India is the second largest country using Facebook. In 2017 it is estimated that there will be around 197 million social network users in India, up from 86 million in 2013. With such a huge user base, it’d be unwise of a brand to not be on social media.
“By starting earlier and using social media to spread the word about the new product, we’re really reducing the amount of traditional advertising we have to spend,” – Jim Farley, Ford CMO
Alright then – I am a brand. I am on Facebook, Twitter, Instagram, Youtube and recently on Snapchat too. I post content regularly on all these platforms. I do promoted and sponsored posts given the fact that organic reach has drastically gone down (pages with more than 500,000 Likes, organic reach could be as low as 2%). I’ve managed to have a decent following on all these platforms. Now the big question is I don’t know how all these social media activities are helping me and my business? How do I measure my social media Return on Investment?
Worry not! Here are 5 simple steps to measure the effectiveness of your social media marketing.
Most of us are measuring the wrong stuff. Measuring social media effectiveness is not about the total number of people see your content. It is about how people react to your content. First, let us understand what ROI is:
SM ROI = (SM return – SM investment) / SM investment
Now that we know what Social Media ROI is let’s make it a part of our day-to-day tracking mechanism.
1. Set measurement Metrics
For different businesses, these metrics can vary a great deal. Some business may want to create awareness, whereas the others may want to generate sales from social media. Measure hard objectives, example:
• Gain 10,000 new followers
• Increase online purchase by 10%
• Increase awareness among target audience by 15%
• Increase revenue by INR 5Mn
• Drive 20% traffic to the website from social
• Drive 100 downloads of brochure
2. Track the metrics that matter
Set one or more of the above measurement metric and start tracking the same. Website metrics like sales, downloads, signups can be tracked in Google Analytics. Social media metrics can be tracked using Facebook Insights, Twitter Analytics and there are a host of online social media measurement tools.
3. Place a monitory value on each metric
One of the widely used methods is the Lifetime Value of a customer, i.e. all time average earning from a customer. If you know the Lifetime Value of your customer then it becomes easy to measure the conversion value. For example:
If the average lifetime customer value is Rs. 500 and you know 2 in 20 who share your content become your customer then average monetary value per ‘social share’ would be Rs. 50.
Assigning a monitory value to a social media activity can be tricky at times but the same can be done. For example, if ‘# followers’ is your measurement metric then:
Value of one twitter follower = (Total revenue in 30 days from Twitter) / (# twitter followers)
Similarly, we can calculate the value of one facebook like, one app download, one online purchase and all the social media metrics that matter to your business.
4. Track conversions
Oftentimes, it is difficult to track conversions when the promotions are simultaneously happening through other media as well. Like a print ad asking customers to download the app or like their facebook page. For now, we will only consider the benefits that come from social media activities.
Start tracking actions taken by people on your social media. Action can range from clicking a link you posted, your app downloads to online purchase. We have several analytics tools to track these activities. For example, one of the e-commerce brands I worked on fetched 8% of the overall traffic from their facebook page alone.
5. Analyse results
Going back to our previous example, if per ‘share’ value is Rs. 50 and say total number of shares are 2000 per month then conversion value (return) is 1 lac.
Once you have the monetary value of total conversions (return) you receive from social media all you need is to find is total spends (investment). While estimating the monitory value of investment considers man hours, social media ad spends, social media tools subscription cost etc. Say everything put together total spend per channel is Rs. 60000 then your ROI would be:
SM ROI = (100000) – (60000)/ (60000) = 67%
In order to develop an effective measurement strategy, one requires accurate data and constant tracking and monitoring of right metrics. The best thing about online measurement is that you can adjust your tactics in real time for desired results.
Keeping a tab on ROI gives you a clear picture as to what works well for you. You can direct your spends and efforts accordingly to ensure that they are realised positively.
The article is written by Sagar Barapatre of Idea Cellular.