You Can’t Measure the ROI of Social Media

May 31, 2013 | Uncategorized

Yes, we said it. You cannot measure the ROI of social media marketing.

Let us explain: Finding ways to measure the bottom line impact of social media has been discussed and debated since brands first began exploring the medium as a way to connect with customers and, yes, generate more sales. Naturally, businesses are curious about the monetary return they can expect to receive from any initiative they invest in, but looking only at the financial impact of your brand’s social media initiatives misses the bigger picture.


For one, social media doesn’t run through today’s sales funnel in a linear, easy-to-track fashion. With social media, the path to purchase doesn’t look like this:

Screen Shot 2013-05-31 at 3.36.45 PMConsumers will not always follow an impression of your Facebook ad with a click and then a purchase. Instead, they might see your ad, notice that one of their friends likes your page, go visit your site, sign up for your newsletter, see a tweet from another friend who just purchased one of your products, go like your page on Facebook, click a link you posted to a great blog post, start browsing your products, receive a discount code in your email newsletter, and then make a purchase. That makes the social media sales funnel look a little bit more like this:

Screen Shot 2013-05-31 at 4.02.48 PM


Understandably, this is much more difficult to track, and someone who is trying to measure the impact of their brand’s Facebook ad by simply using Google Analytics to see which conversions came from Facebook wouldn’t know to associate the purchase we’ve described above with their social media efforts.

Now, you can track the ROI of a specific, isolated social media tactic. If, for example, you run a promotion on Facebook with an exclusive discount code, you can very clearly trace and track the number of impressions on that post, the number of users who clicked on that post, and then the number of users who entered in the discount code and made a purchase in order to determine the financial return on your Facebook promo. But a Facebook post, or tweet, or Facebook ad is not social media marketing – these are just commonly used tools in a brand’s online marketing toolbox.

The second reason sales is not the best way to examine the impact of your social media marketing initiatives is because this way of looking at ROI doesn’t factor in other important goals that social media marketing can fulfill – ones that are even more powerful than sales. Because every single person has a voice in social media, and word of mouth (whether in person or online) is often cited as the form of communication now most trusted by consumers, having access to a large and engaged community of evangelists that can be leveraged as needed is considerably more valuable than any dollar amount. Therefore, looking at social media as a fixed marketing cost is flawed, because you are really building a long-term brand asset.

What are your thoughts on social media ROI?



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