Stop the Insanity; A View on Social Media ROI for Lead Generation


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I’m a former Media Director at an ad agency. For years I planned and implemented media strategies for a multitude of clients. I still do when my clients ask me; radio, television, print, outdoor, etc. I currently manage some digital media buys and paid search campaigns, but I don’t include my rates and fees on a cost-per-conversion report. So let’s remove salaries and time fees from any social media ROI calculation. OK?

If you’re going to count the time and rates to engage, listen, and monitor social media as part of your ROI calculations, then you’d better start applying that same logic to your paid search agency, your digital agency, your ad agency, internal marketing staff, and any marketing consultants. To go further, do you calculate the ROI of networking? Conferences? I don’t believe the cost of doing a job should count into ROI calculations. I say stop the insanity. Let’s keep these measures apples-to-apples.

Where you CAN charge the time, is the cost of social media content; because that’s a deliverable. A blog post, a white paper, a video, a podcast, or another piece of original content all have hard costs; copy and design. Landing pages as well. Any cost of a social media management tool can also be applied to the ROI calculation. But that’s it, gang. At least that’s my approach for my social media clients.

So before we look at calculating ROI of social media let’s understand the following:

  • Social media marketing IS marketing; and that means the goal is leads and sales; no argument there. All marketing must contribute to revenue.
  • Social media is conversation, and that conversation leads to more followers and likes, and that means more opportunity to find prospects and alliances. For Twitter you have to utilize follower tools, and Twitter clean-up tools so that you have a high level of mutual followers. If you have a large mutual following list, then you have more opportunity for conversation, for example.
  • Decide as a team how you’re going to judge conversion success; first touch or last interaction. Google Analytics has a new feature that can credit attribution. Example:
  • I’m on Facebook and engage in your brand (like a post). 2 weeks later I decide to research a need that the brand sells. I may go to Google and perform a branded search for the firm I liked on Facebook. Then I perform a conversion. Last interaction credit- search engine. Assisted conversion- social media.
  • I do some research for a product and visit a website from a Google search. I decide to follow the firm by clicking on the Twitter button on the website. 2 weeks later, the firm produces a new white paper and promotes it on Twitter. I click on the URL shortener and redirects to a landing page. I download the paper. Last interaction credit- social media. Assisted conversion- search engine.

The point is, you have to look at assisted AND last-interaction conversion metrics to determine the true value of social media with regard to conversions.

For more information on assisted conversions and analytics, I offer you this link to Google’s explanation.

So how much is an assisted social media conversion worth as compared to a last interaction conversion? Restated, what percentage of your social media efforts contribute to a non-social media last interaction conversion? Same question for a banner ad, email, or a paid search ad that contributed to a conversion. Hard to say. If your social media activity is estimated to be high (or a Klout score of over 50 if you pay attention to such things), then use 25% as a best estimate. If social media activity is moderate (Klout 30-49) then use 15%. Below that use 10%. Based on your individual overall social media activity, feel free to adjust the figures, but above is what I use to measure social media (and other digital media) attribution.

Now back to analytics and getting ready to measure social media ROI for lead generation. Let’s go through an exercise- just an example:

Social media costs

  • Facebook ads: $1,000
  • LinkedIn ads: $500
  • Social Media Platform tools: $2,000
  • 4 blog posts: $2,000
  • 1 video: $1,000
  • 1 webinar: $1,000

Total: $7,500

Lead/Conversion Metrics

  • 2,000 landing page visits due to social media (last interaction)
  • Last interaction conversions: 600
  • Social media assisted conversions: 200
  • Average sale value (include lifetime value): $4,000
  • Pipeline conversion rates: a. lead conversion to marketing qualified lead – b. marketing qualified lead to sales accepted lead- c. sales accepted lead to sales opportunity (example- 600 conversions x 25% x 75% x 25%)= 28 sales opportunities
  • Closing rate: 25%
  • Sales: 7
  • Last interaction revenue: $28,000
  • Assisted conversion revenue (assume 25% conversion value per above): 8 additional sales opportunities (using pipeline conversion rates) that social media contributed to, 2 sales, worth $2,000 (or $4,000 per sale x 2 sales x 25% social media estimated value contribution)

Total Estimated Revenue from Social: $30,000

ROI Calculation

  • Revenue minus social media cost/ social media cost, or, 300% Positive ROI

The value of a conversion

Working backward based on the above, the value of a last interaction conversion is $46. ($28,000 divided by 600 conversions). The value of an assisted conversion is $10 ($2,000 divided by 200).

Caveat: For the above exercise I did not include margins or customer expenses when calculating ASV. Feel free to adjust when doing your own calculatons.

So now we have measures to present to the C-Suite at B2B firms who prefer to analyze their business with metrics such as leads and ROI. But in reality, social media contributes much more: branding, SEO, customer service, lead nurturing, and relationship building. Don’t get hung up on ROI unless you must; but continue to understand the value of the power of social media to your business long-term.

How do you calculate the ROI of your marketing efforts?

Republished with author's permission from original post.

Paul Mosenson
Owner of NuSpark Marketing Helps B2B and B2C companies market themselves through integrated tactics, (traditional advertising, internet advertising, SEO, social media), conversions, and sales through lead nurturing/marketing automation.


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