Marketers are embracing social media and technology to connect with audiences in new and unique ways. Social community participation, smart phone apps, UGC, gaming, blogging, and video are becoming key channels in which the brand plays. Along with this channel extension has emerged the increasing requirement of marketers to demonstrate the value and ROI from social media efforts.

At a recent social media conference, the topic of ROI surfaced early and often. I heard the same things I’ve heard from my own clients. “We feel those Facebook fans are valuable. We know that blog post has been referenced and shared. We see the RTs from our daily posts on Twitter.”

But how much time and energy should we  spend on social marketing? How do we justify new resources to manage social initiatives if there is no clear “return”?

For starters, metrics that help us calculate return can no longer be a matter of visitors, engagement and e-commerce sales from our website. Analytics of social media transcend the corporate and brand site to include product conversations, branded asset engagement, social network participation and sentiment levels expressed about products, services and companies.

Start by Monitoring

Monitoring our place in the social space is an essential starting point. As brand managers, we need to expand our touch points and develop a model for understanding the value of those touch points to our customer relationship and purchase cycle.  By establishing benchmarks, we can then measure how the integrated mix of social communications impacts those metrics over time. By evaluating pre-campaign attitudes and awareness and tracking changing views and metrics as the brand extends its social message, we can determine the value of the investment.

Some benchmarking questions to ask:

• Are we currently part of conversations about our category or industry?
• How is our brand perceived compared to our competitors?
• How do we enable brand advocates to tell our story?

In my own experience, I have found success in justifying social initiatives by defining baseline analytics, monitoring touch points, measuring their change, and assigning value to those changes. With personas as a core part of our strategy at Whittmanhart, we measure social success in terms of the engagement metrics that drive those personas’ behavior to purchase or influence. Knowing what the conversion rates have been across those personas, we have a sense of what a better relationship with those users will mean to the brand. Specific activities, like social profile fans, forum participation, video views, app downloads, are measured over time. Using referral data and conversion rates, we tie those interactions to purchase intent and behavior, giving the brand a directional sense of how each channel contributes ROI (or doesn’t).

In the absence of defined online personas, it might behoove brands to consider Forrester’s social technographics ladder to identify the value of positively engaging customers in social media.

Don’t Forget About Cost Savings

Furthermore, ROI isn’t a matter of revenue alone. At the recent BDI B2B Social Conference in New York, Pitney Bowes shared how they translated social participation into cost savings to demonstrate ROI. In their low-growth industry, cutting costs is central to the core business strategy. Pitney Bowes developed a customer forum that enables customers to collaborate and share experiences about mailing, postage increases and the company.   For Pitney Bowes, the value of time saved and resources reduced by the customer community has been estimated at 3x the development cost of the forum. ROI was reflected in reduced customer service inquiries, not an increase in acquisitions or revenue.

Ultimately, the metrics used to demonstrate value have to work for the specific organization. Until we begin to assess the value of what these engagements mean to our own organizations, we will only have the case for social to be “just because.” The analytics may trail the technology, but that does not mean we should blindly recommend strategy because one channel looks like the next best thing. We should reflect upon the cross-channel objectives and consistently look to recommend strategies, monitor, and measure our performance against those goals.

How do you measure social media? Let us know. Post a comment or email me…

Check back for more posts about the evolving nature of media and metrics.