It is that time of year when most marketers are knee-deep in building a case for their 2013 budgets.
Despite the five-year enthusiastic rush of companies to jump onto the social media bandwagon, social programs are still just a fraction of the total marketing budget. Still, as enthusiasm gives way to practicality, it is becoming increasingly important to be able to measure the effectiveness and impact of social marketing.
Rather than focus merely on return on investment (ROI), you might want to consider monitoring the quantitative and qualitative benefits of social marketing across four perspectives, a recent Forrester Research, Inc. report, “The ROI of Social Marketing,” says.
The author, Nate Elliot, makes a good case for the need to change the way we measure the contributions of social media programs. It is essential that social marketers use a combination of approaches to validate the business case of these programs.
Elliot refers to a balanced social media marketing scorecard that includes:
While increases in conversions and revenues per sale are the monetary results that are most obvious to see and easiest to measure, there are a host of other financial benefits to consider. These include:
- Measure improved promotion response rates with social-enabled commerce.
- Measure improvements in average consumer spend and share of the wallet.
- Measure the savings from decreased return rates.
- Measure other eliminated costs.
- Use a media mix model to validate brand impact in the social channel.
There are several ways to measure digital gains, from assessing the program’s impact on search engine relevance, to measuring traffic to owned media, to tracking all brand touch points, to analyzing short-term metrics when your objectives are short-term.
Fortunately, marketers don’t need to reinvent brand metrics for the social media age. The key is to define your objectives and select the brand attributes that fit those objectives.
4. Risk management
Many marketers only think about the positive ROI, but what about reducing the potential negative ROI you didn’t anticipate? You can estimate the costs of potential PR issues that would arise from a negative event, forecast the likelihood these issues will occur in the next year, or consider the extent to which you can reduce the costs.
In sum, Elliot urges social marketers to create a balanced social media marketing scorecard by using each of the four perspectives and determining the appropriate targets within each.
It is also important to not rely on just one or two perspectives, even though you might be compelled to, for example, only use financial and digital because they are the easiest to measure.
Let’s hope that, with these guidelines, the effort to build a business case for your social marketing program just got a whole lot easier.