How to Measure the ROI of Social Media

18 11 2008

One question that is constantly asked by organizations who are considering venturing into new media is concerning what the ROI for their efforts will be.  Typically they want to turn to this traditional measuring tool to judge whether or not it is worth their time and investment to get involved.  If you are someone who is the social media ninja for your company or consults for companies on social media, then I’m sure you’ve faced this question before.  As Jason Falls explains in a similar post on the ROI of social media:

“The problem with trying to determine the ROI for social media is you are trying to put numeric quantities around human interactions and conversations, which are not quantifiable.”

Just like everyone else, I face this question constantly, especially from my efforts in social media with my Argentinean steakhouse and food blog.  I thought Jason’s quote above nailed everything that I had been thinking because I don’t try to measure the specific ROI on my efforts.  But, it is a lot different when you’re the owner versus when you need to explain it to a prospective client, investor, business associate or anyone else for that matter who is outside of the social media circle.

Last week I had the opportunity to attend Social Media Jungle (full video stream here) which was organized and hosted by Jeff Pulver.  During the conference, one of the speakers was Ben Grossman who spoke on just this very topic.  I really like how Ben addressed the question of ROI for social media by discussing using ROBI (Return on Brand Investment) and ROCI (Return on Customer Investment) as measurements instead of the traditional ROI.

If you have 20 minutes to spare, I highly recommend viewing this video of Ben’s presentation.

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So, what are your thoughts?  What do you tell your clients, friends, family or business associates when they ask you what the ROI for all of “playing around” on social media is?

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5 responses

18 11 2008
Are You In the Know? Here are the Top 10 Must Reads…

[…] How to Measure the ROI on Social Media – Great blog and video. […]

18 11 2008
Nancy Marmolejo, Viva Visibility

Oh thank you for this post! Watching the video and hearing the questions from the audience sounded like a recording of conversations I have with clients.

I work with small business and solopreneur clients, some of them familiar with social media and others fairly new. The ROI question comes up time and time again, usually when a client hasn’t become a rock star in their first 30 days of using Facebook. Shifting the focus to ROBI and ROCI is more apt to the qualitative nature of social media.

In my work, I emphasize the long term effects of social media, namely building credibility and key relationships. This high touch approach does pay off… just not in your first week of being on Facebook.


18 11 2008
Albert Maruggi

The issue in some cases with decision makers I’ve spoken with is not so much ROI, but predictability and timing. This is a bit more complex in social media.

However, some of the best sales people in the world will have a relationship for years before they engage in a business contract. Why? for the most part it is because the prospect had huge potential.

Technology and advertising, which in many ways is how social media is viewed, has made us impatient. Enter social media which is about relationships and to some extent those take more time to produce financial value.

One can say that through social networks, I can fast track a relationship because I can learn much about someone online compared to physicially metting or talking to that person in the pre social media world.

So advertisers be thankful for social media and above all, don’t look so far down the road to the end game, that you don’t enjoy the moment.

19 11 2008
Ben Grossman


Thanks so much for the complimentary post… it’s very kind.

As I talk about in the presentation, the way marketers can access consumers has been turned inside out, upside down, and spun all around. The model has changed and simple ROI models are not the absolute strongest way to measure results.

@NancyMarmolejo touches on a great point–it can be a battle to help clients and marketers alike understand why ROBI and ROCI are more appropriate measures. Thankfully, I think I’ve found a pretty good way to do it that seems to promote mutual understanding and hopefully, this presentation gives everyone an idea of the ways you can do it.

Albert Maruggi also brings up the issue of predictability and timing… I am of the opinion that that has to be discussed during what I identify as Step 1 during the planning process: Strategy.

Strategy and critical thinking regarding social media is one of the things I love to do–especially in the context of Integrated Marketing Communications. I think it’s pretty exciting that the possibility for astounding results through social media now exists as part of the greater puzzle that makes up IMC. Thanks again for the post and great discussion at #SMJ08!

Yours Truly,
Ben Grossman

21 11 2008
Want Social Networking ROI? Read This | Web 2.0 - Online Visibility - PR - Social Networking

[…] networking ROI is circulating around Web 2.0, bringing up some much needed conversations.  A fantastic blog post and video from Justin Levy’s That’s Great PR outlines some responses to those neverending questions around social networking […]

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