Social Online Marketing: Hype is Over, Time to Show the ROI!

Online social marketing campaigns, used to drive traffic to a site in order to increase online engagement, have been around for a while but they are rarely an optimized process driven by ROI metrics.  Why?  The primary reason is due to the fact that it is not readily known that the data exists to calculate ROI or, if it is known, the data is not available in an effective structure that allows for an ROI calculation.  Therefore, many social online marketing campaigns are analyzed using a cost per click (CPC) metric (total campaign costs divided by number of click-throughs). 

To date, most web analytics are at an aggregate level, and not at an individual user level.  The evolution from aggregated web analytics to online customer analytics and optimization is taking place, with online Data Management Platforms (DMPs) leading the charge.  This evolution, and the resulting data architecture, enables the user to calculate true ROI on all online social marketing campaigns (as well as many other benefits that I will not get into here).    

So how do you go about calculating social online marketing ROI?  Below is a step-by-step guide.

1. Online Customer Value Model: First you need an online customer value model applied to all online customers.  I know, that sounds complicated, but it does not have to be at first, and it should be built in phases.  This is not a financial calculation that will be scrutinized by the SEC. Start with what you have, even if it's a proxy, as an initial value appended to all online customers is much better than nothing.  First determine all sources of online revenue and apply at the individual customer level.  Once the initial version of the model is complete use the metric while continuing to enhance the 'value model' over time.
2. Identify your online social campaign data and incorporate.  When setting up an online social campaign, whether it be a Facebook, Twitter or a Google campaign (or other), a campaign name tag can be added so once a prospect clicks on that campaign, and is redirected to your site, your online analytics solution can capture who that prospect is and apply a unique ID (or cookie).  Now you have all customers that clicked on a campaign, with the campaign name and their click date & time.   
3. Calculate Campaign ROI:  The customers identified in step2, as being acquired from social campaigns, may be merged with their resulting value in step1 to calculate ROI.  Campaign ROI / Profit = Revenue minus campaign costs.
4. Enhanced Social Campaign Analysis:  Knowing whether an online social campaign generated a profit or a loss is valuable.  Further segmenting customers within those individual campaigns, to determine who performs well and who does not, is even more valuable insight that may be used to optimize your online social campaign strategy over time. 

The techniques described above provide additional advantages including delivering a means to effectively gauge the value of your online customers by acquisition vehicle / originating site.  I have found that not all online customers are created equal thus cost per click (CPC) can be a deceiving way to gauge online social campaign effectiveness.