Show Me the Money: Proving ROI for Social Media

If you had a VCR and a pulse in the mid-to-late 90’s, it is probably safe to assume that you saw the popular movie Jerry Maguire. The movie was a huge hit, and it became an instant classic due to its cast of well-known actors, among them Cuba Gooding Jr. In addition to an Academy Award, Cuba’s role left us with something that will stand the test of time – the infamous phrase, “Show me the money!” This line, of course, is second only to Tom Cruise’s, “You complete me.”

We all know the scene. Cuba Gooding Jr. (Rod), an athlete, turns down the radio and yells into the phone, “Show me the money!” On the other end of the phone, Tom Cruise’s character (Jerry), a sports agent, realizes that if he wants to keep his client satisfied he is not only going to have to shout, “Show me the money!” at the top of his lungs in his office, but he is also going to have to deliver on that promise.  Thankfully, Jerry does deliver, and he is able to prove his value to Rod by the end of the movie.

So what is a marketer to do when a client says, “Show me the money!” and asks the marketer to prove their social media value?

In terms of results from a company’s social media efforts, “showing the money” can be a very challenging task. However, as a marketer you can rest assured that (like Rod) your clients will ask you to be show the money when it comes to their social media investment.  With that in mind, I recently spent some time investigating best practices for measuring social media results and ROI.

My conclusion? It’s a confusing world out there. But let’s try to make some sense of it.

Demonstrating ROI 

The process of measuring ROI for social media, and its level of importance tends to be a controversial topic. I recently read a blog post by Social Media Examiner, which provides great insight on the topic. The bottom line is that, although there are other important benefits to social media like engagement that do not necessarily have a dollar value associated with them, marketers still need to be prepared to demonstrate the ROI for social media activities to their clients. Business professionals have been trained to think in terms of this metric, so it is not one that can be easily ignored.

Perhaps the most realistic way that social media ROI can be demonstrated is through tracking conversion rates. That is, measuring how many leads come to your business through social media and how many of those leads are converted into an actual business.  Social Media Examiner has some great info about tools to help you track this. The number will probably be pretty low at first, but by looking at your conversions divided by number leads, you determine your conversion rate for social media and compare this against other marketing channels.

Other Key Metrics

There are several other metrics that are a bit “softer” but still provide measurable insight regarding the performance of a clients’ social media activity. They include:

• Exposure: In its simplest form, exposure is the sum of all your followers on social media. However,  we can take exposure to a more complex level – in which it includes your extended network that can be tapped when followers “Like,” “Share,” or ReTweet” content. The best way to think about a company’s social media exposure is that it represents your entire pool of potential leads from social media.
• Engagement: Engagement represents how many people actually did something with your social media message. In other words, engagement measures the number of times your links were clicked, your message was re-shared, or your content received a comment.
• Influence: This metric is much softer. It is a very subjective metric that requires some defining by each company. Basically, you want to look at the sentiment of those who have engaged with your company on social media. So, for those people that are engaging with you, is their impression positive, negative or neutral?

Social Media Examiner also has some great tips for tracing these metrics.

How do you measure social media success? I would love to hear your thoughts and approach to social media metrics.