Are you putting all of your emphasis in social media measurement on exactly the wrong thing?
I did a webinar recently with my friends from Expion about cross channel social media analytics. One of the great points that Albert Chou from Expion brought up in the webinar is that we often have plenty of measures around social media outputs. We know likes and comments and shares and all those things. There’s no excuse for not knowing what your outputs are.
But where we fall down, in terms of social media measurement, is actually measuring the inputs. We spend almost no time figuring out how much does it actually cost us to do these things in social media? And if you don’t know the inputs, your ability to make sense of the outputs is mitigated considerably.
You cannot figure out ROI without first knowing the “I.” (click to tweet)
So my advice is to spend some time thinking about what are your true costs in social media and how to assign those costs on a weekly basis, a monthly basis, a per channel basis, and/or a per post basis to figure out what your actual return is.
How to Quickly Figure Out Your Social Media Costs and Get Closer to Social Media ROI
Here’s how you’d do it for a team of three employee making an average of $60,000 per year:
$60,000 per year divided by 12 months = $5,000 per month x 3 people = $15,000 per month
Add an overhead factor (this includes stuff like electricity and health insurance. I customarily use 50% for this, but if you want to be super accurate, ask your accounting department for the % in your company) = $22,500 per month, all inclusive
Add up all the other expenses related to your social media, such as your social media management software, your stock photo licenses, designer fees, and the rest. Let’s say that costs your organization an average of $4,000 per month.
Under this scenario, your total social media costs are approximately $26,500 per month.
For math’s sake, let’s assume you create 300 total pieces of social content per month (tweets + FB posts + Instagram, and so forth). Your average cost per piece of content produced is $88.33.
Now You Know Your Costs. What’s the Next Step in Tracking Social Media ROI?
Knowing that information you can either take it one step further and determine what your true costs are per channel (you’ll need to track how much time you spend on Facebook vs. Twitter vs. Instagram vs. Pinterest), or you can use your $88.33 to start to more intelligently value the impact of each piece of social content.
What’s a click to your website worth? Well, how much are you paying for them in paid search? If you’re paying $3 per click on average, and your social content is generating 30 clicks per post on average, you’re producing $90 of value for every $88.33 spent. And if you want to get really serious (and we can help you if you want to do this), you should be mapping those clicks to lead generation and sales, based on direct conversion (or more likely for social, indirect conversions).
There are of course a ton of other benefits to social media beyond clicks and conversions. Market research insights and reduced customer churn/increased lifetime value are two potentially massive social media benefits that are under-discussed and rarely modeled accurately. It’s not necessarily easy to figure out the presumed financial return of those benefits, but nobody ever said social media was easy, just that it was awesome. (My pal Jason Falls has a great post he wrote recently about some of the other benefits of socialand how you should be measuring them as well as ROI)
So when someone asks you about the ROI of social media, don’t give them a vague and squishy response about relationships and engagement. Tell them you have to first figure out the investment before you can calculate the return.