Is there an ROI from Social Media Marketing?

Updated: March 31, 2011

Marketers are investing significantly more in social media efforts, with increases from 6% to 18% percent of marketing budgets expected within five years. Marketers understand that you must make an investment to deliver social media results and success, but what spending levels are required, and how much effort needs to be expended to deliver specific results?

As social media marketing efforts increase, so does the investment required. And in today's "age of austerity", every significant investment now requires proof of bottom-line impact and superior value - a condition called Frugalnomics. As a result, with the social media spending increases, comes:

  • Increased executive scrutiny,
  • Challenges from other stakeholders who may be losing budget to these efforts.

This is driving the need for better social media measurement and return on investment (ROI) accountability.

Recent survey results from Altimeter state that measurement is indeed one of the most important aspects to social media success; in fact, the top priority reported by 48% of corporations was "Creating ROI Measurements" for internal programs. According to Altimeter, "those that can effectively measure improvements can make the business case, and can truly obtain more budget funding".

However, even though social media ROI measurement is important, Altimeter found that benchmarking efforts are incomplete, with:

  • 65% of corporations using only Engagement Data as the top measurement metric,
  • a mere 22% capturing Product Revenue, a key element in quantifying value and ROI.

With so little measurement, can anyone say that there is actual ROI from social media in general and your own unique marketing efforts in particular? Alinean believes that the sustainability of funding for social media is at risk in enterprises that are not able to demonstrate solid business cases for these initiatives.

Our research shows that ROI results are mixed at this time, with some companies, industries and best practice leaders reaping a payback on social media marketing investments, while others struggle with low engagement levels, high costs, and poor returns.




To measure the ROI, and help others understand their own derived value, we have created the Social Media Value Chain.

See the full ROI assessment results and methodology here:

http://www.alinean.com/docs/Alinean_How_Do_You_Calculate_the_ROI_from_Social_Media_Marketing.pdf

For personalised ROI Calculator and more resources visit:
http://www.alinean.com/socialmediaroi.aspx

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