How Do You Measure the Value of Social Media Marketing?

There are many ways to measure a company’s return on investment in social media. Effective methods often depend on how small-business owners are using social media and for what purpose.

The “amplification model,” also known as the purchase equivalency calculator, is used to measure the value of social impressions, which is how many people have seen the content, and actions, such as clicking on a link or sharing information, said Jim Tobin, founder and president of Ignite Social Media, a social media marketing agency in Cary.

The amplification model doesn’t calculate return on sales from marketing. It shows the value of impressions and actions and compares them to the cost of buying that level of activity through traditional advertising means, Tobin said.

Using the amplification model, look at your number of organic impressions on Facebook, Twitter or blog post. Facebook Insights is one of several tools that can track views and interactions.

“We can calculate the number of impressions that our organic efforts, such as our updates, have generated,” Tobin said. “And we can put a value on them by multiplying by the common cost per thousand impressions.”

For a highly targeted online media buy, such as one on Facebook and Twitter, impressions easily cost $10 per 1,000, Tobin said.

Owners can also measure actions that are more valuable than impressions, such as if someone reacts to a post, shares it or actually clicks on a link.

“So we could begin to say ‘What’s a click worth?’” Tobin said. Owners can determine that by looking at what marketers pay on the cost-per-click model, which can vary.

If a company knows it spends an average of 50 cents per click for a website, such as Google, or 20 cents per view from YouTube advertising, then look at social media analytics and figure out how much the social media clicks are worth.

“So by doing all this, you can begin to add up the value of the exposure you are generating if you were to buy it,” Tobin said.

Copyright © 2013 The News & Observer (Raleigh, N.C.) Distributed by MCT Information Services.