How to calculate an ROI on Social Media




How to calculate an ROI on Social Media How to calculate an ROI on Social Media

For calculating the return on investments from social media, you may not need a calculator. This is not to say that it is insignificant. However, the equations that govern the rate of return from social media are not in direct figures, but in benefits that accrue over time. Chances are that you personally or your enterprise is already involved with social media to some degree.

Most businesses would like to do a ‘what if’ scenario and related calculations before embarking on an advertisement program. Striving to calculate the return on investments from driving higher communication and collaboration within and between organizations, by implementing a social networking strategy, is well worth investigating.

Most businesses fail to equate the need for social networking on a personal level to the requirement for social networking on the enterprise level. After all, the enterprise is made of people and if there is a benefit in social networking on a personal level, it is bound to be reflected in the improvements in communication and collaboration between employees at the enterprise level as well. In short, productivity improves; that is a direct ROI.

The behavioral changes through social linking and sharing enables a flatter structure and breaks the traditional organizational silos that keep people apart. The improvement in collaboration and communication leads to an effective time management, thence to better productivity and ultimately, to an improved ROI.

This example may be a simple one when confined to the enterprise social networks. However, the challenge comes when trying to figure out the ROI of social media outside the corporate and while looking at other social networks such as Facebook and Twitter.

As with any other effort, say, advertisement, you need to plan a strategy, put in some efforts and reap your profits. That same logic could be applied for calculating the ROI from social media as well. Therefore, the equation could be strategy + expenses = Profits. The cost of planning and putting up a strategy may involve taking assistance or guidance from experts in the field. Expenses could involve purchasing server space, design charges, costs involving monitoring, salaries, etc.

It would not be very difficult to measure the benefits before and after an implementation date. The important part is to decide what you want to get out of implementing social networking, and measure how much you have achieved over time. However, you may need to take care of issues like data security, safety of intellectual property, and issues of plagiarism.

Additionally, a single strategy may not be very effective in generating returns from the social media. In such cases, it is usual to plan several strategies, implement them simultaneously and monitor them in parallel. ROI must also be tracked individually for each of these strategies. Over time, strategies returning lower compared to others may be retired, and newer ones tried out.

Since requirements, traditions and fashion change, strategies may have to be tweaked periodically to keep track of the market. That makes the process of calculating ROI, a constant effort.


Mo Moumenine
Mo Moumenine, a media professional with more than 20 years experience in setting up media companies and managing them. Previously founder and CEO of the first Integrated converged media house in Dubai. Vice President of Programming for CNBC Middle East ( to 2006). Currently enjoying my free time in South East Asia, working on my first book on Social Media and writing for my blog. google

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