Social ROI: Critical Mass Takes a Stab

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Back in the early 2000s, people pondered whether or not websites were worth it. CEOs wondered whether or not people would even be using the internet in 15 years, and asked questions like, “If I’m not using e-commerce, what can a website really do for my company?”

I think it’s safe to say we’ve gotten our answer on that one.

But now that very same question has shifted to social. What can Facebook and Twitter actually accomplish for my brand? Is it senseless chatter, a bottom line booster or something in-between?

First off, let it be known that there is a difference between value and ROI. The value of social media is a qualitative question: is social media worth it? Answers typically take the form of, “Yes, niche engagement and enthusiasm adds value to your brand.” Social ROI, on the other hand, is a quantitative measurement that gives CMOs and CEOs a look at how the value of social media looks in rankings, percentages and bottom line revenue.

At Social Media Week’s Getting to Social ROI: Black and White and Lots of Gray Scot Wheeler, Marketing Science Director at Critical Mass, and Shaina Boone, VP of Marketing Science at Critical Mass, covered three ways to measure social return on investment. Before we regurgitate their presentation it’s worth noting that some of these methods are more clear-cut and straight forward than others. At lonelybrand we have our own way of looking at social engagement, but if we wrote about ourselves all day things would get boring around here pretty quickly.

The first (and very obvious) method for calculating social ROI looks at clear click-through paths. For example, if a consumer clicks a link and lands on a shoe store’s e-commerce site their click path is tracked all the way to purchase. We then take total revenue of purchases and subtract the cost of resources to get the social ROI.

For example:

$1600 (revenue) – $500 (cost of advertising) = $1100 (ROI)


The second type of social ROI looks at engagement and advocacy. This measurement is a bit fuzzier as it’s technically an estimation of the number and power of referrals. Making this calculation requires recording social actions like comments, likes and retweets. Of course not all social actions are created equal, and I would have liked to see more discussion around weighting.

In a simplified example, you can compare Twitter and Facebook engagement like this:
Twitter: 50 mentions / 1,000 followers = 5% engagement
Facebook: 600 content likes / 30,000 page likes = 2% engagement

Knowing the engagement level is helpful, but does not tell us anything about how sales and certainly isn’t a ROI figure. To obtain cleaner information you may need to survey consumers to see how social referrals actually affect purchasing behaviors, with questions like, “Are you more likely to buy a product that you see recommended on a social network?”

The third proposed way of measuring social ROI takes awareness and affinity into account. Here we look at the spread of positive versus negative versus neutral chatter about a brand. Volume, reach and sentiment are all taken into account.

If we look at a fictitious brand we might find:
126 Positive Comments
342 Neutral Comments
76 Negative Comments
+50 Affinity Score

Though it’s nice to know about volume, reach and sentiment we’re a few steps away from conversion and ROI. Primary research is required to put awareness and affinity values into proper measurements. This research takes the form of a survey that asks users about the impact of social media on their purchasing intent.

Social ROI: easier said than done apparently. The effects of engagement and sentiment on purchase are tricky to suss out, and the process involves number crunching, primary research and a bit of estimation. That means there are human and perhaps outsourcing costs associated with following this process. Messy isn’t it?

Do you have a process for determining social ROI?