SOCIAL MEDIA MARKETING IN NIGERIA – HOW IT CAN BE CALCULATED.
It’s worse in Nigeria.
However, this takes nothing away from the fact that it is necessary and must be done. The measurement of ROI is birthed out of the need to justify marketing spend.It’s not unusual to hear MD’s claim that marketers are ‘wasting money’ and just having fun. Absurd as it may sound, I once heard a snide and unfounded remark about marketing activities being “conjured to make agencies happy”.
It is true that in marketing, the pathway between marketing initiatives and the moment when a buying decision is made is not always as clear as we would want it. Still, this does not negate the fact that marketing plays a powerful and indispensable role in determining sales.
With the digital has come bigdata. Now we can measure a whole load of activities around our initiatives. With big data, the question of ROI can be dealt with sensibly.
Below are some principles for measuring ROI. I also debunk some hocuspocus theories that are flying around and may have hit you sometime in the past. If you keep so of these things at the back of your mind, you will never go wrong.
ASK THE RIGHT QUESTIONS
The error arises when you begin to ask the wrong questions. When you do ask the question What is the ROI of social media marketing? you may actually be setting yourself up for the wrong answers.
The right questions specify the activity.
The right question should be What is the ROI of (insert social media activity here in social media)?You should then go further to specify a timeframe.
Say What was the ROI of (insert social media activity here for Q1 2015)?
Other questions include what was the ROI of shifting 40% of our customer services resources from traditional call center to twitter this past year?’
What was our ROI of social media marketing driven new product flavors’ awareness campaign in Q3?
I have made these examples because it is important to avoid asking the wrong question. Asking the wrong question has led many a social media ‘expert’ or ‘guru’ down a dark path of dark improvisation. ROI calculation, then, goes from being a straight-forward calculation of investment vs gain from investment to becoming any number of made-up equations, throwing together unrelated metrics into a jumble of drivel like this:
SOCIAL MEDIA MARKETING ROI = (tweets-followers) / (comments x average monthly post)/ (Facebook shares x facebook likes)/ (mentions X channels used) X engagement
The concept of ROI centers round understanding consumer behavior and how they affect the moment of sales. Any calculation that does not put that into consideration isn’t worth the ink it’s done on.
ROI OF SOCIAL MEDIA MARKETING IS NOT CONCLUSIVE
The outcome of an ROI calculation is never really final. Social media is unlike traditional media where campaigns or activities have a start and stop date. For e.g. people’s conversations will neither start and stop on an advertiser’s schedule. It is an ongoing process that lasts long after the campaign duration is done. You may want to answer the question of how to put this into consideration?.
ROI calculation is not an afterthought.
It is important to set goals and KPIs even before the commencement of the social media activity in question.
ROI should not be a process of frenzied attempts at budget justification at a time when the marketing department is assumed to have wasted a lot of money and senior executives are under pressure to make the balance sheet look good.
A clear path should also be established on how these goals lead back to financial outcomes.The relationship between budgets and activities, then activities and outcomes and finally non-financial outcomes and financial outcomes must be established and mapped.
Social media activity should deliberately drive ROI. If it is not deliberate, odds are that it won’t likely result in any.Hundreds of thousands of followers on Twitter will most likely not amount to anything if you don’t have definite plans for it.
NOT EVERYTHING SHOULD BE MEASURED, NOT EVERYTHING IS RELEVANT
Phew! Yes, you don’t have to measure everything.
Measuring ROI can sometimes be complex.Hence if you have limited resources, you may decide to calculate the ROI of certain activities and not others.
Along with that line, it is also important to note that ROI is not always relevant. Not all social media activity needs to drive ROI. Functions like technical support accounts receivable, digital reputation management, digital crisis management; R& D etc are not always tied directly to financial KPIs. You don’t have to force them into the ROI calculation process.
IT IS AN AGILE PROCESS
The measurement of ROI of Social Media Marketing is agile.
The tempo of digital marketing necessitates that when ROI is measured, you need to be flexible enough to change strategy.
This involves adjusting to the tactics and techniques that are paying off and reducing input to tactics that are not paying off.
It is nonsensical to keep performing an activity when you find out that it is not yielding much just because you are awaiting the annual ritual of strategic planning.
In all of this, it is important to always remember that social media in and of itself has no cookie-cutter ROI.