How To Measure Your ROI on Facebook

It’s not uncommon for businesses to make statements about Facebook.

Some of the comments are:

• “I am not convinced about Social Media.”
• “I’ve tried Facebook and its doesn’t work for me” – this usually after hearing hype about how good it is.

There are 3 issues here:

• The first is that social media takes time to nurture – as with most things success doesn’t happen overnight (it takes patience, perseverance, commitment and a damn good strategy).
• The second issue is that the business has failed to clearly identify objectives and put appropriate systems in place to measure results.
• The third is that Facebook is not necessarily the right vehicle for every business (but in general it works well for consumer orientated businesses)

Setting objectives is the first step to measuring your return on investment. Once goals are defined, it is then easy to put the systems in place to measure success.

So what are some good objectives?

Your goals will vary depending on your type of business & your overall marketing objectives.

They can be broadly categorised into:

1. Business Objectives (such as increase sales)
2. Connection / engagement objectives (such as increase brand awareness)

Some common goals identified by companies are listed below:

1)     Brand awareness
2)     Strengthen brand
3)     Monitor sales
4)     New leads or sign ups
5)     Drive website traffic
6)     Manage, monitor or change brand perception
7)     Crisis management
8)     Improve visitor quality
9)     Grow revenue
10)   Acquire customers
11)   Retain existing customers
12)  Speedy customer service
13)  Protect online reputation

Facebook Measurement Metrics To Gauge Success: 

What are the metrics that brands use to measure their success on social media? Do brands look beyond basic quantitative metrics for measurement? Let’s find out!

1) Directly Measurable Metrics:

Most marketers measure this metric which includes but is not limited to criteria such as likes, interactions, shares, unique visits to your website, page views, bounce rate, length of visit etc. from your social channel (Facebook). Typically these types of metrics are used by social community managers.

However, the quantitative measurement metrics that most companies tend to miss out on are listed below:

Facebook Impression value

1. Objective: brand awareness
2. Calculation: (total organic impressions/ 1000 * highly targeted display or search CPM)
3. What this tells you: what is the value of your social impressions vs the same number of impressions on search/display media. This will give you an idea of the cost you are saving for eyeballs received via organic social reach.
4. Tools you can use: Facebook insights, AdWords campaign reporting

Facebook Impression value over time

1. Objective: Increase in brand awareness
2. Calculation: (impression value in month 2 – impression value in month 1)
3. What this tells you: what has been the increase in brand awareness on social media between two specific time periods. For example, if you’re running a specific campaign in month 2 via organic posts, you can find out the effectiveness via this campaign.
4. Tools you can use: Facebook insights, AdWords campaign reporting

Facebook content reach:

1. Objective: strengthen your brand
2. Calculation: [Brand reach + ∑ (Shares) x (Reach of each sharer)]
3. What this tells you: What is the total estimated reach of all your content in a specific time period. You can also use this to try different content types and calculate reach for each type.
4. Tools you can use: Facebook insights

Social web referrals

1. Objectives: Drive website traffic
2. Calculation: [Facebook referral clicks to website x (CPC) equivalent display or social ad costs]
3. What this tells you: This determines your social ad value via organic visits in comparison to ad value via display or search to drive the same amount of traffic.
4. Tools you can use: Google Analytics, AdWords or Display campaign reporting tool

2) Attributional Metrics:

 Attributional metrics are the measures that the marketing and / or PR team cares about. They include measurements related to quality of users, interactions, website visitors etc. We can measure these by the following ways:

Positive Sentiment

1. Objective: brand perception, avoid crisis
2. Calculation: (Number of positive brand engagements/ Total number of mentions)
3. What this tells you: What do you people think about your brand, what is your current brand association. You can also identify your social influence by comparing your positive sentiment to that of one or more of your competitors.
4. Tools you can use: Social mention, Radian6, Brandwatch, Simplify360

Negative Sentiment

1. Objective: brand perception, manage crisis
2. Calculation: (Number of negative brand engagements/ Total number of mentions)
3. What this tells you: What do you people think about your brand. You can identify if there is a social crisis coming your way and plan your way ahead to avoid it, you can also manage crisis situations by constantly monitoring every brand mention.
4. Tools you can use: Social mention, Radian6, Brandwatch, Simplify360

Quality of Visitors

1. Objective: Improve visitor quality
2. Calculation: (Compare data on Google analytics for Facebook vs. ppc vs. other social channels on criteria like bounce rate, time spent on site, goal conversions etc.)
3. What this tells you: What is the quality of visitors that visit your website from Facebook vs the quality of visitors from other channels. Once you drive this comparison you will receive more insights on how effective your Facebook efforts are and if there is anything you need to change.
4. Tools you can use: Google analytics, Nielsen or Adobe Online Marketing suite.

3) ROI Metrics

ROI metrics are the metrics the business owner and CEO cares about.

 Immediate ROI:

1. Objective: Lead generation, revenue growth, new customer acquisition
2. Calculation: [(Number of qualified online Facebook leads identified) x (% lead-to-customer conversion rate) x (average order value)]
3. What this tells you: This gives you the lead sales value of a single purchase done via Facebook.  You can then compare this order value from other channels.
4. Tools you can use: Conversion measurement (Facebook), Google Analytics

Life Time Value:

1. Objective: Lead generation, revenue growth, new customer acquisition, customer retention
2. Calculation: [(Number of qualified online Facebook leads identified) x (% lead-to-customer conversion rate) x (customer lifetime value -LTV)]
3. What this tells you: Since social customers are not one time buyers like AdWords or display customers, calculating this metric predicts customers’ lifetime sales value.
4. Tools you can use: Conversion measurement (Facebook), Google Analytics

Are you using any other measurement metrics that we haven’ t mentioned here? How are they working for you? Also see 7 reasons why companies ignore social media measurement.

Contact us if you wish to build out a social media strategy yielding high ROI for your business.

References:

• http://www.icontact.com/static/pdf/Calculating_Social_Media_ROI.pdf
• http://searchenginewatch.com/article/2249515/Social-Media-ROI-14-Formulas-to-Measure-Social-Media-Benefits