Marketing accountability and metrics

More than ever before, accountability counts. Marketers are using a variety of metrics (both quantitative and qualitative) to measure marketing and media results.

One of the key quantitative metrics is ROI. The Harvard Business Review defines marketing return on investment as:

(Incremental financial value derived from a marketing investment minus the cost of that marketing investment)

divided by

 The cost of that marketing investment

In this ROI definition, the marketer must not only know what marketing costs, it must be able to gauge the financial value gained as a result of making that investment--not so easy.

Often, a company has difficulty attributing a sales increase (financial value) that occurs because of a particular marketing investment (such as one specific promotional campaign). So many influences can affect marketing results, including competition, other marketing efforts, economic conditions, consumer buying behavior, retailer activities and more. In fact, marketing that used to produce a certain result may no longer induce that same result.

Online marketing can be measured in clicks, for example, but there are also quantitative metrics that can prove valuable to long-term financial success--such as the sentiment of social media comments (positive or negative?). This can be measured, but how does a marketer relate that to financial value? And what about ROI of investing in influencer marketing, meaning paying for popular YouTube or Twitter celebs to promote a brand or product.

B2B marketers have to be accountable too, able to measure social media and other marketing efforts. Nonprofits are thinking long-term, not just measuring immediate marketing results from fundraising programmes and other activities.

Social media marketing ROI

Can you measure the bottom-line results of social media marketing? In the early days of Twitter, Facebook, LinkedIn and YouTube, the focus was on setting up accounts, adding content and attracting an audience. The most commonly-used metric was (and still is) audience size. How many Facebook users "like" your page? How many Twitter followers do you have? How many YouTube views do your videos or adverts get?

However, building an audience is only the first step in applying metrics to determine the return on investment in social media marketing. To make social media marketing pay off, you'll need to actively engage the target audience in your marketing activities.

The third step, illustrated above in a diagram by Jamie Turner for Mashable, shows that social media marketing is a long-term activity. To earn a real return on social media marketing, you have to convert your followers/fans/viewers to actual customers and retain their loyalty.

Research suggests that consumers are more likely to buy from brands that they are followers or fans of. Over time, if you actively engage your audience via social media marketing and listen to their comments as much as you post your own, you'll be better positioned for higher revenue and a positive return on investment.

ROI in social media

Is it possible to measure the return on your investment in social media? Yes. Should you be doing this? Yes.

Start with your marketing plan objectives. What is each programme or campaign designed to achieve? How can social media help get you closer to your objectives? What metrics can you use to measure the results of social media initiatives as you implement your programme or campaign?

Counting the number of Facebook fans or blog followers is just one aspect of reckoning results, as ClickZ explains in its post on '7 easy ROI metrics'. I especially like the suggestion to create tracking links using shortened URLs like bit.ly and is.gd for individual social media messages. Then you can count the number of times people click on each link and see how well each draws compared with projected results and previous campaigns.