Social Media Campaigns – Calculating the ROI

‘’The ROI of Social Media is that Your business will still exist in 5 years’’ –

(Erik Qualman)

Increasing cost pressures coupled with intense competition for customer wallet share have put further pressure on marketing budgets. A recession or a slowdown brings down the hammer on marketing budgets and it is the first one to come on the radar for rigorous monitoring. Assumption being that such a practice leads to a more justifiable use of the scare resource and a firm therefore tries to extract the maximum out of every dollar spent. This is a regular story with conventional media and same applies for its counterpart social media as well. There is always this debate as to how to calculate the returns of investment for social media and hence justify the spending.

You may consider sales figures in conventional –assuming that the campaign has had the incremental sales effect- to calculate ROI, but how do you go about doing the same for social media, considering the campaign could be running parallel to a conventional campaign and hence the chances of incremental sales attribution could be really difficult. How to consider the likes, the followers or the comments made, hits on your website etc. are some of the pertinent questions which demand attention to arrive at a conclusion.

Is the ROI Calculation Method Really Different for the two?

In reality however the method is no different from the conventional media ROI calculation; cost and revenue hold the fort for social media as well.  The difference being in terms of the primary revenue driver for social media compared to a conventional one and the cost/revenue items considered. Social media is primarily engagement driven and works towards increasing your revenue. A campaign may not turn out to be a successful one, if you are not able to gather the required amount of engagement, which in turn would lead to lower revenue. In social media you increase the ROI by improving the revenue and not by reducing the cost. You may get lower prices for social media initiatives compared to the conventional one, but that shouldn’t be the decision criterion. You are better off sticking to conventional media if costs are the pain point.

It’s really about the Thought Process:

Social Media requires an engagement driven thought process and not a cost reduction one. You might end up damaging your brand’s reputation or spending exorbitantly high, if low costs are a primary driver for you and not engagement. Apart from the revenue driver aspect, the cost/revenue items change for Social Media ROI calculation and rest of the process remains the same. For instance, if you take number of ‘customers who visited the showroom’ as a factor to calculate revenue in conventional media, you would have its parallel as ‘average number of Facebook interactions’ in social media. Following example to illustrate the point further:

                  ROI Calculation – Social V/S Conventional Media
    Conventional Media               Social Media
    Costs (In Rs)            Costs (In Rs)
Salary of the Marketing Team 125000 Salary of the Social Media Marketing Team (Monthly, in Rs) 20000 125000
Ad Cost on TV-prime TV 300000 Cost of Shipping 500 120000
Print Ad cost 60000 Cost of Packaging per 5 tablets 300 14400
Point of Purchase Material Cost 70000 storage Cost per tablet and other costs 100 24000
Total Cost 555000 Total Cost 283400
   Revenue Items    Revenue Items
No. of New Inquiries 1000 Hits on the website 4000
No of leads converted 200 Average Percentage of Facebook interactions (of total website hits) 50% 2000
Price of the Tablet 4000 average percentage of repeat visitors of the above 30% 600
Total Revenue 800000 average percentage of visitors who bought the product online (only repeat visitors, first time visitors didn’t purchase) 40% 240
ROI Calculation =(Revenue-Cost)/Investment 44% Tablet Price 4000
Total Revenue 960000
ROI Calculation =(Revenue-Cost)/Investment 239%

As is clearly evident, the calculation method is very similar and the items considered are in fact a parallel to conventional media. The real difference is in terms of the engagement, which is being depicted by the percentage of visitors who visited the website after having the interaction at Facebook. It’s significant to note that the revenue is a direct function of this value. Revenues risk plunging if interactions move south and hence the engagement levels go down.

A Six Point framework to help you demystify the ROI calculation for social media:

  1. Set Targets:  The first obviously is target setting. What is that you wish to measure? Your revenue and costs figures would finally be a product of the targets set. Targets should be set in line with the concept of user engagement. Measure engagement, which is the factor driving revenue. Monitor metrics such as Number of clicks on the Facebook page, No. of comments made, tweets, re tweets on the topic, how many users accessed website using link provided on Facebook etc.
  1. Track Conversions: Second step would be to track the metrics set. Online tools like Google analytics come in handy while tracking these metrics. Regular monitoring of these conversions allows changes in the overall campaign strategy if at all you feel the need to do so. ‘Website Traffic’ is an example of a metric.
  1. Assign Monetary Value to each metric: You could either use historical data for a similar campaign run in the past or use a guesstimate. For instance, average cost per click, average percentage of repeat visitors who bought the product online etc.
  1. Measure Benefits by Channel: how many visitors and from which channel- Facebook/Twitter etc. – is the key question here. This would be useful if you are having a multi-channel strategy. For instance, data from you tube, twitter, Facebook etc.
  1. Determine Total Costs: You add up all the total costs. This is very similar to the conventional media method. Only the items differ
  1. Analyze results and Improve: You may feel the need to redesign websites, links, posts etc. to generate more traffic on the site or attract more comments. You would get this insight post data analysis

ROI calculation in Social Media then is a matter of understanding the similarity rather than the difference. The only difference is in terms of the primary ROI driver in both the cases. For conventional media, it is awareness and then action. For social media, it is engagement and then action. Social Media revenue is primarily engagement driven and work by improving the return part of the equation rather than the cost. Firms and Managers need to understand this basic aspect and need to include this understanding while making ROI calculations for the same. As firms allot bigger portion of their marketing budge to social media, more and more mangers and firms could face this issue and a little effort towards understanding the workings might be the difference between a failed and a successful social media campaign.


Social Media – Unsuccessful Campaigns In India

Social Media Campaigns are talk of the town in the current business environment and everyone wishes to be on the band wagon as soon as possible. Firms ask for ROI and are not ready to compromise on their social media presence. Though the excitement and willingness to reach the customer in real time is understandable, lack of a basic understanding of issues at times leads to unsuccessful campaigns. Firms then are puzzled over the failure, as every weapon in the Armour had been tried to get the users talking positive about the brand.

Let’s glance through some of the failed social media campaigns in India for better comprehension of the issue. These Campaigns tried hard but couldn’t capture the user’s mindshare.

  1. Lal Krishan Advani’s Social Media Campaign :


We saw Advani becoming Ad -Vani with his aggressive ad words campaign targeting every Indian site. At one point there were only his ads on every site we browsed.  The first and foremost reason it failed – We hate Ads

This is what one of the bloggers had to say after watching several irritating ads depicting Mr. Advani as the change agent. Obviously it didn’t serve the purpose. Indian Lok Sabha elections were around the corner, and Mr. Advani felt the need to be on social media to promote his brand.

Reasons for Failure:

  • Instead of trying to engage users online, to write more about him, sharing his views on current affairs and interacting with users, his Social Media Team decided to develop innumerable ads and linked these ads and videos to different sites.
  • As and when the user would access these sites, he would either see an unwanted ad or a video and would end up spoiling his online experience. Therefore, instead of creating a positive buzz around him, these undesirable online activities ended up harming his brand and did no value addition to his image. Though his party won the election, the win had nothing to do with his online campaign.
  • Instead of trying to engage with users, he ended up forcing ads and videos on them, which were brutally discarded by the users
  1. No takers for Congress ‘Main Nahin Hum’ (‘we’ not ‘I’): This time the Congress party decided to present a tough competition to Mr. Advani and launched its own social media campaign. The Campaign tried highlighting Congress philosophy for the elections and ads/videos etc. were posted on almost all the major online platforms –Facebook, you tube, twitter etc. Things however didn’t work out and there were hardly any takers for the campaign


Reasons for failure:


  • The Campaign had to no clear message to engage users, which was unlike its rival BJP. Users who saw the ads/videos had no idea as to what to make out of this campaign.
  • The party members were not prompt in replying to comments made online and many a times comments and questions went unanswered
  • Party didn’t try to engage young users and focused only on the poor. Forgetting the fact that, it was the young generation using social media and not the poor. Campaign had an audience-message mismatch
  • The Campaign tagline wasn’t catchy enough. It had a low recall value
  • The tagline used was a part of the competitor’s election speech and hence many users found it funny that Congress couldn’t even conceptualize a new tagline


  1. Maruti Suzuki ‘Young Driver’ Contest:

Maruti Suzuki Launched the Young Driver Contest online, looking for the best young driver out there. The initiative was successful, but social media couldn’t contribute much in the success and most of it –as company sources analysed- was due to conventional marketing only.  The company couldn’t generate enough buzz and leads from Social Media


Reasons for failure:


  • Regular search on the internet didn’t throw up much information about its online presence. The Buzz on social media was missing.
  • Written content on internet didn’t have mention of the opinion leaders. For instance, car experts or magazines
  • A dedicated application would have been better
  • There were no efforts from the company’s end to engage users online


This sets the stage for certain do’s and Don’ts’s in social media:

  • Keep revising your campaign strategy based on user feedback. Don’t wait for all the negative comments to pile up for taking action.
  • Engage with users and don’t force content on them.
  • Don’t oversell yourself. Social Media is not about you, but the users. Talk about a topic related to your product/service and then gradually move on to talking about your product.
  • Be ethical. Users do understand the intricacies of the content being updated online. Don’t lay a claim on something which doesn’t belong to you
  • Less is more. Keep it short and sweet
  • Have a back-up plan, in case it doesn’t work out as intended
  • Create a buzz and involve influencers


Though it has become a necessity to be on social media, you should be careful while drafting your social media campaign strategy. Considerable difference exists between conventional and Social Media Marketing, which requires understanding of certain basic social marketing principles and their appropriate application. What has worked in conventional set up might be completely uncalled for in Social Media. Firms and Individuals need to imbibe this concept to capitalize on the Social Media Advantage.

Does a Successful Social Media Campaign lead to brand’s overall Marketing Success

A successful social media campaign implies the achievement of objectives laid out at the very beginning. It could be in the form of basic metric such as LIKES and FOLLOWERS and regular day to day communication with fans who are not customers yet. Whatever the metric may be, a successful campaign does add to the overall brand value and creates a positive impression in the target segment. There is however challenges which run deeper than the ones visible at the surface and hence require further discussion before declaring a successful social media campaign a ‘sure shot strategy’ for the brand’s overall marketing success.

Some Food for Thought:

  1. Engagement has to be continuous and not temporary

Social Media is primarily about user engagement. People should be willing to talk about your product and thereby contribute towards making it a talked about and relevant product in the eyes of other users. This engagement however has to be on a continuous basis. A one-time successful campaign may bring in the desired attention and get the ball rolling, but regular and interesting initiatives should follow to keep the momentum maintained and users engaged. A successful campaign in fact should be used a stepping stone to further user engagement, improved user experience and sales. Abandoning the entire strategy in-between or not having a continuous user engagement strategy is highly undesirable and may in fact show your brand in poor light. You could be perceived as a one-time wonder rather than a ‘here to stay’ player


  1. Overall Marketing Success depends on other variables as well

Your overall marketing strategy should be a combination of conventional as well as social media strategy. Simply relying on either of the two may not be a very wise strategy, considering the ever changing customer requirements and the opportunities provided by the online space. A Social Media Campaign should in fact be complemented by a conventional campaign, to ensure consistency in brand communication and more importantly targeting the user with the right kind of content using the right media.

The user would then be able to join the dots, having seen the communication in different media, and the probability of your brand having major customer mind and wallet share should be comparatively higher. A successful social media campaign requires a supporting conventional campaign as well. You risk missing the bus if the required conventional marketing support is absent.


  1. Get the Basics Right

No Amount of Social Media Marketing can help sell a bad product. You may have run a successful social media campaign ensuring huge fan following, but the final product has to deliver on the promises made. Claims of high performance and personal touch have to be corroborated by the brand and the user in real life situations, Else your brand might come across as one more ‘wanna be’ out there. Therefore the social media campaign has to be supported with the right kind of on field infrastructure. Along with the product, the pre and after sales customer experience should also target customer delight and not be below standards

  1. Your Competition Matters

You might have had a strong social media campaign run. But what if your competitor has a strong brand presence in the market? It could be due to the social or conventional media marketing, but it certainly poses a strong marketing challenge to you. Your overall brand success would then depend upon your competition’s brand strength relative to yours. A strong competitive brand may allow for a successful social media campaign but may prevent the rub-off effect to your overall brand success. The competitor may in fact initiate its own social media campaign and hack the limelight gained from your own campaign


The conclusion then points towards a more moderate answer. Social Media Success doesn’t guarantee success, but certainly increases the probability of the brand having a successful run in the overall marketing terms. It does so by engaging users and getting them to talk more about your brand. This definitely leads to brand recall and recognition and brings the product into their consideration set for the product purchase. Overall Marketing Success requires certain other critical variables as well, adherence to which is a must for strengthening the overall brand position. You need to have a two pronged strategy of conventional and social media marketing to achieve brand success in overall marketing terms.



Social Media Marketing – How is it different from Conventional Marketing

“It’s not just about consuming content, but sharing it, passing it on, and adding to it.” – Arianna Huffington


Above Quote highlights the rapidly increasing significance of social media as a marketing platform. Gone are the days when you could come up with a teaser or celebrity laden ad on TV/Print/Radio and capture people’s attention. Increasing media clutter and reducing attention span ensure that the companies are literally fighting it out for you Mind and thereby wallet share. Firms don’t think twice before dolling out huge money for it and expect fair returns against the investment.

However neither they seem to be having a clear metric to measure the ROI nor can they discard it since their competitors would come down heavily on them, if the conventional marketing route is not followed. Conventional marketing therefore seems overloaded and cluttered compared to the social media space. The clutter however has started creeping-in into the social media space as well, for firms apply the conventional marketing principals to social media which obviously doesn’t do well some of them out there. This is not to say that basics of marketing have changed for the social media space; but our goals, expectations and more importantly the thought process has to be different for social media marketing. It needs to be seen more as a partner and less as an assistant.

Ignorance and failure by managers to understand the new paradigm of social media, has also contributed to the incorrect similarity between conventional and social media marketing. We have been trained in the conventional marketing space and many of the principals are no longer valid for social media marketing. This makes us uneasy and we move into the denial mode.

Following are some of the key differences between conventional and Social Media Marketing:

  1. Conventional Marketing is about Product, Social Media Marketing is about Users

The regular 7P’s of marketing talk about the product and tell you how it is better than the competition and then gets involved in the regular chatter. Social Media Marketing however focuses on user engagement and then expects it to be converted into final sales. You can’t go about endlessly praising your product in

Social media as people seek self-expression in the online space and you might be creating avoidable clutter on the name of product marketing. Effort should be to develop creative ways to engage users and positive perception about your brand rather than continuous and mindless throwing of content at users.


  1. Social Media Magnifies the Market Behavior

The intended impact which you may earn using social media could be way intense and effective than the one compared to conventional marketing model. People tweet, re tweet, post comments, raise questions and receive replies instantly in the online space. You could either be at the right side of things or experience a real shocker due to the negative publicity out there. Information literally spreads at the speed of light and escaping the heat is next to impossible, if things didn’t work out the way they were supposed to

Though Conventional Marketing has its own benefits, the flow of information among the users is minimal. People might have heard of your product, or seen an ad on the TV. But they rarely talk about the product in the way they talk of it in social media space. Social Media has a strong network effect which conventional media aspires for.


  1. Flexibility in Marketing Strategy

Due to its real time nature, the flow of communication between the user and the firm is uninterrupted. Required changes in your social media marketing communication strategy could be made in a short span of time, based on the online feedback.

For instance, you wish to promote your JEANS brand and start off with the Facebook page talking about the topic of fashion. You launch a contest and the winner is supposed to receive cash prize etc. People are talking about it and suddenly a user comments that instead of the regular cash prize, the winner should get a dinner with a celebrity. You see a lot of likes on the comment and realize that people are talking more about it. You now have the opportunity to change the offering and involve users further into it. This however would be really difficult to carry out in conventional marketing. The time lag involved would generally coincide with either product acceptance or failure.


  1. Real Time accessibility

You have got to be available online for the users 24 by 7. You can’t post a picture or article and then vanish for a day or so. A day’s delay in social media is similar to a month’s delay in conventional marketing. People wish to interact and talk about the product on a real time basis. They expect a reply in no time and the machinery should be ready to do so. For instance, it’s seen that users generally expect a reply within an hour from the firm related to a query or comment posted online

Conventional marketing however doesn’t necessitate such an action plan. This at times brings down the effectiveness of conventional marketing compared to the social media one.


  1. Social Media Involves evolving technologies and platforms

Gone are the days when companies would have ample time to prepare their responses to customer queries and present to the press. Communication now needs to be real time and accurate. A customer might know more about you than you know about the customer. Hence the marketing function needs to have the communication or content strategy ready all the time. They need to have certain basic ground rules laid out and communicate with a strong presence of mind. A word here or there could mar the prospects of the brand. The emergence of mobile application, review websites etc. have made it easier as well more difficult to manage the online marketing space.

Conventional Marketing provides you with the time lag to prepare the communication text and then interact. But then the lag makes it difficult to communicate timely and more effectively


Are the marketing strategies taught in B-schools becoming irrelevant then? Of -course not. The basics remain the same; however the application has to be different for social media when compared to conventional marketing. Ways of engagement in social media are very different from conventional marketing. It wouldn’t be wise to treat social media marketing as a subset of conventional marketing, but a necessary partner. Organizations and more importantly managers need to unlearn a few things and put on a different lens to capitalize the power of social media marketing.

Social Media Marketing – The Significance of Screening

Let’s revisit the concept of screening for our social media marketers. Screening is the process of online scrutiny by the users/online visitors as to the claim made by the firm. You can encounter positive as well negative scrutiny on your road ahead to the achievement of relationship goals you have set for your social media campaign. By campaign we don’t necessarily mean a social media marketing campaign, but even a Facebook page used for communicating with the visitors could be seen as a part of the company’s overall social media presence.

How Screening Works?

Clearly, positive scrutiny vouches for the claim or product friendly observations made by the visitors and negative ones either raise questions or refute the claim. Hence it becomes all the more significant to understand various aspects of the concept of screening within the domain of social media marketing and how social media marketers can manage screening and try using it to their own advantage.

A firm accepts certain explicit and implicit guidelines when it decides to foray into the ever changing and highly volatile online world. The effects are far reaching and it in fact has the unprecedented ability to magnify the company’s online actions. The intended affect could be magnified ‘x’ times once it gathers momentum in social media or as more and more visitors/customers/prospects start hopping on to the ‘online contribution’ –Contributing in terms of Facebook/Twitter/You tube comments likes etc.- bandwagon. The Sad news however is, it works both ways.  So you might end up getting 20,000 likes instead of the intended 5000 or could face a serious backlash , if something in the social media space didn’t work as expected. Firms however ignore this fact at times leading them to the damage control mode.

A Case in Point:

A recent case was seen in Bollywood, when a leading English National daily was accused by one of the actresses for showing disrespect towards women, as the newspaper had uploaded certain pictures of her which the actress thought were highlighted in an obscene manner. The issue got on to the likes of tweeter/Facebook and a flood of comments provided fuel to the fire.  It is important to note that the picture had been on the newspaper’s site for quite some time and the actress had made note of it quite recently. Noteworthy here is the fact that the issue got picked up when it came on social media and the actress tweeted about the issue. People contributed to the flurry of comments and it continued for a few more days. Social media not only brought the issue to limelight, but also magnified the effect and the newspaper had to take down the pictures due to the fear of a prolonged backlash.

Screening is unavoidable:

Scrutiny is inevitable in the online space. Sadly you can’t wish it away, and this asks of you to find out ways to live with it. One of the best strategies companies can follow is to reveal the truth. Yes, you got it right. Well it’s not to say that companies didn’t provide the complete information back then. But the competitive advantage of information is no more available to the firms. Users interact, post comments, ask questions and receive replies online. This makes it all the more difficult for firms to play the ‘information’ ploy. Users now create the brand/product and not the firm; the users decide the way it will be talked about at least in the online space and not the company. You could plan for any of the intended effects, but it would go in vain unless the users respond accordingly.

Managing the Screening:

  1. Involve Users and Don’t Interfere Much

The best strategy hence in such a case is to involve the users and induce them to be a part of the brand/product, so that they don’t feel cheated at the end of it. You involve them by letting them post comments as it is and don’t try to play the big brotherly role. AMAZON is a great example of authentic user content posted on its sites. They don’t remove a negative comment and let the users decide about the product and the comment. They cultivate this feeling of trust and try to convince the customers to revisit their site for future purchases. For consumers, AMAZON provides authentic feedback. Too much of interference is obviously not called for; else it might look artificial and a mere formality to be on the online space

  1. Let Them Collaborate

You should also allow people to contribute more, as social media is about people themselves and the collaborative content

  1. Let the users make the strategy and not you

User feedback/comments should guide your understanding of the offering and the segment. You should feel the need to change the existing strategy based on the way people talk about the offering and not on your whims and fancies


The View Point

Putting everything in perspective, social media seems an additional and more effective lens provided for screening to the end user. Its reach, real time and effective communication form the upside and not so surprisingly the same reasons form the downside as well. You must learn to live with it and find out ways to manage it all to your advantage.

Businesses and Social Media – How it helps create new business models

Business Models in simplistic terms explains the way firms make money.  It is the set of processes and activities using which the firms create, capture and deliver value and hence it covers the entire value chain. Needless to say, a strong business model is a fundamental requirement for any business to sustain and consequently thrive in the market. Newer markets and changing scenario has led to dynamic and improved models over time. These models challenge the old one and lay foundation for the next incremental or big leap in the existing business model. Changing customer preferences due to more aware customer, political, social and technological drivers encapsulate some of the key reasons which have contributed significantly towards business models across industries. Though each driver has had its role in the overall scheme of things, Removal of Information asymmetry through content aggregation has been one of top drivers and has had critical implications for existing models. Content Aggregation acts as a pool of relevant information for the customers and hence provides them more options, convenience, ease and ability to compare. All of this leads to customer satisfaction which in turn leads to higher footfalls and more numbers for the service provider. This is in contrast to the earlier business models where in the traditional format was followed and even the service provider didn’t have enough information at times – from a customer’s perspective- barring information which could be put under competitive intelligence.  Moving on to the service provider side of things, We need to consider the theory of the missing link and how it is related to social media. The Missing Link is the activity or process which the new business model has done away with, but was an integral part of the earlier model. The Missing Link could also be seen as a major cost center in the earlier model. But how do you remove a cost center from the new model, without having adverse implication on the firm’s business operations. The Answer lies in Technology and Social Media. It has simply converted the physical into the virtual, reducing cost and improving performance at the same time. OLA CAB service in Mumbai (India) is an apt example as to how the social media converted this missing link into a competitive advantage. Traditional TAXI providers have a call center, where in the customers make a call and book the cab. Call Center Operations add to the cost and move the fares to north making it expensive for the customer. High fares restrict the market opportunity to a particular section leading to limited growth opportunities. OLA CAB founders saw an opportunity and decided to completely do away with the call center operations. A mobile app was developed, which the customers would download on their phones and book the cab from the cell phone itself. You are not supposed to make a call to book the cab and it in fact shows you real time availability of the available cabs. It has taken all the regular taxi providers on board and hence there is no investment in buying the vehicles as well. This new business model brought down the cost considerably and OLA was able to capture a significant percentage of market share based on low prices and easy availability of vehicles. Sites such as Facebook, You tube, twitter etc. were also bombarded with user feedback helping create the right buzz around the brand and reaching the target consumers effectively. It in fact had one of the highest social media voice share based on a recently conducted survey.Apart from removal of a cost center, social media has changed the dynamics of customer feedback as well. Customer Feedback for earlier models was a good to have and not a must. Firms like OLA vouch for the fact that business can be built upon customer feedback. Customer Feedback can be a part of the business model itself, driving revenue and another critical numbers for you. Hence feedback is not something to be collected at the end, but a real time activity providing you a feel of the market. To Put it in a nutshell, Social Media has empowered firms to challenge the conventional models and helped converting the missing link into a sustainable and competitive advantage.