Social Media ROI Best Practices

Engagement is your Path to Social Media ROI

Long considered the ultimate indicator of financial value for marketing programs, Return on Investment (ROI) is equally important to track and understand for social media practitioners. A clear ROI story enables managers to evaluate social media initiatives side by side with traditional marketing and customer service efforts and intelligently allocate resources and effort.

However the relatively fuzzy nature of the real benefits of social media is fueling an ongoing debate: How do you track the real ROI of a tweet, a podcast interview, or the hours spent by employees commenting on blogs?

Short-Term ROI: The Easy Part

The answer depends on clearly understanding your business goals. If your goal involves driving short-term sales, then social media channels can often be employed alongside more traditional elements of the marketing mix.  Successful brands of all sizes are including tracking links and custom landing page URL’s on selected tweets and posts, directing visitors to their online stores or special product promotions.

These provide for a fairly quick, compelling, and accepted marketing ROI argument as they use social media channels as targeted advertising tools.  By a similar measure, if that tweet answers a burning support question for a dozen people who would otherwise have called a support center, the ROI story is clear, compelling, and defensible.

Building the Brand: The Real Challenge of Social Media ROI

Where the debate still rages is around all the other kinds of social media activity: the brand awareness and loyalty building efforts made through your company blogs, employee tweets, and executive podcasts, often referred to simply as “engaging in the conversation.”

Social media efforts of this nature share a common ROI challenge with traditional forms of strategic marketing, such as brand advertising and public relations. They are difficult at best to trace a direct line from back to accepted measures of financial impact. These activities often are measured against activity or performance metrics, ranging from impressions and views to survey-driven scores such as Net Promoter, loyalty, and customer satisfaction.

According to a recent Aberdeen Group report on the ROI of social media:

• 76% of Best-in-Class companies, compared to 15% of Laggards, have improved their year-over-year performance with respect to customer retention
• 58% of Best-in-Class organizations have dedicated resources devoted to social media marketing
• 41% of Best-in-Class companies, compared to 15% of Laggards, have defined performance metrics for measuring brand advocacy/customer referrals

The most valuable brands in the world are experiencing a direct correlation between top financial performance and deep social media engagement. The relationship is apparent and significant: socially engaged companies are in fact more financially successful.

Charleni Li (Altimeter Group) and Ben Elowitz (Wetpaint) July 2009 ENGAGEMENTdb, Ranking the Top 100 Global Brands

On the Road to ROI, Engagement is the Driver

An alternate path to understand the ROI of your strategic social media efforts lies in tracing a direct line from engagement to financial performance. Engagement can be defined as active participation above and beyond mere presence: replying to posts, responding to comments, and generally taking an active role in the conversation.

According to the ENGAGEMENTdb report from Altimeter Group/WetPaint (July 2009), brands who pursue both broad and deep engagement efforts in social media (labeled “Mavens”) consistently report superior financial performance than those who do one or the other, or worse, neither.

• Broad: Engaging in many different channels at once. Your brand is active with multiple blogs, online communities, Twitter accounts, and other forms of social media.
• Deep: Active engagement in a given channel, beyond the mere broadcast of content. Your brand is in the trenches, responding to comments and tweets to create meaningful conversation with your customers and critics.

A serious social media engagement effort, with both breadth and depth, has the potential to result in both short- and long-term benefits for a brand by increasing the volume of customers, creating natural cross- and up-sell opportunities, boosting satisfaction, and building brand loyalty over time.

Smart brands are investing for the long-term in social media engagement, supported by effective measurement tools and performance metrics aligned with business goals, setting the stage for financial success and a compelling case for ROI.

Microsoft: Driving Interest in New Application Platform

To supplement traditional marketing programs promoting a series of conferences and events for the launch of Visual Studio 2008, Windows Server 2008, and SQL Server 2008, Microsoft rolled out an aggressive online marketing initiative built on top of Visible Technologies®’ Visible Intelligence® social media management platform.

Visible Intelligence helped Microsoft identify top sites and authors to track and measure, in an attempt to better understand the real impact of social media efforts on event awareness and attendance. The results were compelling:

• In terms of tracking the conversation sources related to the event series, 46% took place in forums and 36% on private blogs, Slashdot, The Coder Blogs, and TechRepublic.
• Engagement in relevant blog threads increased traffic to campaign landing environments by 2.5 times the CAR percent of paid search.
• Interaction and dialog raised conversation volume by 200% around the launch events.
• Campaign sentiment and volume improved for all three products, that were launched even after the “event halo” wore off.

The success of the campaign has led Microsoft to add social media marketing and analytics to future marketing efforts, and implement a broader strategy of integrating social media outreach programs across multiple Microsoft divisions.