How do you measure the ROI of online marketing actions?

“Not everything that counts can be counted and not everything that can be counted counts.” Albert Einstein left us this phrase that perfectly defines the measurement of ROI.

In this article we will delve into this topic by explaining in detail and in detail the steps to follow to measure the ROI. Measuring the ROI of online marketing actions in social networks means having a strategy and marketing plan, which is part of the measurement phase of ROI, and it is at this stage that we will get an answer Of whether our strategy has been the right one or not.

To begin with we have to be clear the 4 steps that we must follow in the measurement of the ROI:

  • Define KPIs (Key Performance Indicators).
  • Measure the results.
  • Interpretation of results.
  • Check the online marketing strategy.

Define KPIs

One of the most important parts of the measurement of ROI is to establish the objectives of the actions in Social Media, these should be measurable to know if we have met the objectives initially proposed. To do this, we first have to set the overall goal: What do we want to achieve? Brand awareness, increased sales, increased community, … and according to the overall objective, the corresponding KPIs are established in each of the social networks in which we act, although we have previously studied and analyzed the starting point In which we are in each established KPI.

The KPIs will depend on our overall objective, but to understand how we can parametrize them in this case we will establish basic KPIs. To facilitate this task Dolores Vela  has shared with all of us a  template  that will help us to classify and order the KPI’s, which can be grouped into four sections:

  • Visibility
  • Interaction
  • Influence
  • ROI

In the section on  visibility  we will consider KPI’s parameters that give us an indication of the representativeness and presence of our brand in social networks, for this we will set as data to get followers, fans, clicks, retweets, reach (TweetReach), subscribers , Inbound links, etc.

The  interaction or loyalty  that we have passed on to users will be measured by establishing indicators such as mentions, favorites, #FF, shared, comments, likes, page views, unique visitors, …

We are also interested to know to what extent our brand is influential, and to monitor the  influence  we have a series of parameters such as positive and negative comments, answers and interactions, indexes such as klout or peerindex …

Finally we have the measurement of  ROI  and as its name indicates we will measure the return on investment. The ROI formula is very simple:

ROI = (profit realized – investment) / investment

That is, the benefit that we have obtained from an investment (or that we plan to obtain) we subtract the cost of investment made. Then we divide it between the cost of the investment and the result is the  ROI .

Although its formula is very simple is not its calculation, since we have to contemplate all the expenses that occur in a conversion. It is also important to calculate from what level of ROI we are actually making profits. Having said all this, in my opinion we can not stay there, the ROI is more than this formula and understands all the parameters that we have established in the other sections. It is necessary to take into account that when we speak of actions in social media they have to be incorporated to the calculation of the ROI because they are part of the global marketing plan, that is why the IOR (Impact of Relationship) is incorporated in the calculation and is What we have done in the first three sections.

In any case, these would be the basic KPI’s that each one should adapt to their needs in function of its global objectives and the Marketing Plan of the company, and remember that it is necessary to have a periodic monitoring of this process to be able to detect deviations and power Correct them in time.

Measure Results

At this moment we must help each other with different tools that are on the internet and that will facilitate this arduous work. The tool that I use most and I consider it to be  Google Analytics, with it we can extract all data related to traffic, pages visited and visitors to our website. For the rest of the information needed or is achieved through the statistics of social networks, or on the other hand we can use other tools that will help us in the task of measuring the results, some are paid and others totally free (although Also have their version of payment), among the free we have:

  • Social Mention
  • Who is Talking
  • How Sociable
  • Social Bro
  • Think Up
  • Klout
  • Peer Index 

Among the tools that are payable we can have the following:

  • Hoot Suite Pro
  • Sysomos
  • Meltwater Buzz
  • Alterian SM2
  • Lithium 

Once we have filled in our KPI’s template with the data obtained, we enter into the interpretation and analysis phase of the same.

Interpretation of results

Once we have obtained the results we must see the degree of compliance in each of the KPIs of the four sections and check that actions are giving us positive results and which need a modification of the strategy because they do not reach the established goals.

Check marketing strategy

The last thing we have to do is find out if our online marketing plan has worked. If we prove that it has not worked, we will have to change the strategy and perhaps it will force us to propose other actions, to offer different content, to re-study the target and to see what their needs are, to find out where our target audience is. In any case as discussed above it is important to have a periodic follow up to realize in time the corrections that we have to make to our marketing plan.

Although we have been talking all the time about numbers and stock value, there is an intangible section that we will never be able to quantify, and if someone knows it please share it, because how much is a satisfied customer worth? How much does a loyal user cost? How much does the word of mouth advertising from these customers cost? In short, measuring the ROI will give us a relative value that will indicate the trend of our online marketing strategy and never an absolute value.

In this post I have tried to do a basic analysis of the measurement of ROI, without entering the aspects of advertising actions in social media that would give for another post.

And you How do you measure the ROI of actions in online marketing?

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