The whole ROI conversation seems to be heating up. There are differing views on the conversation of ROI. Lee Odden tweeted from Pubcon that ‘it is a platform, not a tactic’ in a response to a question about measuring social media ROI.  Yet the reality is, that the time and energy being invested in social media programs requires companies to establish some level of ROI.

First lets talk about what ROI is.  ROI is the acronym for Return On Investment (okay no big revelation here).  In most cases when we discuss ROI we are talking money.  X was spent and Y was realized therefor ROI = (Y-X) / X. If you spend $10 and get back $40, your ROI is  3 times what you spent.  But lets discuss other important goals that create value and generate revenue: brand recognition, customer service, customer loyalty, industry leadership and market authority.  These are all important objectives of any business yet achieving them and measuring their true ROI becomes very difficult. We all love the easy to measure direct path of sales dollars, but most businesses don’t really know the direct path of any new customer.  They may know the final access point but have no idea of the path that got them to that point.  It is this unknown path where most often, the true value of Social Media can be found.

Here’s an example of the unknown path before social media (yes WAAY back then  . . .).  When I was working for ThomasNet.com (an industrial portal that drives highly qualified traffic to a client’s website) a client was reviewing his monthly reports and a name jumped off the page at him.  It was a significant prospect that had come to him via ThomasNet and my client was flying out to meet with him the following week.  The prospect had told him he found his information in ThomasNet.com but my client was curious to know what else I could uncover about how this prospect came to him.  In digging through his site analytics you could clearly see the path of the prospect searching over a month through Google and Yahoo! and each turn ending up at my client’s site.  The prospect used various search terms; from the machine that the service would be performed on, the actual service being performed, and finally the company name.  Clearly his presence in ThomasNet was the final certification, and the launch point for the inquiry.  But, that month long path through other search methods brought him there.   My educated guess, based on seeing similar search patterns in other clients analytics, would be that this is not an unusual process for most searchers.

So what impact would Social Media have on this path?  It will most likely be much harder to measure and identify.  Yet, clearly important.

Here’s an example utilizing social media.  In a meeting with a new Site-Seeker, Inc. prospect in May, I asked him how he found us.  He had originally sent an inquiry via our website, but I was curious to know the details.  It was unusual, but he actually explained to me how he came to contact us.  We had been promoting our presentation at CONNSTEP’s Annual Manufacturing Conference via many social media tools.  He had viewed the seminar page, linked to our website, read my blog and then contacted us.  How he was brought to the CONNSTEP page we are unsure.  Again it was that winding unknown path that supports our brand, builds our market leadership and helps us to gain industry authority – Social Media.

For those of us that are in the Internet marketing arena we must help our clients establish appropriate ROI goals for their social media programs.  We are asking them to invest their valuable time and energy, and they have to understand the goals, objectives, and return.  We need to help them to monitor and measure as effectively as possible.  While I agree with Lee Odden that it is a platform and not a tactic, it still requires us to establish ROI – whatever we determine that is.

The following article is from Mahsable.com by Christina Warren and offers alot of tips and tools on establishing ROI. HOW TO: Measure Social Media ROI