Social Media Marketing and ROI

Running head: SOCIAL MEDIA MARKETING AND ROI
Social media marketing and ROI
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1SOCIAL MEDIA MARKETING AND ROI
As of 2018, business owners are slowly coming to terms with the fact that social media is
indeed the future of marketing around the world. Businesses and organizations have arrived at
the conclusion that social media is the ultimate way of reaching out to existing and potential
customers (Tuten and Solomon 2017). It must be kept in mind that the purpose of any marketing
or advertising strategy is ROI or return on investment (Westcott 2016). Keeping an eye on the
current economic scenario, it is important to ensure that businesses are investing in a practice
where they are getting their return on the market investment. With budget cuts being rolled out in
corporations around the globe and the extensive reach of social media, ROI within social media
marketing must be analyzed. However, a report released by marketers show that more than forty
per cent brands are unable to measure ROI when it comes to social media (Fisher 2009). The
barriers standing in the way of ROI measurement are the main reasons why social media
adoption is still in the developing phases.
The ultimate purpose of any business is to ensure that the shareholders or the ones
investing in a particular business get their money’s worth; in other words, there has to be some
kind of return on the investment that has been made (McCann and Barlow 2015). In the case of
social media, it would be difficult to define ROI in exact terms because there a number of
variables at stake here, including brand awareness, trust, customer loyalty and interaction and
visibility; none of these technically have a definite numerical value. Thus, if these cannot be
measured using definite metrics, it would be impossible to evaluate the performance of a
particular campaign, highlight its flaws and optimize the strategy for enhanced results. It is
evident that businesses lack understanding of who their target customer is, and what they want; it
is not sufficient to simply carry out market research, metrics like influencer measurement and
APIs will also have to be utilized. Similarly, an inadequate knowledge of the various platforms

2SOCIAL MEDIA MARKETING AND ROI
of social media and their functioning further makes it impossible to reap the benefits of social
media marketing.
According to reports, nearly 40 per cent of companies have not been able to pinpoint the
impact of social media on their revenue; while some brands have successfully been able to
conduct a qualitative analysis of the effect of social media marketing, it has been deemed almost
impossible to translate that into numbers (Clark and Melancon 2013). Going by the same poll
which claimed that inability to measure ROI was the chief reason behind failure to successfully
implement social media, it can also be said that this is because marketers are more inclined to
resort to tactics which are measurable, instead of assessing their effectiveness (Kumar et al.
2016). Marketers are not particularly keen on opting for qualitative analysis, and would be more
comfortable with specific quantitative metrics. It must be remembered that social media
marketing is a fairly new field; thus, there are not sufficient metrics or benchmarks for analyzing
and studying the impacts of social media marketing on revenue or sales of a company (Peters et
al. 2013). While judging the role of social media in business, none of the business owners are
looking at the bigger picture; their horizon is limited for they tend to focus only on the likes,
engagement tactics and comments. Conversion rates, which ought to be top priority, go largely
ignored by the marketers.
Earlier, it was comparatively easy to measure the performance of online advertising
campaigns; marketers could use metrics like cost per click, page views, unique visitors and so on
(Fisher 2009). However, with the advent of social media, measurement of ROI has become all
the more complex; now, marketers would have to take into account not just the online
advertising, but the frameworks that form the foundation for it. The Internet Advertising Bureau
(IAB) had released a report stating its findings on the effectiveness of social media marketing