Looking for the ROI of Social? It’s $1.50

For every $1 spent, social marketing returns an average of $1.50. That’s what we found after analyzing results from all the Market Mix Modeling (MMM) studies conducted on BzzAgent social marketing campaigns for several of the world’s leading CPG companies.

(Here’s the press release on the study)

The MMM studies were conducted on 21 campaigns by top measurement firms including Nielsen, Genpact and Foresight ROI between 2009 and 2011. We’d love to be able to discuss the companies involved, but as you can imagine, they hold their ROI cards pretty close to the vest. They are valued clients and we respect that. We can say that they are all large CPG companies, including 3 of the top 10, with products sold at retail nationally.

An average ROI of $1.50 for social marketing is great validation about the financial impact social can make on a business. In some cases, the studies have shown that the ROI has been as effective as anything in the brand’s marketing mix. It’s important to look at ROI in the big picture. We know that ROI analysis practices can differ in every company.  So a lower ROI may still represent a very successful campaign when evaluated in the context of the overall marketing plan.  The great thing is that sophisticated analysis like MMM enables you to do that.

If you are not familiar with MMM, it’s considered the gold standard in media measurement. Some of the biggest marketers in the world use it to quantify the drivers of business performance across all marketing channels and activities.  It is a comprehensive process led by specialty measurement firms and it is usually conducted once a year.

What does this all mean? Two things:

1. Social ROI Can Be Measured Accurately.  Social marketing can be measured using the same sophisticated analysis used on all other media investments. Marketers don’t need to make up new metrics or rely on inexact assessments of influence and engagement to evaluate business impact.  Social can be measured apples-to-apples with other media in the marketing mix.

2. Social is an Effective Sales Channel.  We’ve always known that social media has a tremendous influence on our purchase decisions, but its actual business impact has been unclear.  When social marketing is focused on product attributes, with the right targeting, cultivation and measurement practices, it can be a highly effective sales channel for brands.

Social media is used many different ways in an organization. Each department has their own communication goals, so their metrics of success should reflect that.  If you are in marketing and looking to support the sales effort of the company, then social media can be an effective tool for driving sales.  With the right practices, it can be managed and measured the same way you evaluate marketing investments in every other media format.   As we’ve seen from this data, often its social media that comes out on top.

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