Practical ROI for Social Media

Calculating the ROI

Calculating the ROI


“Twitter is no good as a sales tool”

“Facebook is just a time suck”

“Blogging is more effort than it’s worth”

“I’m doing all this social stuff but not seeing a return!”

A return on what exactly? Time, investment?

What were you’re expected outcomes when you started using Social Media? Like many businesses you probably didn’t think too hard about it. If you thought at all, it was probably about the number of visitors or fans you were accumulating. Were you too scared to put financial goals against your social activity? Did you think you could approach it like marketing of old, spray the area with your name – Oh, brand recall has gone up!

Stop Tweeting right now!

3 deep breathes and let’s think about this.

It’s not too late to start monitoring your Social Media activity and measuring it against pre-determined goals.

Pick a goal

  1. Increase visitors to your website or blog
  2. Increase the number of comments on your blog
  3. Grow brand mentions online
  4. Drive more people in-store offline
  5. Increase basket spend

Feel free to create your own if you there is something more appropriate.

Now select one, make it easy to start with. After all you will be one of very few businesses monitoring your activity in Social Media, let alone applying targets.

For the ease of this example I am going to choose number 1. Increase visitors to your website or blog.

Do you  know how much it costs to get a visitor to your website currently? Add up all of your marketing costs pertaining to activity that drives someone to your site. Take the cost of this activity and divide it by the number of visits it drives to your web site in the same time period i.e. monthly. You should be able to establish this in Google Analytics or similar tracking software that should be integrated into your site.

Example: £1,000 to get 3,000 visits via Google Adwords = £0.30 per visit.

Do this with all your paid activity to get to the average per visit cost or cost per acquisition (CPA).

One of the great things about the activity you have been doing so far is that you now have a baseline, a starting point from which you can see what is and isn’t effective. We could go back to before you started engaging in Social Media and see how website visits have been affected. But this has many holes in it. There may have been other activity that you over looked and you are not going to know which type of activity worked and what didn’t.

How to get people to our website

  • Links – By sending out links to content on our site
  • Brand awareness – We can encourage people to talk about us
  • Search Engine Optimisation – Use Social Media to grow relevance in search
  • Product or Service Reviews – Find bloggers in our industry and invite them to do reviews
  • Offers & Discounts – Easy one and not my favourite

You can probably think of more.

A bit simplistic? Yes, but what were you doing before?

Some of these are related, by doing one you encourage the other, but don’t forget our target is an increase in visitors. Therefore, I am going to pick Links.

We have our goal, Visits, we have our method, Links.

Now let’s set a Target

We can do this in two ways, allocate an amount of time, work out what this is worth and therefore how many visits we need to get becomes our target. Or select a target and work back to how much time that gives us to work at it.

Don’t forget we also need to allow some time to get there, it’s not going to happen in the first month.

I am going to give myself 6 months to increase visits by 5,000 per month.

  • I expect to see little increase in months 1 and 2
  • 1,000 more visits in month 3
  • 2,000 more visits in month 4
  • 3,000 more visits month 5
  • 5,000 more visits month 6

So using the Adwords cost above as a guide, £0.30 CPA, I can spend the equivalent of £3,300 on Social Media activity to drive traffic for the first 6 months and be no worse off than using an increased Adwords campaign. I have £1,500 worth of activity each month after this to maintain it at 5,000 more visits a month more than when we started.

This cost is all going to be based on time, yours or another employees. You are not going to need to spend any money upfront. Based on £50 an hour you have 66 hours to allocate over the first 6 months, then 30 hours a month for each month after. You would probably need more time at the start to get used to things, but once you are past your initial build up, 30 hours a month should be more than enough time.

The truth is that with a well implemented Social Media plan the activity becomes less onerous as you progress. You over come the initial difficulties and awkwardness, time management becomes less of an issue and the whole process becomes more natural. Also, with a good structure growth is exponential in the long term.

As each month goes by you can now track site visits in your analytics software and see if they are increasing. Be sure to note any additional marketing activity that may have an effect and allocate visits accordingly, for most small businesses this should be fairly easy to determine.

So what are we going to do to get those links? Get blogging…

Please note: I have tried to simplify this as much as possible, in doing so it may raise more questions and some exceptions. If it gets even one business to start measuring their social activity then I have succeeded. If you disagree, find fault with my reasoning or calculations I more than welcome your views in the comments below.

Image used with kind permission of: Being Self-Employed .Org
About Sean Clark

Building successful online companies since 1999, we help you market your business online. Whether you need help with Search Engine Optimisation (SEO), Paid Search (PPC) or Social Media Marketing call us today on 01603 343477 for a free initial consultation.

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