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How do you measure the return on influence of a social media campaign?
Tradition ROI (return on investment) is no longer a viable model. Revenue $$ resulting from social business is tied to the soft "viralibility" value of the message than hard metrics. Products that measure influence (e.g., Klout) are a nascent market.
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7 Answers
First of all, I disagree with the statement that 'Traditional ROI is no longer a viable model.' Businesses invest resources because they require - and expect - a return. It may be a return that can be measured easily (cash) or less easily ('engagement', 'loyalty', etc...) but seeing some type of 'Return' on the 'Investment' is as necessary as it ever was.
For any marketing campaign (social or not), the return should be measured in terms of that campaign's success in getting potential and current customers to notice and act on it. In other words, a (social) campaign's success or failure should be measured in terms of whether it moves opportunities INTO the a lead qualification funnel, and/or moves them THROUGH the funnel (or both).
My company (Terametric) put together a Focus Roundtable on this very topic a few weeks ago entitled "Above the Funnel: Making the Connection between Social Sales & Marketing and Measurable ROI". The Roundtable discusses many of these topics in detail and a replay is available. Thought you and others might want to check it out - http://www.focus.com/roundtables/above-funnel-making-connection-between-socia...
Last but not least we've got another Roundtable - specifically focused on Influencer Marketing - coming up on November 1 - http://www.focus.com/roundtables/relevant-influence-discovering-and-engaging-... - please feel free to join us and we can discuss these issues live!
Maurene, I was so inspired to your question and this topic, I decided to write a blog post. It is a different approach to utilizing influence in your social media campaign but I hope you find it helpful!
http://terametric.com/blog/2011/11/is-there-a-return-on-influence-top-5-uses-...
I agree with Chris. I was taught that if it can't be measured, and if you can't draw a straight line to the bottom line, I'm not going to pay for it.
The idea that the traditional ROI model is not viable would be soundly rejected by our clients. That's not to say that people aren't going to try to come up with metrics that make their method look good; it just doesn't say ROI is not viable.
If you want to prove that a social media campaign is effective, calculate its cost-per-lead - using a standard definition of a lead (or simply use cost-per-sale) so you can make an apples-to-apples comparison to whatever other methods you're using.
So a consultant walks into a bank, fills out a deposit slip with the word “Viralibility” where the dollar amount usually goes, and …
Believe I’ll take a pass on that concept, thank you.
Thank you Chris and Jeff for your thoughtful comments and I agree with you both.
My point is that the traditional means for defining who are your direct and indirect influencers is morphing. Let's assume that the people who "Like" your FB event are part of your direct influencer target. Quantifying the ROI is easy.
However, how do you measure the influence of the people that "Like" what your target influencer likes? These are the indirect influencers. One method is to make all qualified leads, direct influencers, indirect influencers and second-cousin-twice-removed influencers to use the hash tag assigned to your event. ** Not so much **
Article that led me to this train of thought
http://www.forbes.com/sites/danschawbel/2011/10/18/the-end-of-business-as-usual/
There are many ways to say "how" a social media campaign "should" be measured. Ask the client if they have current measures in place. Your idea of success may be different from your client. This is true if you're part of an outside agency tasked with the program/delivering ROI results or if you're part of an internal team at a company.
Determining social influence & success can and, IMO, should include a variety of metrics.
At its very root, the discussion distills to what is ROI? For me, it is the "perceived benefit received divided by the perceived cost incurred". Within the context of determining Social Media ROI and other many other media for that matter, we may never be able to fully determine the financial impact of our campaigns but using this as the basis for ROI leads us to determining at the very least the minimum Return On Investment and works as a guide to tie together Influence, Engagement & Action. I recently presented on this and in particular the "bridging" of the soft metrics to the hard metrics at Facebook last week http://slidesha.re/sxw6bO and at Microsoft the previous year.
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