ROI for Social Media Utilization

Track your ROI to see the actual impact social media is having on your business

ROI : Social Media in all of it’s glory & popularity seems like a waste of time for the average person. However, on the sales side, social media is used for prospecting and generating leads. It is also used to make & show off your community involvement as well as network with other professionals. But how much of an impact does it really make? To help you out, a few equations have been created in my office that can help you determine the impact your social accounts are making.

Individually the numbers won’t make sense, but when you compare them month to month through a 12-month period, you will have measurable results that will tell you how effective your social media is in comparison to your web traffic, Because the main objective for social media is to drive traffic to your company website. One thing that seems to always come up is the question of whether or not there is an economical impact for a business who uses heavy social media. There are many ways to do this, and the equation below is just one example of how to track your ROI using social media

1) Average Interaction Rate – AFF/PV= AIR –
This equation measures how people are interacting with your business online. Simply take the Average Fan/friend (AFF) number which is determined by dividing how many Points of View (PV) people add to your wall by the amount of friends/ fans on your list, this will give you your Average interaction rate. Example: 655/2 = 327 AFF, say you have five of your friends post to your wall, so PV=5 then 327/5 PV = 65.4 AIR

2) Return on Investment – (NFI x CA) — CI = ROI –
This equation’s purpose is to justify marketing spend on Social Media. It is determined by taking the amount of friends/fans you have, multiply that by the cost of your advertisement and subtract the cost to Implement the campaign — this will give you a Return on Investment number. Example: 525 x 1.50 = 787.50 — 100.00 = $687.50 ROI per month. However if you are outsourcing social media, you must take in consideration how much you are paying the business to do content management on your social media platforms.

*NOTE- GP dollars received by a client as a direct result of using social media is tracked separately.

3) Total Online Production WAO/SMO x .05 = TOP
This compares your web traffic to your social media traffic; simply take you Web Analytics from month A and subtract your web analytics from month B, this gives you your WAO (Web Analytic Output) Then take your Social Media followers from month A, subtract from your social media followers from month B; this gives you your Social Media Output (SMO) Now, Divide your WAO by your SMO and multiply that number by .05; this gives you your Total Online Productive Rate. Example: 262/11 = 23.81 x .05 = 1.19 (TOP)