How many time have we seen that projects are not pursued because we are unable to substantiate a return on the investment. Business Case justification at the end of the day is always dependent on how we represent it in terms of dollar value. Any project has to provide some benefit to the organization either in the short term or long. Many people mention that it is hard to quantify intangible and indirect benefits. This is partially correct in the sense that yes it is hard to get a specific decimal number but one can obtain a fairly accurate number provides correct assumptions are made. Social Media Campaigns fall into such examples where calculating ROI can become challenging. However, with many more examples coming to the fore it has become much more easier to calculate ROI.
The key element to calculate a ROI is knowing the metrics that one would like to track. The first and foremost task is to list out the measurements and confirm how one would calculate the ROI. The same applies to a Social Media Campaign too! If one is able to determine the number of visitors of which who eventually end up purchasing a product, then one would be able to associate a revenue generated to it. Similarly, one can definitely track the expenditure to a particular campaign and identify the cost per customer. With these two numbers we can easily calculate the ROI as ratio of Profit / loss Margin to Cost of campaign.
The key question that stands out is what estimate to factor in for Social Media Campaigns before they are launched. Like any other project we should compare these with similar projects and make the estimates. Ergo, if we would like to estimate how many customers would eventually purchase a product. We would try to compare with other product launches and use a similar or conservative number. As mentioned earlier, as long as there is a logical assumption that can be substantiated the reviewer would be willing to accept it.
With Analytic data being provided by all the Social Media Companies it has made the job of a Marketer very easy. If we take the example of Google analytics, it provides a ton of data that can be used for many purposes and not just calculating ROI. From our perspective metrics such as reach, traffic, customers, conversion rate become very useful.
The final element to bear in mind when publishing the ROI is to ensure that it relates to the Business goal. Research published by Brandwatch and performed by DOMO suggests that 3 out of 4 marketers struggle to publish ROI for marketing campaigns and the key reason for that is that they have not defined the measurements (KPIs) upfront and determine the process of collecting these details. Yes, Social Media Campaigns are different from the regular campaigns but it does not mean that it is any different from other projects in terms of the output it is required to generate. Hence if Marketers can apply basic logic and test this upfront it will not only be able to calculate ROI but also substantiate the business case and benefits on completion of the campaign to deem it successful.