Three concepts for mastering social media ROI measurement

Three concepts for mastering social media ROI measurement
By: <a href='' target='_blank'>Skara kommun</a>
By: Skara kommun

You have probably read many myths and legends (and many lies as well) around the concept of ROI. However, it is not necessary to reinvent the wheel. This time I’ll tell you what three questions or tools you have to keep in mind to run away from the myths that have been created around social media ROI.

At the beginning of every science there is a red thin line between what it is considered science and what is alchemy. For example, we all know Isaac Newton as the first scientist, when he should be more famous for being the last alchemist. Why social media ROI should be different from physics?

Fortunately, more and more consultants, academics and practitioners of this fantastic profession of digital marketing and communication are abandoning alchemy and necromancy, the dark arts of social media. If you want to join us and want to master social media ROI measurement, take care of these three concepts.


1.Causality vs chance.

If I kick you in the leg and it hurts, it is very clear that there is a direct relationship: there is causality. If you read this post and your leg hurts… yes, it’s coincidence (chance).

In our terms, if a social media campaign has been brutally successful in terms of ‘likes’, ‘followers’ and other non-financial indicators (soft indicators, opposite to the hard ones, or financial and commercial), it does not mean you are getting a good ROI. Neither the fact that you are growing your soft indicators while the hard ones are also improving has to indicate the existence of a causal link; yes, it may be pure chance (again!).

Human beings are naturally selfish, and maybe some egocentric. The social media manager may think that all the increase in sales is attributable to the social media campaign, without considering if there have been other campaigns (i.e. offline media), changes in the rest of the marketing mix, or other competitor activity that may have affected the sales.

Regardless, if you want to measure the possible existence of causality, you can start with the most common and easy to calculate statistical measurement: the correlation coefficient. However, detecting correlation does not imply causation; resorting to the correlation coefficient is only an initial technique to try to conclude whether the evolution of the soft impact on financial indicators is significant. How? If there is no correlation, you can assure there is no causality, so then concluding the lack of it. Otherwise, you should start analysing if the detected correlation may come from a causation or mere chance.



Price, product, promotion, and point of sale: In the twentieth century, a basic marketing model allowed that with only four groups of determinants explain how a product or service differentiated from other competitor products. How does social media fit into this model? Very easy, by incorporating a fifth P: people.

You should be able to assign the strategies and actions to each one of the pillars of the marketing mix. Moreover, it is possible that you have been explained the model of the four Cs (hey, there are many, I mean: Clients, Content, Context, Channel), indicating that this is better because it is consumer-oriented. I do not like it, because it focuses too much on the communication processes, when social media can aspire to much more than being simply channel of communication and relationships with the users/clients.

If you really want to set aside a model with more than fifty years of existence because you consider it obsolete, something I disagree with, then you can use the model of the four Cs of the nineties: Cost (instead of Price), Consumer (instead of Product), Communication (instead of Promotion), and Convenience (instead of Point of Sale). While you were reading the C-words have you been able to visualise your Community (instead of People)?


 3.Sales funnel.

The target market for your products and services can be considering many consumers. However, only a percentage of it will know about your products, and only a small part will be interested in them. Of the later group, a few will buy or use your service. This process can be represented by a funnel, known as the sales funnel, and it can be easily remembered by the acronym AIDA:

  • Awareness (of your brand)
  • Interest (on your product)
  • Desire (want your product)
  • Action (purchase it)

This funnel is similar to that one used by SEOs and web analytics professionals, but you will have to consider that not only from online sales business thrive, and that there are many businesses out there that sell physical products in physical stores. Those must also measure sales, although the process will be more difficult.


Once you have understood the three concepts and how they relate to social media, you will be ready for social media ROI measurement, since we are gradually assembling the puzzle that is taking us to know how to calculate it.