Social media ROI, or return on investment, is a mathematical formula that tells the marketer the revenue generated from each dollar of marketing spend. This sounds simple but to track ROI marketers need to understand exactly how much they are spending on their marketing as well as tracking the revenue generated by the marketing campaign. While direct spend is easy enough to track there are a number of indirect costs that go into a marketing campaign such as internet costs, equipment costs that are difficult to attribute to one activity or task.
- Investment return, particularly as it applies to social media spend, is the bailiwick of Christopher Penn.
- Penn is the chief data scientist at Trust Insights. He recently penned a book entitled, AI for Marketers.
- Penn explains that ROI is not merely your earnings. It is a percentage meant to show your earnings subtracted by your money spent and then also divided by your money spent.
“If we broaden our minds to what our definition of a social network is, then suddenly organic social media starts to look like referral traffic instead of social.”