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How to Calculate the ROI from Social Media Marketing

With social media becoming increasingly popular, marketers need to understand the value created through this channel to evaluate its effectiveness for a given company. Companies may find it hard to quantify the subjective opinions and feedback social media gives us. In order to to do this, some companies are utilizing the social media value chain.

The social media value chain allows marketers to compare investments to areas of the chain such as engagement, benefits and derived value in a low-cost, simple way. The value chain essentially acts as a cost benefit analysis specific to social media.

The social media value chain is newsworthy for several reasons. First, there is an expected 40% increase in spending on social media by businesses in 2011. With increased spending, there will be a greater demand by businesses to see the ROI. Also, many ROI solutions can be costly. The social media value chain offers simplicity while still being effective for a business. Finally, the value chain is newsworthy because it can lead to the evaluation of a company’s overall marketing efforts.

It is possible for companies to see sustainable ROI. In order to be as effective as possible, there are four areas to consider in a social media marketing plan.

  1. Content
  2. Campaigns
  3. Monitoring
  4. Collaboration

The social media value chain offers a simple, yet effective way for companies to monitor the ROI from social media marketing in a time where it’s more important than ever, as social media spending and popularity rises.