A recent study by the Lenskold Group tackled the elephant in the social media room: Can a correlation be made on the measurement between traditional marketing Return On Investment (ROI) and the similar calculation on social media? Accurate ROI determination has long dogged social media marketers as the actual link between the behavior of a social media follower and a subsequent sale is much more tenuous than it would be in a conventional medium such as a TV commercial or a magazine ad. However, there are companies who are successful in this task and you can be among them.

72% of all companies do not apply social media profitability metrics

The study found that fully 36% of all respondents used traditional marketing metrics which are essentially inapplicable to the dynamics of the social media sphere. An equal number of another 36% stated that they apply some financial metrics to their brand’s social media activities but not profitability metrics. This is somewhat tantamount to ignoring the fundamental tenet of business which is, after all, to make a profit. The smallest slice of the respondent pie stated that they do apply ROI or other profitability metrics to their social media participation, but this was only 28% of the respondent total.

15% of social media ROI-analysis brands have given up in the last year

This 28% may seem low but it is a figure which has been on an uptick in the last few years, as that figure stood at well below 20% just five years ago. What is troubling about the chronological findings is that the companies which do apply ROI or other profitability metrics to their social media presences has actually dropped from 2010 when it hit a high of 32%. The reason why this nearly 15% of all marketers who had been using state of the art calculations to determine their social media ROI have thrown in the towel may be indicative of the difficulty of the application of these metrics, as well as an inability to integrate them into an overall analysis of marketing effectiveness.

Few companies show improvement in conducting the ROI calculations

Another aspect is the sheer challenge of conducting the ROI calculation in the social media universe. The majority of 52% of all the companies which reported that they were using these analytic tools stated that they had either not been able to improve their capabilities to measure the financial returns or had a slight improvement from the previous year. Only 14% reported that they had undergone a significant improvement.

31% of traditional analysis users have no social media presence at all

The factor which is definitely the most telling in the comparison about the organizations which are applying ROI metrics to social media versus those who are stuck in the traditional past is the participation of their marketing team in various social media. While fully 84% all ROI users stated that their staff was active in leveraging social media for marketing purposes, this number fell to 69% in the traditional calculation category. This left a remarkable 31% of all respondent companies stating that their marketing staff had absolutely no participation in social media in any way!

57% of traditional calculators state social media is a low priority

The astounding discoveries inherent in this comparison are not just limited to participation of the staff in social media marketing, but also in the priority which they apply as a company to measuring the impact and contribution of their social networking activities. Nearly three out of four or 72% of ROI metrics users stated that they placed a high priority on social media measurements while among the traditional metrics users this figure dropped precipitously to just 43%. That equates to fully 57% of all companies which are currently involved in traditional metrics analysis outright stating that measuring social media ROI is a low priority.

Deriving usable metrics from your social media activities is possible if you are able to motivate your staff and embrace the possibilities. Make a priority of your social participation and apply the ample tools available and get a leg up on your stuffy competition.