All of us have heard the question about “What is the ROI on social networking”. There is no more the question, “do we need social media” or “does it work?”, so in essence we all have accepted that social media is important for marketing and should be taken seriously by businesses. Also, it is not for free, it requires investment and efforts.
Now, like any other marketing strategy, Social media brings you results if approached correctly. There are no dollar conversion metrics that anyone has come up with, except I have seen http://www.frogloop.com/social-network-calculator claiming that they have a formula to calculate ROI on social network campaigns.
Measuring the ROI for social networking is difficult because the returns you’ll get out of networking via social media are not direct and immediate. Chatting with another person on Twitter or linking with other professionals on linkedin does not always convert into business. However, this process is about building relationships and communities which you can leverage in the future.
Viral nature of social networking helps in many ways with very minimal investment. The power to reach out to target audience through social media is tremendous and does help in building your brand as well as reputation; only if you can deliver effective and interesting content.
Online success is by and large measured by page views and unique visitors. So if you can’t get social traffic visitors to your website/content/campaigns, you have to get them through other websites and that’s where social sites like twitter, facebook, myspace and many others play a great role.
Social media is powerful in lot of ways and good candidate to measure return on branding and customer relationship. It is a long term strategy and not a short term objective.
“If your company does not have a social media presence online, you are missing out on the 93% of Americans who believe you should, and the 85% of Americans who are expecting to interact with your company through social media, according to a new research study from Cone. ” – Source (http://www.corpsocialnetworking.com/bsn-blog/study-reveals-93-of-consumers-expect-companies-to-have-social-media-presence/) Social media is the new way of doing some of the business workflows. It supports transparent relationship with the customers, improves the customer experience and opens up doors for collective intelligence.
The ROI on social networking depends on and is driven by goals of the company. There are many success stories of high revenue through advertising, a good example is facebook. There are many other applications built using facebook APIs (http://www.bestfacebookapplications.com/) which are performing well. If you can create stickiness, you are successful.
Michael Arrington of TechCrunch started as a lawyer then became a blogger and now makes $2.5 million per year, has a $100 million valuation, classifieds and job boards, $12,000 per month display advertising, Crunchgear (merchandising) and blogger staff.
There are multiple resources which can help you measure success of your social networking media/efforts, some of them are – AideRSS allows you to enter a feed URL and returns statistics about its posts, including which are the most popular based on how many times they are shared on a variety of social networking sites (Google, Digg, Del.icio.us)., Google Analytics and Feedburner are free tools to help analyze your company’s blog traffic, subscriber count, keyword optimization and additional trends.
Xinu is a website where you can type in a URL and receive a load of useful statistics ranging from search engine optimization (SEO) to social bookmarking and more. So in my opinion, if you have social networking sites that derive Ad revenue, there is direct way to calculate ROI. But if you are using social media for advertising, marketing and as a support tool for business processes, there are lot of benefits but no direct $ conversion formula.
