Return on Investment
In marketing and sales focused organizations, every marketer must prove that the return on investment (ROI) for a campaign or project justifies the effort and resources spent. RoI is typically defined as:
(Value of outcomes – Cost of Delivery) / Cost of Delivery
While it is fairly straightforward to track contributions coming from paid, owned and earned media campaign activities, digital marketers are still struggling to convince their managers of the medium to long-term benefits of their work.
Instead of tracking simple metrics such as followers, reach, likes, sentiment, and reposts, organizations need an evaluation framework that focuses on improvements in brand reputation, share of voice, propensity of consumers to recommend a brand or product, improvements in brand loyalty, and likelihood of repeat or higher value purchases.
Looking at RoI from this perspective requires organizations to have a robust social intelligence platform and capable data analysts who have solid research skills. It also necessitates a different definition of success. Social media activities now need to be implicitly linked to an organization’s strategic business objectives. This means marketing, communication as well as digital activities must be deployed in a synchronized manner to be successful.
Calculating the media value, i.e. the dollar amount assigned to content gained through owned and earned media, is yet another way to assess the financial impact of content production, advertising and communication activities. Applying this concept to social media, means that a financial value is calculated for each interaction with a user on a particular social channel. In other words, every share, comment, video view, like, repost, etc. is a measure of performance that is worth something to an organization.
Although the media value approach requires some basic assumptions, such as the value of audience interactions measured as e.g. the average cost per thousand impressions or click basis (CPM and CPC) for various industries, it produces something akin to a profit & loss statement that allows managers to compare e.g. the activities of an influencer campaign to that of a traditional advertising campaign.