(This is a partial repost of an article I originally wrote for the Ignite Social Media blog, included here to share with my readers. For the full length post, see the link above).
It has become the great debate in social media marketing: “What’s the ROI? How do you measure it?” Or more directly put: “Does it work? How can you tell?” Beyond being a hot topic for pundits to debate, social media return-on-investment (ROI) is something we address with every one of our clients on an ongoing basis.
Through all those conversations and measurement plans, we tend to employ a mix of four distinct models for measuring social media ROI: Direct, Correlated, Relative, and Proxy ROI. If you look hard enough, you’ll find both avid fans and harsh critics for each model, along with a large group of people claiming only “real” ROI (the “Direct” model outlined below) is valid. The truth is, it’s just not that simple, particularly when you’re trying to measure social media efforts that are a single piece of a much larger integrated marketing or communications plan. Each model of social media ROI listed below might or might not be useful for any given campaign or situation.
As a wise knight once said “Choose wisely.”
What follows is an introduction to each of the four models. Over the coming weeks we’ll examine each model in more detail and explore examples, while touching on several related topics in measuring social media ROI. Bookmark this post, and be sure to check back for linked updates.