How To Calculate Roi From Social Media Marketing

April 17, 2012 - PRLog -- Calculating the ROI of social media requires a framework or model of the dynamics of social media
campaigns. This is then populated with measurement of how engagement with new prospects, existing
customers, and collaborators via social media channels helps to drive and derive a bottom-line impact to the
company, either through cost avoidance/savings or incremental revenue/margin impact.
Alinean proposes that Social Media ROI can be calculated by analyzing the value chain, from Investments to
Engagement to Benefits and Derived Value and finally, to ROI (net derived value/investments) as follows:
1. Investments — to get any benefit from social media requires an investment, particularly in marketing
labor, resources and tools to establish the social media presence, create content and campaigns,
monitor and collaborate and measure social media success;
2. Engagement — a first order effect of the investments, measuring the resultant number of followers,
advocates, reach and influence of the social media marketing efforts;
3. Benefits — the quantification of the resultant value of engagement, measuring the impact that social
media marketing is having on generating incremental revenue with new prospects and existing
customers, driving product/operational savings and innovation with collaboration partners, or avoiding
costs, such as avoiding the marketing expenses for other less effective/ efficient or redundant lead-gen
programs;
4. Derived Value and ROI — a financial summary comparing the ratio of investments versus derived
benefits to assure that the social media efforts are generating enough value compared to other
potential investments, and worthy of more (or less) investment.
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