I’m sure you’ve come across these objections… “Where’s the money?” “Prove to me social media marketing works.” “Show me the metrics!” If you’re just getting started with social media marketing, get ready—these challenges are coming. Perhaps you’ve asked them yourself.

“It’s not possible to quantify social media marketing,” says one pundit. “Anything can be measured,” says another. Then come the phrases such as return on invested time, return on objective, return on participation, share of voice, and the list goes on endlessly.

If you’re a little confused, you’re not alone! The dreaded “How do I measure the effectiveness of social media?” is one of the biggest questions marketers want answered, according to the Social Media Marketing Industry Report —a study of over 800 social media marketers.

So what is the answer?

I gave myself a mission: Find out the best way to measure social media return on investment (ROI). I queried marketing executives at major corporations, scoured all the leading thinkers’ writings and contacted my peers. What follows is an important discussion on measuring social media return.

Start by Defining Social Media

The first thing I discovered is it’s essential to rethink the common phrases we use. And that starts with social media.

Social media is bigger than you might think. Social media communities could include sites like Twitter, Facebook or LinkedIn. But they also may incorporate people commenting on your blog and your YouTube videos. They may even include forums and private communities hosted by your company.

Think about your social media activities the same way you think about the groups, clubs and organizations you belong to (i.e., poker gathering, parent-teacher associations or even your church).

You participate in real-world groups because there’s a lot of intrinsic value—something that’s hard to measure. Maybe you do it for your kids, to give back to others or to find companionship.

Your customers and prospects are all there too, in one group or another. Just like in the real world, they’re organizing online.

Chances are pretty good that people in your target market are involved with multiple social networks, whether they realize it or not. Be honest, that’s what turned the marketing cogs in your mind in the first place, right?

Now an important question… Why are you here? Why is social media marketing attractive to you? The answer to this question will take you one step closer to determining social media ROI.

“At Avaya we use social media mainly to support our customers,” said Paul Dunay, Global Managing Director of Services and Social Marketing at Avaya.

Why are you using social media? Here are a few ideas (a possible cheat sheet):

  • Gain more exposure
  • Find prospects and leads
  • Increase site traffic
  • Find new business partners
  • Improve search engine rankings
  • Reduce marketing expenses
  • Close more business
  • Improve brand awareness

And the list goes on. Come up with your list and you’ve got a starting point for a good ROI discussion.

What’s Your Investment?

The next question is what do you mean by return on investment (ROI)?

In the traditional marketing sense, ROI means for every dollar invested, a measurable return can be calculated. Back when marketing was predictable and the channels were few, this was a science. Invest more in channel X and watch the sales flow in.

Social media changes the game. Social media marketing doesn’t need to cost much. Actually, for most businesses it doesn’t cost anything.

“The problem with trying to determine ROI for social media is you are trying to put numeric quantities around human interactions and conversations, which are not quantifiable,” says social media strategist Jason Falls.

Folks who say you can’t measure ROI use some strong analogies.

For example, they’ll mention real-world networking. What is the ROI of passing out a business card while in the grocery store line or shaking hands at a networking event? Yes, everything has a cost. Business cards cost something and maybe you paid admission to the event.

But what about activities that are so instinctive that you could never really measure the cost? How about sending an email to a customer that simply says, “I appreciate you.”

Tim Ferriss, author of the 4-Hour Workweek, argues, “Whenever technology becomes fashion, ROI tends to get lost in the excitement of the latest .com catwalk.” He was referring to the media sensation with Twitter. Ferriss is a big proponent of measurements and argues you can actually calculate a return on your social media activities.

But, to calculate a return, your investment must be measurable. It really is hard to measure the cost of social media activities. A tweet here. A Facebook status update there. A LinkedIn friend request…

Time is the most obvious choice to measure. It’s a fixed asset we all wrestle with.

If time is your metric, then naturally you’ll be able to determine how much time you’re putting in as a starting point. Why not come up with a value for your time? For example, a guy I know puts a $250 per hour price tag on his time. So every 4 hours he puts into social media each week is costing him a grand.

But let me warn you… If time is your metric, you need to be fair in your calculations. All marketing activities take time; for example, writing copy or proofing ads. If you use time as your measurement, just be sure you measure time for your other marketing activities as well, for an apple-to-apple comparison.

Once you know your investment costs, it’s time to look at returns.

What Return Are You Hoping For?

What do you hope to achieve? A key to measuring return is determining what you’ll actually track.

“One thing many people do is measure how many Facebook friends, LinkedIn connections, and Twitter followers they have. In my opinion, that’s a hollow metric. It’s not important how many names we collect, but rather how many we engage, build relationships with, become our brand advocates, and exchange info with,” said marketing consultant Elaine Fogel.

The range of measurable returns is wide and deep.  According to marketing measurement expert Katie Delahaye Paine, State Farm measures employee morale and Red Cross measures how sites like Twitter save lives and avoid harm.

Yes, there are hard metrics you can track.  Consider Avaya. “We measure the number of social media mentions per week of Avaya, and the number of support issues we resolved that week,” said Dunay.

In other cases it’s about growing a targeted following. “For networks like LinkedIn, if you are starting a group, it is simply the member count of the group or the number of particular people (like CEOs) who join,” said Mark Amtower, a government marketing professional.

Greater exposure may be another goal.

“Are you using social media to spread your message? Then count the mentions. There are no silver bullets, but the more specific we can be with our marketing goals as they pertain to social media activities, the better,” said Joe Pulizzi of Junta42.

The Next Step

Once you’ve got a clear understanding of the investment and the desired returns, you need tools to track the results.

I’d like to hear your thoughts. Are you struggling to answer the social media ROI question? Let’s engage. Tell me what you think below.

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  • Michael; An interesting post about a really slippery topic. Enjoyed reading it and savoring the points you made. I think part of the problem is that social media engagement is different for small businesses, large businesses, professionals, and non-profits (who should again be divided by size). With a lack of a clear, defined, achievable and quantifiable goal for the engagement, measuring a “return” is just plain tough. And since the goals differ, it would seem even more difficult to make a uniform measurement or index of success.
    Engagement is easier to determine than it is to measure. I read this post because @jasonfalls tweeted about it, and I like and respect Jason, finding him to be smart, funny and personable. As a result of my engagement with him on and offline, you and I are having this conversation now. Since I enjoyed your post, I’ll probably find you and follow you other places, and if you think this response is interesting perhaps you’ll follow me back and we’ll begin a more personal dialogue- and who knows where that might lead? Perhaps one of us will employ the other, perhaps we’ll meet and one of us will end up with free drinks, perhaps we’ll do some other business together- so the engagement is real, the possibilities are endless… and all of it is really hard to measure in a precise and mathematical manner.

  • This is a good conversation starter, Michael. It really points up the importance of having specific goals when you start to do social media marketing. Having goals implies a plan, and having a plan requires an investment of time and talent. That investment is an up-front cost that you didn’t mention.

    Too many of us go into social media marketing with an attitude of “Let’s see what happens.” Ironically, even though the investment is smaller, the return is likely to be much smaller. And, as your article makes clear, it’s very hard to measure.

  • Hi billlublin,

    Yes, I do think social media raises the challenge of putting a value networking can bring to a business. We all know networking is essential offline or online. The trouble is that some people are better at networking than others, and some people are more open (on the receiving end) to networking than others. And then some people get more business value out of their networking skills than others. They have a business flair more suited to the social media environment.

    It’s not easy to measure everything when you take your points into consideration too.

  • Great post Michael! Although my interest in social media is more from a learning & development stand point than marketing, I agree that it is always best to start with the end in mind. As a learning professionals we create a program meet the need of the learner. We ask ourselves “what should the learner be able to do in the end that they can not do now?” Similar to the “what are you hoping for?” that you outlined above.

    But, as you said, these metrics need to be measurable. Since most companies use sales to determine the success of an initiative, learning has been at a disadvantage for a while because it is so difficult to directly correlate training to sales performance (especially for non-sales staff). Since much of social media is an “education campaign” it seems marketing is starting to find themselves in the same boat. Nevertheless, as we continue to explore the “new” tools of social media we are finding ways to measure change (such as the ones you pointed out above and a few others for learning and development) it’s just a matter of convincing your leadership that these are worthy markers of a campaign that will soon pay dividends.

  • Larry, I remember when I first started using Twitter for my business, I was way too skeptical to come up with any goals. It definitely was a “let’s see what happens” and it took me about 2 months, and the coaching of a few good social media buddies, to see a possible goal that could work for me. Since then I’ve tested different tactics and I found what works best for me… Twitter is now one of my main social media tools.

    So I hope that the others get beyond the “lets see what happens”.

    Also, social media’s not a miracle resource to get sales, I still have to do the other tasks needed to bring in clients. I think goals help to find the place social media can have in your overall marketing plan.

  • Thanks much Bill for your comment! You are smart to follow the trails of people you trust.

  • Thanks Renee! You know everyone (even me) is guilty of often jumping in feet first without a plan. Sometimes that is wise, however once you’re in the pool it does make sense to ask yourself why.

  • Anonymous

    It seems these days that if you’re talking about digital marketing and you aren’t able to measure through to ROI you must be doing something wrong. Social Media is no exception as people passionately argue that we have to create measurement standards in order to bring ROI measurement effectively to the world’s social media activities. As a search marketer I love ROI but I think that people are throwing their demand for ROI on Social Media without putting enough thought into the realities of the medium.
    If you’re using Social Media for promotional purposes like pushing a discount or special offer, it’s very easy to get to a campaign-based ROI. Simply track the sales or leads associated with the promo or discount code and voila you have your ROI. However, when you look at the larger picture of overall Social Media activity I think we are wasting our time in trying to assign an ROI directly to social activity.

    Social Media is about engagement. And to me engagement is a conversation, not a conversion. So it’s a very small step to realize that conversations aren’t something that should be part of an ROI calculation but instead are the genesis of a relationship that in time, if done right, will lead to a conversion of some type that does have value for an organization or company. Therefore it is that down the road conversion that we should be interested in influencing and ultimately tracking. I know justify investment in social media in the hopes of converting somewhere down the funnel can be a hard sale to management but research exists now that is beginning to show the impact that social media has on people in the purchase funnel.

    GroupM Search (my parent company), along with comScore, released a groundbreaking study a few weeks ago entitled “The Influenced: Social Media, Search and the Interplay of Consideration and Consumption”. In this study the impact of targeted social media activity on search behavior and performance was analyzed to determine that users who were exposed to a company’s targeted social media activities were significantly more likely to search on a brand’s associated keywords and click-through than those that were not. (I apologize for my extreme simplification of our findings. They white paper has more concrete details if you’re interested.)

    I’m not posting this to promote our organization but instead to help push along the thinking in regards to how we should be thinking about measurement of social media. To me it’s not a game of direct ROI measurement. Instead, Social Media should be used to influence others so that you can capture their declared intent down the funnel using things like search marketing, email or even offline marketing techniques.

    If you want to learn more visit to download the white paper about our research. I think you will find it useful in pushing the conversation forward regarding social media measurement.

  • Anonymous

    Great food for thought! Thanks!

  • Michael,

    I’m glad you entered the “fray” on this topic. I think it’s ironic that business owners and CEO’s are pretty quick to hire consultants for all kinds of business needs and never seem to apply the ROI “smell test” prior to hiring them. Social media by itself is meaningless to a business. You have to hire someone to do it, either in-house or outsource. You have to have some kind of expertise in order to make it work for marketing, PR, customer service or any other aspect of your business. So why is it that we require far more scrutiny from social media in terms of ROI? Certainly ROI should be your goal in creating an effective strategy, and it can be measured, but to shoot down social media in flames before it ever gets off the ground is silly. Why not listen to the experts, and yes there are some, come up with a plan that includes metrics, and go from there? How is that any different from putting together a budget or any other aspect of your business plan?


    John McTigue

  • Actually I think that the marketing strategies so many are now employing/pushing are destroying the viability of marketing on social media sites such as twitter. In the time I’ve been on facebook & twitter I’ve watched people go from talking to one another – to talking at everyone.

    The successes I get marketing my art comes from interaction with other people and that is the appeal to me that drives me to sift thru all the B.S. HYPE. I very much enjoy getting to know the people who like my work and the phoney followers that don’t interact I tend to unfollow after a while.

    Thus my point is this, socialize and you’ll see successes, fail to and in the end you’ll slit your own throat.

  • I agree with what everyone is saying — it really is all about goals. And while it is difficult to measure marketing (always), at least with social media we have ready access to information we wouldn’t have with print and broadcast. It’s a step in a better direction, I think.

  • Anonymous

    I look forward to your future posts on tools for measuring social media. I too believe that in certain instances you can obtain useful metrics. But really, how does one measure things like “engagement” or “brand affinity” or conversation. With the latter, yes, you can count the mentions and try and observe tone, still, that only goes but so far. One of the things that makes social media so interesting is that it’s not entirely tangible. And then too, some numbers aren’t all they’re cracked up to be.

    Here’s a quote by Albert Einstein that ties-in nicely: “Everything that can be counted does not necessarily count. Everything that counts cannot necessarily be counted.”

  • Hi Michael — What a splendid post. It outlines what we do at PostRank perfectly. 🙂 Certainly “how do we measure it?” became the big question after “what is it and how do we do it?” got answered. I think we’re getting that under control, too, now. We launched Analytics a month ago, and with Avinash Kaushik’s Google Analytics announcements today at the eMetrics conference, I think it’s getting a lot easier to track social engagement through to conversation and revenue. Best part is, these tools don’t come with an enterprise level price tag. 🙂

    I think, as you note, that concretely knowing what you’re in it for is the biggest thing. Certainly, you can get started not knowing — find out where your audience/community/customers are and the most effective ways to engage them, see what tools work best with what you have to share, etc. But at some point it stops being an experiment and starts being day-to-day operations that can’t explain or justify themselves — unless you figure out what you want social media to do for you, what your goals are, and what metrics are going to prove or disprove that value. (And, in conjunction, you need to be willing to not jump on the latest bandwagon, or be willing to abandon certain efforts if there’s just not solid reason to keep using them.)

    As part of your mission to find the best way(s) of measuring social media ROI, I’d love to get your thoughts on Analytics. We offer everyone a 30-day trial, but since it’s something of a favour, I’d be happy to round it up to three months. If you’re interested (or just want to chat social media metrics and ROI), give me a holler:

  • Anonymous

    As indicated in your article, it really depends on what aspect of social networking marketing you are looking at. Personally, I think social network is multi-faceted. Collection of followers whom have built a trust in you, your advice, or your posting information.
    What is the goal of gathering this following? Well, if social networking is used for marketing, then use of the trust built over time can potentially be developed into a true monetary gain. IF you are collecting names and contacts to further your job or employment prospects then the trust in what is shared and it’s accuracy can lead to a hall of “opened doors” to career development.

    Monetary gain is an all to familiar reason for social netwroking. However, knowing someone and developing a personalized relationship over twitter, facebook, myspace and other netwroking sites can allow the home bound or movement challenged community concrete connections to the outside world.

    I believe that everyone who is a member of any social network, is marketing toward some goal fullfillment. Can it be measured? Yes, although hard statistics may not be available due to networking goal variations, there is a goal being sought by each of us, whom use the networking sites. Is the networking successful, depends solely on the gratification felt by the individual marketer, or non-marketers goals becoming obtainably solidified.

  • Patrick, I really appreciated reading your comment and thanks for sharing the info about your white paper.

    For some reason the analogy of writing letters came to mind this morning and I wanted to share this with you.

    We used to write sales letters for specific promotions – and with this type of direct mail campaign it’s easy to calculate the ROI.

    But some sales people or marketers also thought of writing letters/notes/cards simply to stay in touch and deepen the relationship with their clients. No one ever really needed to calculate the ROI of mailing these letters out. You need to look at the whole picture over a longer time frame before statistics have any meaning.

    The trouble is most social media marketing has more similarities to the second example.

  • John, you make some good points. As we hear more stories of how companies successfully use social media, I’m sure more companies will find examples they can relate to. And as measurement tools get better this makes it easier for businesses to see how they can set up their own strategies.

    It’s going to be interesting to follow the evolution over the next few years.

  • Great point Randall. At the beginning of this year, I started making one personal contact each day with a social media contact I find interesting. This usually means an hour on the phone/skype – but I just schedule this at the end of my work day and it’s now part of my routine.

    This is where I personally begin to convert social media into value for my business. It’s not the first step of being on social media, it’s what I do with it next.

  • “Everything that can be counted does not necessarily count. Everything that counts cannot necessarily be counted.”

    What a great quote for social media! I was thinking about the value of social talent for businesses… about the @kogibbq and similar examples. It’s very difficult to measure this ability to see how businesses can connect with clients through social media, but it can make the difference in profitability 🙂

  • Melanie – thank you for sharing PostRank Analytics here. I must say that I felt like it was Christmas when I first found out about it. It looks great. Tools like this are exactly what we need 🙂

  • Gary, thanks for sharing and bringing up the use of social media for the home-bound or movement challenged community.

    Although I am well physically, I am located in France, thousands of miles from my clients. It’s simple, without social media I would not be able to connect with them.

    I think small companies can also obtain interesting benefits from social media once they master the challenges with the time investment and find the best way to include social media within their existing marketing strategy.

  • I agree with you Sara. I think it is a step in the right direction and can’t wait to see where the great minds out there will lead us. Just looking at the different ways companies have used social media marketing to date, I think we are going to see more interesting stuff in the future 🙂

  • One of the best ways to measure inputs into any project is to have a laid down goals that is measureble. Thanks for this piece, It helps a lot @pathfindernig

  • Aww, thanks! It makes us feel good to be like Christmas. 🙂 If you have any questions or whatnot, do feel free to give me a holler.

  • Anonymous

    Great article and comments. What makes this so tough is that, by the time a sale is made or new customer signed on, they may have experienced a long cycle of building the relationship with you via SM. So, maybe the person first followed my Twitter, and then took a link to an article back on my site, then at some point signed up for my blog or newsletter, or downloaded a white paper, or signed up for a free webinar.The stats may show that the customer became a lead when he/she downloaded or signed up for that webinar, but in reality the funnel started a long time ago with social media. Or even search engine rankings that were made possible from dozens or hundreds of blog posts. It’s seems impossible to tie the sale or deal to that first Tweet.I don’t think we’ll ever be able to fully measure ROI from social media for these reasons, but I do agree that companies have to start showing some sort of payoff for the time invested, such as what percent of site traffic comes from each SM avenue, then measure increases in signups that bring people in as real leads.

  • I like this post of course but I have to disagree that social media does not cost. Anything and everything has opportunity costs.

    So instead of playing with your kid you tweet or write comments on a blog post like this or instead of spending time with a customer talking face-to-face.

    And while you may choose to do something such as leaving a comment here, putting a Facebook status update there, what do you wish to accomplish with your social media activities should foster prominently in how you want to address this. So before you benchmark you have to figure out what you want to exactly benchmark and measure to see how this might affect customer retention, satisfaction or sales numbers

    Thanks for a very helpful post.


  • I think it’s important to develop a measurement formula based on your ‘logic map.’ Connect outputs like Tweets, mentions, views, etc. to average conversion rates and resulting amount of sales increase. Logically, these types of quantifiable results can be linked to specific (business-based) outcomes.

  • It’s easy to get caught in the hysteria and buzz of something new. I’m guilty of that as well. I think the ROI calculation is going to be different for someone like me vs big company that pays employees. Although I think social media has great value (some tools more than others), I do worry that we become tied to systems and forget to “unplug.”

    I liken social media to building a sand castle. If you don’t take care of what you’ve built, something will come and wash it all away. But I suppose that’s like any other marketing effort.

  • Anonymous

    Why is it that Social Media Marketing has to justify itself? Marketing is marketing. It’s value is obvious and the time spent arguing it’s value would be better spent by it’s detractors defending their market share from it’s practitioners. Nothing is more valuable to the sales process than identifying buyers in the research phase and counseling to a purchase decision. The time spent measuring ROI is the real cost, because it contributes nothing beyond reassuring timid minds that more should have been done. Measuring ROI??? is non-productive busy work and to what end? I just want to know the companies that decide against SMM… Their competitors are going to be my best clients. Read that, marketshare available…. come and get it.

  • Hey Don! Good points. But you know that at larger businesses the accountability thing can be a rather large deterrent to moving forward with new ideas. I would be shocked if any business analyzed the upside and decided to not look into social media marketing.

  • Kallcroft

    Your point about ROI and measurement being different for small and large businesses is well taken. As a small business owner, it’s easy not to put a price tag on my time since we’re in business development stage. However, as we grow, I’ll have to put a price tag on time since I’ll be paying an employee to do for the company what I do now for “free.” Also, small businesses must take their victories in smaller increments as they build momentum. So, the metrics for small business will be qualitatively different than for larger business.

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  • euhero

    This gives me a lot of useful information. My main reason of using social media is definitely to increase brand awareness. It really is not easy and I am now considering using a tool to help me become successful. Have you heard about Mass Planner? I would love to read your thoughts about it.