How could it be otherwise? Marketers have been spoiled by search advertising with its last-click attribution, but the reality is most advertising doesn't work that way. Think of a billboard, for instance. There's no record of who has seen your billboard ad and certainly no way to calculate how many people have seen it and then purchased your product because of the ad.
Despite its copious digital data, social media is pretty much the same. That said, there are a few dead simple ways to track ROI that don't require a mixed media modeling program or a staff of math nerds.
1. Coupons and Offers
If you offer a coupon solely on Facebook, then you know with 100% accuracy that every coupon that customers cash came from Facebook. Facebook introduced a more formal version of coupons in September called Offers. So far more than 42 million customers have redeemed an Offer. Creating an Offer is fairly straightforward and can be tracked via a barcode for in-store Offers or an online redemption code for online offers. "That allows online and offline stores to quickly see where the traffic is coming from," says David Baser, Facebook's product manager for Facebook's Page Insights.
SweetFrog, a frozen yogurt chain in Morganville, W.V., posted an Offer on its Facebook Page in November for $4, which covered "all you can fit in a 12 oz. cup." Though more than 9,200 people claimed the offer on their desktops, just 144 people redeemed it in store. In mobile, the ratio was better: 3,747 people claimed it on their mobile devices and 382 — about 10% — claimed them in store.
2. Call Tracking Phone Numbers
Relatedly, another idea is to provide unique call tracking phone numbers on social media platforms like Twitter and Facebook to learn which channel drives the most leads and conversions.
3. Conversion Measurement
Another new Facebook tool for measuring ROI is Conversion Measurement. Conversion Measurement lets advertisers track the behavior of people who click through an ad. If a customer clicks and then goes on your site to register, then you have proof that the ad was at least effective for that. Of course, the ideal scenario is when a customer clicks through an ad and then buys something on your site.
Baser says adding Conversion Measurement to your ads and webpages is as simple as cut and pasting a few lines of code. "Anybody who runs a website should be able to do it," he says.
In theory, when used in conjunction with OptimizedCPM, another Facebook tool, you can use the conversion data to get a better idea of whom to target. For instance, Fab used that combo to cut its cost per new customer acquisition by 39%.
4. Google Analytics
This won't tell you what people are buying, but at least you can see if traffic is coming from Facebook, Twitter or Pinterest to your website. If you run an ad and see a bump in traffic, then you have a good idea that it's working.
5. Look at Overall Results and Then Work Backwards
Perhaps the simplest way to calculate ROI is to look at your overall sales and then attribute a boost at least in part to your social media advertising or activity. Sam's Chowder House, for example, ran a status update on its Facebook Page about a special and doubled their business that day compared to the same day in 2011. "The only thing they did differently was a status update," says Baser. Terry Walsh, owner of Sterling Goss, a Chicago butcher shop, said he realized that his Facebook program was working when sales of turkeys doubled over Thanksgiving. "Turkeys are a measurable event," he says.
Of course, that's a fairly blunt instrument. There are various factors including the weather, the day of the week and the economy that might have an effect as well.
In fact the above methods will only give you a limited snapshot of how well your social media advertising is working. Sid Shah, Adobe’s director of business analytics, says marketers often give up on social media advertising because they don't see much measurable activity. "As a company, we've always believed that you shouldn't look at social as its own channel," he says. "A search marketer will say social doesn't work because [customers] don't click and buy stuff, but there's brand value there. You build a relationship."
Ben Pavlovic, founding partner of VineSprout, says that social media often defies ROI measurements. "Some will disagree, but social media shouldn't always be tied to a metric," he says. "And like any other marketing activity, ROI will not always be immediate. First and foremost, social media is a communication tool, just as the telephone and email function as a way to have conversations with current and potential customers."
Original post by Todd Wasserman for Mashable