ROI of Social Media: Thinking of the Bigger Picture

Posted by Steve Lazuka - August 27, 2010 - Social Media - 3 Comments

When things are tough, it’s understandable that businesses look to save money. Budgets are cut back, expenses are limited and in the worst cases staff are let go. In such a climate it comes as little surprise that many businesses are looking at every existing and new venture and asking themselves whether they justify their investment.

Bearing this in mind, some companies are questioning the return on investment of social media with some openly asking whether it is worth their time and money.

As understandable as this is, it is a mistake to dismiss social media as a “good-times” luxury that cannot be justified in more cost conscious times. The truth is that for the majority of businesses, social media cannot just be justified it may actually be one of the best ways to take a business on to the next level of success. Considering the following points should help clarify how important social media can be to a business.

  • At the core of all business social media is the age-old business principle: the equation of investment versus expectation of return. Put simply, if a business invests in social media, what can it expect in return? This is where many people fail to understand its potential, thinking it is just a nice add on for the good times. The problem is that social media success can be difficult to measure for those with an old-world idea of investment or return. Social media succeeds by generating interest. In practice this means, for example, a business blog writing service does not profit a company by selling a product, but by increasing visitors to a business’s website. The same applies to Facebook friends and Tweets – it may seem an anathema to some, but this is the world in which many customers now live and more importantly, it’s how they discover new products/services.
  • The good news for anyone wanting something a little more solid is that there are a number of tools that can be used to measure the effectiveness of social media. One of the best is Google Analytics, which will monitor hits and tell a business how many people are visiting their site(s). When combined with social media strategies, this is a great way to present a clear and detailed comparison between visitor numbers and the social media that has influenced them.
  • Of course visitor numbers are unlikely to appease a social media cynic; after all, it’s irrelevant how many people stare at a window display, what matters is the number of people who come in and shop, isn’t it? This is perhaps the key point: numbers do matter, albeit indirectly. The point to grasp is that it is not just the online equivalent of window shoppers that is important, but what those visitors actually equate to in the real world. They can create good impressions, great press, click-throughs to other areas of the site they would not have visited, increase visitors to real world stores and retweets. The list goes on: social media is like the stone that starts an avalanche.
  • The ROI of social media is not about the action/reaction of traditional business, but about the overall financial impact on a business. It’s big picture business. Perhaps the simplest way to judge is to compare year-on-year growth before and after the introduction of social media. The results will surprise many doubters.

The ROI of social media is that it impacts on all areas of a business from reputation and press coverage to shoppers at actual stores. It pervades the entire business and far from bearing a good time only strategy, social media comes into its own when times are tough. It is a method that repays investment not just may times over, but in a far reaching and long term way.

Check out the Social Media ROI Calculations graphic from David Carr

About the Author

Steve Lazuka

Steve Lazuka is the President of Interact Media, a website marketing company based in Ohio. Follow Steve on Twitter, @SteveLazuka, to learn more about his business blog writing service, content marketing, and SEO.

In reference to your point about Google Analytics linked with social media, if you are running a business social media campaign, especially for a business that gets a lot of phone calls - when the phone number is usually present on a campaign promotion ad or on the website contact page, it is best to use something called REF Code Analytics ( ) - it's an analytics tool that allows you to track and follow your visitors, and consider them as conversions (only these are conversions that didn't exactly fill out a get a quote form or a contact us form). REF Code tool can be linked together with Google Analytics and it will let you see all the details of the visitors that made those calls. It's something any company that gets a high volume of calls through their website, should install.

Deepak Gupta
Deepak Gupta

Nice content Steve. Personally I use many HubSpot tools to measure conversion from organic efforts. I also like the long term thinking instead of the quarterly results. More companies need to let Marketing lead instead of the financial folks which have it obviously gotten it right with a melt down.

Mark Thompson
Mark Thompson

Behadur, Great idea, I never thought about that. Could you also use call tracking like Mongoose Metrics? or is this an easier way?