Ten Steps to Prove ROI on Social Media Spend vs. Traditional Media Spend
You don’t have to go far to find an article that talks about the RoI of social media (normally arguing the case for it). Anything regarding business change needs some sort of business case, which is fairly exhausting, and people have often found it daunting to prove the RoI of social media – myself included, although I have managed it to secure quite a lot of funding (it took pretty much three months though – what’s the RoI on that?). There was a great article on UnMarketing a couple of weeks back that points out there’s a whole load of traditional business practices where we don’t need to prove RoI when perhaps we should.
Then, I think it was somewhere around the last couple of mornings while I was in the shower, it struck me. I think I saw a flash of something, but that could be the development of epilepsy. There is a seriously easy way to think of the RoI of social media marketing against traditional media.
Step One: Work out Your Media Spend
Get onto the marketing department (you may already be in it) and find out what the budget is for media spend. That shouldn’t be too hard – you may even be able to rustle up some documents of last year’s spend.
Step Two: Work out Your Media Reach
You’ve got the total spend, now look at the reach of the media where the spend is. How much does it cost to reach this amount of people? You could work out what the cost of reaching each person individually, but it’s not strictly necessary.
Step Three: Consider Effectiveness of Campaigns
Often clueless marketers spend all their money on half arsed campaigns in traditional media that don’t really work. It doesn’t help when they’re marketing a product that sucks. Delve into anything you can find where there was an apparent sales uplift as a consequence of media spend. If there is an uplift, then match that against spend and see if the campaign delivered RoI? If there’s no uplift, you’ll have a stronger business case for going social.
Step Four: Quantify Social Reach Costs
Now you’ll need to quantify the amount of money (think people) it would take to build the kind of social media footprint that would near or surpass the reach of your traditional media. Say your traditional media reaches 80,000 people a week for a month at a cost of £40,000. Consider how much it would take to gain 80,000 social connections. If it would cost significantly more to achieve your social numbers, you’re going to struggle with your case.
Step Five: Consider Timing
You’ll also need to explain how long it will take to achieve the numbers. If you think it’s going to take five years, you should drop the case.
Step Six: Consider Engagement
There’s a slight issue with the last step around engagement. It’s difficult to quantify engagement rates, but if you can find anything out about it, consider the data. The bottom line is these are different types of media – lots of people ignore adverts in magazines and can’t remember them, but lots of people ignore messages within social media too.
Step Seven: Consider Permanency
Perhaps a better and easier case for social media than considering engagement is that once people are connected to your brand, they’re not all that likely to leave in the short term. That means you have a semi-permanent influence over social media connections when all you have in the traditional space is influence for the length of the campaign. Thinking about social media in the context of a campaign isn’t too clever. It’s a permanent thing, and that’s why I think it has an advantage vs. traditional.
Step Eight: Business Case
So you know traditional media spend and ROI vs. the cost and timeframes of building your own audience via social media. You need to demonstrate that you can lower the cost of media spend via social media (by building your own permanent audience) over a time period. You may want to make a case for extra money, but it may be worth asking for investment from the budget which fills the traditional media spend. You won’t get success by saying social should have all of that spend; first of all, companies are rarely this rash and radical and you’ll get laughed out, and secondly, you still want to reach some people in traditional media, even if you have a social footprint.
Step Nine: Presentation
Be as factual as possible. The more cold hard data you can present in terms of your bottom line, the higher the chance of your executives opening the purse strings for social. It’s an entirely logical process: if you can build a permanent community which has as large a reach as traditional media over a good time period for a lower sum of money than traditional spend, it seems highly likely you will gain some traction. Think of the value of reaching 19 million people. Now think that Skittles has that value every time it updates its Facebook page.
Step Ten: Execution
You’ve probably spent a considerable amount of time proving the business case for social media, now you have to execute this plan. It is easy to be excited initially, and then the interest to wane if things don’t necessarily go to plan. Don’t be disheartened, keep at it. Brand building and social media can take la lot of time.