Friday, June 12, 2015

SPJSM: Calculating Social ROI

Let us first start with the formula for return on Investment.

ROI= Return- Investment / Investment
To measure return we need to make sure that we are we measuring. Now on how to calculate it, the following approach can be propagated.
Step One: Choose the goal – Some of the broad goals can be categorized below:
1.       Increasing brand awareness
2.       Increasing  sales or other conversions
3.       Increasing  traffic
Some of the sample goals to be set for effective tracking pertaining to conversion are given below:
(i)                  Recruiting new followers or capturing more fans.
(ii)                Registering on the site, subscribing for newsletters
(iii)               Asking queries or downloads of the target item.
(iv)              Online purchase 

Step Two: Tracking your goal – The above goals require associated metrics to be tracked. The above three campaigns warrant tracking of different measures which are listed below:
Campaign Type
Measure to be tracked
Campaign One – Brand Awareness
Impressions, Engagement, Reach ,Frequency 
Campaign Two – Conversions
Conversions,  Destination URL
Campaign Three – Increasing Traffic
Clicks, Keyword Performance, Clickthrough Rate
Google Analytics can be effectively used for setting goals and event tracking. The social media interactions (shares, likes, follows) can be tracked well using Facebook page insights.
Step Three: Assigning a monetary value
There are four major ways to assign a monetary value to help generate numbers and calculate ROI.
(i)                  Customer Lifetime Value:  This metric helps in estimating the average earning from a customer.
(ii)                Customer Lifetime Value * Conversion Rate:  This metric helps in tracking the worth of each potential visit.
(iii)               Average Sale:   This metric helps in tracking what is the average purchase through the web-portal or mobile platform
(iv)              Pay-per-click Costs: This metric can also be used to calculate opportunity cost or we can also track that how much would the firm/individual would end up paying if conventional advertisements to achieve the social media actions

~Submitted By
Vivaswan Pathak (PGP-14-155)

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