Calculating Social Media ROI, Trickier Than You Think?


Why it's Tough to Prove Organic Social Media ROI

Back from 2010-2013, I used to provide social media services when I started my agency. It was a great way to add reoccurring revenue to our bottom line, but we always had a problem. And that problem was proving a return on their investment in our social media services. Meaning, that if they paid us $1,000 a month and they needed a 4-to1 ROI, we needed to get them $4,000 a month for them to justify the expense.

This should be easy, right? Wrong.

No matter how much we tried, there was no real way for us to prove social media was the way we were acquiring more customers outside of the advertising and conversion pixel. The reason being, I have found, like all organic marketing, it is hard to track unless you are a Fortune 500 company with every analytics program known to man attached to your website.



I have come to realize there are a lot of reasons for organic social media to be tough to prove from an ROI standpoint and, to save you time, I have them listed below from my experience:

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Why It’s Hard to Prove Social Media ROI

Analytics Can Be Inaccurate

The first hurdle was that Google Analytics was usually inaccurate, as was Facebook Analytics to a certain extent. We would have “Social Media” traffic segmented out in Google Analytics, but we found out the majority of it was being counted in referral or direct in Google Analytics! Talk about a bad way to report to your clients.

Why it's Tough to Prove Organic Social Media ROI

This made it almost impossible to report success to our clients — because we didn’t know if it was working or not. We also found the conversion pixels from Facebook were good for paid search traffic, but there was nothing for the organic side.

You can measure traffic, to a point, using the Facebook back end, but we saw huge discrepancies between what Facebook back end reported and what Google Analytics reported. Generally, this created a rabbit hole we had to climb through for each client, to figure out the discrepancies between Facebook and Google.

Also, can you really count just “clicked” traffic? Perhaps they saw your ad, post or company through a friend, and then Googled your name. This happens a lot, so you cannot even really measure those other points of entry beyond them clicking on a link. Even now, on Instagram, you can use custom URLs in the BIO but, generally, you cannot track traffic from old posts where someone would search for the post.

Overall, tracking analytics is very messy and difficult to accomplish.

Traffic and Social Media Engagement Count Is Low

If you have a small business, you could have low traffic numbers, which makes it very difficult to track. Generally, organic social media efforts are easier, with large presences and lots of website traffic. If you make one Instagram post and notice a 30 percent spike over the next 24 hours, it is much easier to relate that traffic to the Instagram post. Then you can average all the increases together, and you can see how much it influences your traffic levels.

However, if you do not have these clear-cut analytics, then it is much harder to judge which is the reality, for the 99 percent of businesses out there using social media as a customer acquisition tool. Or, at least, who think it is a customer acquisition tool for them.

Customers Convert at Multiple Points

This is the most overlooked key point with social media and, generally, marketing. Consumers generally do not convert on the first click. In fact, it is very rare they convert on the first click. Generally, customers go through multiple steps before they turn into a customer.

They could find you organically, click on your content, leave, see a re-targeting ad, come back and like your social media platform, and then convert into a customer after a post. Was it social media which did the heavy lifting? No. It was the other channels, after which social media then finally closed the deal. This is the reality for a lot of marketing channels, and social media is no different.

Social Metrics Disconnect from Revenue

In the Facebook back end, or any social media platform, there are tons of metrics — i.e., impressions, clicks, shares, likes, etc. — but none of these ties into revenue through a physical sale or a lead capture point. Per my example above, it is difficult to tie the analytic programs together. For these reasons, you cannot really associate any social media metrics to physical revenue from social media efforts. The only thing you can directly relate is advertising from Facebook or other similar social media platforms … and even that can be inaccurate.

Re-targeting Captures Conversions

In  the same regard as multiple points before conversion, consumers who convert on re-targeting usually are counted in the “re-targeting” category but, really, they came from a social media interaction. Social media helps flow traffic to the website, which can be converted into a customer with re-targeting and is difficult to attribute back to the social media platform.

Conclusion

Overall, tracking ROI with social media is very difficult. I have learned, as a marketer, if you obsess over ROI, then you will generally spend more time going down a never-ending rabbit hole, compared to spending that time doing other things like … marketing. It is good to have a basic knowledge of your conversions and where they are coming from but do not obsess over it.

As John Wanamaker said: “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.” Trying to figure out which half and stopping that waste is a very difficult task.

Tablet Photo via Shutterstock

2 Comments ▼

Ronald Dod


Ronald Dod Ronald Dod is the Founder and Owner of Visiture, an internet marketing agency that focuses on Search Engine Optimization and Pay Per Click management for eCommerce businesses. Ronald holds a Masters in the Science of Marketing from Florida State University and is certified in Google Adwords & Analytics.

2 Reactions

  1. Hi Ron ,

    Such a great topic. If only more agencies would be more open and transparent about the pitfalls of analysing ROI. Thanks for sharing you and your clients experiences.

    Beth

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