All Roads Lead to Your P&L
Posted On February 7, 2019
You can recognize companies where social media really matters. Their social media managers are some of the highest paid employees in the company and they have a seat at the executive table.
If you’re one of those companies, congratulations, you’ve cracked the code. Feel free to stop reading.
Let’s Redefine Social Media
Social media is not new. Though we’re still fascinated as if it’s the latest craze, social media has now existed for over 17 years.
Social media is not novel. The ability to create and publish your own content while building and interacting with a community is a core feature and function of the Internet as a whole. Social has branded and marketed an overly convenient way of doing so, often within a walled garden bringing memories of AOL.
Social media is not just Facebook. While the elephant in the room, social encompasses any Web2.0 platform that encourages community and user generated content. That requires you to be aware of, and plan for, customer engagement across many sites like Twitter, Snapchat, LinkedIn, Instagram, YouTube, Reddit, Pinterest, Quora, Tumblr, Tik Tok – and those are just the majors.
Social media platforms are media companies. While Facebook, Twitter, Snapchat, and others have some ancillary income streams, the bulk of their money is generated from selling ad space. Millions in profits are generated by increasing their “reader” counts – MAUs (monthly active users) in tech lingo – and selling those eyeballs to companies.
The ‘I’ in ROI Means You’re Going to Have to Spend Money
Social media is demanding to be treated more as a media company by their requirement of your financial investment. In 2016, even before the alternative news feed change (2017) and commitment to friends and family (2018), Facebook showed organic business page posts to less than 2% of your fans. Twitter boasts similar numbers. Excel on Instagram, and 30% of all posts may get noticed.
By this, they are demanding that you spend money. Justifying salary spent managing social media requires impressions, and 2% just isn’t going to cut it. So you throw $20 at a post to boost it. A few hundred a month in ads. Suddenly your investment isn’t in just time and payroll, but in overhead costs too.
‘R’ Stands for Return
What social media introduced were measurable actions that we worry about constantly, but don’t translate to actual impact.
If you’re using social as a sales platform, either through online sales or through an inbound marketing program, the set of basic tools that are needed to determine the actual return on your investment consists of:
- An accurate budget number for all costs in running social in both personnel (salary, benefits, taxes, training, employee overhead) and outside costs (ad budget)
- A CRM
- Google Analytics with goals activated and created
Google Analytics will track each contact or sale back to an originating source. Google will even do multichannel funnels and attribution. A CRM software solution will be able to track offline sales by customer. With a little math, these three solutions can get you to further metrics like customer lifetime value (CLV), close ratio, and abandonment rates. No likes or shares required.
If you’re using social as a branding platform, then proving return requires a top-of-mind awareness survey which can cost upwards of $25,000. Of course, Facebook will give you one free – if you already spent $175,000 with them.
What you’re left with is knowing that half of your advertising budget worked. You’re just not sure which half. A digital age problem that people have been trying to solve since the 19th century.