This document discusses measuring the return on investment (ROI) for social media marketing. It acknowledges that social media requires budget to pay for people, technology and time. The key points made are: 1) Social media can reduce costs through lower customer service needs and providing market research, while also generating more revenue through new customers and increased loyalty. 2) ROI should be measured as a business metric, not just a media metric, by tracking engagements, transactions, behaviors, and benchmarking various marketing activities. 3) Both financial and non-financial impacts need to be reported to show how social media is affecting all aspects of the business. Steps outlined include setting goals, using metrics and tools, analyzing sentiment,

1. Social Media
Return On
Investment
February 2010
Emily Wilkinson

2. “Think of Twitter as the canary in
the coal mine.”
Source: Morgan Johnston, Jetblue Airways

3. Why allocate budget to Social
Media?
Social Media (SM) is not free, it takes:
 People
 Technology
 Time
Marketing, sales, accounts, I.T, PR etc. make up 100%
of your budget – each resource has a specific cost and
yields specific results. These resources generate 100%
of your business.

4. Why should I take a chance?
Why should I allocate resource to it?
 It will result in a cost reduction (customer service,
market research)
 It will generate more revenue (via transactions,
new customers, customer loyalty
ROI = Gain from investment – cost of investment
cost of investment

5. Business Justification
ROI is a business metric, not a media metric. Social media
isn’t responsible for an increase or change, it is a tool.
Similar to suggesting that the telephone helped sales. That
said:
 The engagement conducted via social media that can be
measured.
 The transactions and behaviours can be measured
 Measurement of all activities and benchmarking
 Poll customers, promo code seeding across a variety of
channels etc.

6. Investment-return relationship

8. Impact of social media on non-
financial

9. It’s not just about measuring
eyeballs..
Reporting should show that social media is impacting
every aspect of the business (and areas it isn’t
impacting, how can we have an effect there?)

10. Steps
 Goals
 Before we set out to measure and monitor, we need a clear idea of
what we want to accomplish.
E.g. If the goal is to increase social media mentions, where does
Silverstone currently stand now?
 Tools
 Although ROI doesn’t not equal metrics, traditional metrics such as
traffic counts, number of comments, twitter followers, FB fans etc
are important when calculating ROI.
E.g. Does an increase in FB fans correlate with higher sales? Are
people that find Silverstone.co.uk from Twitter then clicking on your
driving experiences?

11. Steps
 Sentiment
 Sentiment is a useful baseline to look at before implementing or
changing social media. Is it negative or positive that is being said?

12. Steps
 Using the data
 Once we have the initial baseline data and the
metrics, we can then see how these correlate to
higher sales, better customer retention etc.
E.g. Have sales levels increased? Check no. of
referrers on the website, twitter, facebook, no. of
vouchers given away and calculate what stemmed
from social media campaigns. Is there an increase in
traffic after posting on FB? Twitter? Does a higher
sentiment lead to an increase in sales?

13. Example
 37% of Gen Y were aware
of the Ford Fiesta via social
media before its launch in
the US
 25% of Ford marketing
spend is on digital/social
media

14. Example
 £9.5k SM investment
 300% website traffic increase
 20% sales increase
 Google 1st page for “free website
builder”

15. “Why are we trying to measure social
media like a traditional channel anyway?
Social media touches every facet of
business and is more an extension of
good business ethics”
Source: Erik Qualman, Socialnomics

16.  Thank You
Emily Wilkinson
@ewilko
Ewilko.wrodpress.com