Social media may not charge to post on their platform, but there are many costs and resources that are involved in a Social Media Platform. There should be an analysis of the return you receive for the resources you invest in social media.
What it is: The Social Media Analysis is the comparing of the returns or results of your social media activities versus the cost of dollars and resources involved in managing the social media platform.
What does it do: It determines the relative value of each social media platform and lets you know whether there is any positive return from your involvement, and which platforms should be targeted for the greatest returns.
Uses:
How is it used: Many times a Marketing or Public Relations (PR) group will decide that they should invest in many different social media platforms. They often will invest resources in their own personal favorite platforms, the platforms that are the easiest to use or apply resources evenly across the platforms. None of those approaches will likely provide the optimum application of resources. The financial analysis allows the marketing or PR group to focus resources on the platforms that will provide the best returns for the invested resources.
Where: Some marketing or PR groups will have the financial knowledge to complete the analysis themselves, but often a financial advisor is used to complete the calculations. But even if a financial advisor is used the Marketing and or PR groups will have to supply the data or assumptions to be used in the financial analysis. Some of the results can be measured in financial metrics (revenues or costs), but other times the platform is being used for increasing awareness or perception, where they may not be any measurable financial metric. Here you may need to determine what you think it would be worth to have followers, click-throughs, etc. and what expenses you would be willing to assign for those results.
Why: An organization does not want to waste their resources on social media that is not providing enough value to justify the resources that are being expended on it. In addition, the Marketing and PR people will want to apply all the resources possible on the social media platforms that are making a positive impact on the returns and value of the organization. Focusing limited available resources on the social media that provides the biggest bang for the buck will make your company or organization more effective and efficient.
Limitations:
Where it shouldn't be used: There may be certain notification requirements from government or industry standards that require you to make certain things public. You need to make these resource investments even if they do not have a positive financial return.
Any restrictions: Be careful to not allow unreviewed assumptions to be used in the financial analysis. There needs to be some verification or evidence of the projections used in the financial analysis. As in any financial analysis, Garbage in - Garbage out!
Warnings: There may be some types of social media that keep your name out in front of important stakeholders even though it has no measurable impact on actual revenues or profitability returns. There can be social media platforms that make people feel better about using your company, organization, product, or service, even though that platform does not drive any discernable direct revenue impact. This kind of activity can retain customers or create return customers, but that may be difficult to measure.
If you are using social media to increase sales you need to determine where social media will help and measure the impact on revenues
Are you trying to attract people to your web page - look for measurements of how many people came to the website from the platform
Are you trying to increase the % of visitors to the website that complete a purchase? How did the platform impact the rate of conversion of visitors to purchases
Are you trying to encourage people to feel better about using your product or services? You may need to measure reviews and testimonials or the number of repeat customers based upon platform performance.
You must determine Why you are using social media and what you are trying to accomplish.
Consider what metrics you will use to measure the effectiveness of your platform performance
Gather the metrics from each platform. See the demonstration video (Social Media Marketing - ROI) and pay particular attention to the videos that cover measurement tools for each platform
Measure (or project where data is not yet available) the cost of participating on each platform (see the template and example and video for ideas)
Capture the cost of all activities and resources utilized to manage the platform.
Utilize Google Analytics to understand the tracking between social media and your website and sales on the website
Analysis of data
Where you can determine the impact of each metric on revenue of the social media that makes it easy to fill in the financial template
Where your goals are awareness and name recognition, you have to project value for clicks, engagements, website visits, etc. and use that value to compare to the costs of managing the platform
Utilize the template to build your calculation, or simply divide profit improvement by platform expenses to calculate ROI, or build a prioritization table that compares by subjective measures the efficiency of reaching your goals.
To the extent possible try and identify the financial impact of the measurement tools for each platform by calculating ROI
Interpretation of results
You can measure ROI by comparing the profit generated by the social media posts (using google analytics for metrics) as profits divided by expenses invested
You can also measure ROI by assigning an estimated value in capturing specific numbers of followers, engagements, etc. and dividing that value by the expenses and costs used to manage the platform
The important measurement is return on investment (ROI). If the return is positive then you are making a good choice to invest in the platform
The better choice is to prioritize your invested resources so that you are investing a higher % of your resources in the platforms that provide the highest level of positive returns within your portfolio of social media platforms.
Presentation of results
Charts, graphs, tables, and other graphical representations can be valuable in displaying returns or effectiveness of each platform and comparing them against each other. Recommendations for how much you should invest in each platform can be made from the comparisons on returns and efficiency.
A bar chart showing the different ROIs for each platform is an effective way to show the differences if platform efficiency. Then providing a table that shows the relative investment planned in each platform can display the recommended investments by platform.
