There is a lot of concern among marketers as to how to measure the results of a campaign and equate the returns from social media to those of traditional executions. Most importantly brands should consider the return on investment for a strategy, also known as ROI. This metric can only be measured with a form of currency, such as dollars and requires that a brand determine the costs associated with a strategy and the profits from the execution, both in dollars.
Marketers are wary of using ROI to determine the success of social media because of the difficulty in quantifying both returns and costs. They tend to rely on intermediate metrics, such as ‘likes’ and ‘followers’ because they can easily tie those individuals to a particular platform. Since social media has high human resource costs marketers need more tools at their disposal for measurement and analysis.
One option is to compare the cost of a social media strategy to the cost of strategies in other forms of media. Comparing media costs is sometimes called media equivalency or media equivalents. This analysis has a bad reputation because PR firms have used it to multiply the influence of their campaigns. However, the tool can be really useful for social media.
To do a media equivalency analysis the marketer has to make one big assumption. That an impression is an impression regardless of the medium. If a person sees a posting on Facebook it is equivalent to viewing a television ad. This is obviously not completely true, because each medium has its advantages and disadvantages. For instance, while television has beautiful graphics, Facebook has the opportunity for engagement. Though the effects may be different audiences see these forms of media with a brand identification. In fact, most forms of media deliver some kind of brand-related impression (unless the message is subliminal) and this concept can be used to equate media to determine their comparative impact.
The analysis requires that the marketer determine reach and costs for each medium on a cost per thousand basis. By using cost per thousand (CPM) the marketer can equate costs and determine which strategy is more expensive relative to how many people viewed the message.
Is this method perfect? No, but it is useful for understanding your marketing spend.
“Is return on investment THE metric I should use to evaluate my marketing strategy?”