Measuring ROI from Social Media

It is exciting to see that the companies and their executives are jumping into the social media wave. To be able to use this tool completely, one needs to know how they can measure the benefits that they receive from them. After all it is your business and you need to know the amount of benefit that you get when you spend your time and money on them.
Calculating ROI on social media is not the same as calculating ROI from print media or broadcast media. It is not just a simple calculation of how many new sales you made or new enquiries you generated by posting an advertisement in a magazine or broadcasting an ad during a T.V. show. The steps that are to be taken are somewhat different.

The first step to measuring ROI from social media is to define concrete goals as they will help you in your calculating what you wanted to accomplish and what you have accomplished. For example, if you wish to increase the number of views of your website, you need to know the number of views you currently get on a daily/ monthly/ annual basis. Similarly, if you wish to increase the number of mentions your organization gets in social media, you need to know where you stand now.

You also need to know the demographics that a specific tool is catering to. After all you need to know where your target audience is. The maximum number of Facebook users fall in the age group 35-41 years. If you are selling a product that is for the teen agers, Facebook is not the right tool to be used.

You would be required to register with one or more of the web-traffic measuring tools like Google Analytics, TweetMeme Analytics, PostRank Analytics, WebStats BASIC, WebStats PRO, eWebAnalytics and MetaTraffic.
You also need to keep a track of time spent by you or your employee on any of the social media tool for promoting your product; the number of man hours consumed to get a stated return.

After a phase of, say, 90 days or so, you need to pull out the numbers from the traffic measuring tools. A simple correlation method will help you in calculating the increase is sales due to increase in traffic to your website through advertising on social media tool.