By: Samantha Bedford

Are you wondering what the ROI of Social Media really is? Advertising on Facebook holds such great promise, and most of the time its been a source of frustration for marketers. This is particularly true for marketers who are used to the transactional nature of search engine marketing and bidding on paid search terms. When the platform was in its infancy, a major KPI was Likes. Many an agency or in-house team concentrated on the mathematical formula to determine what a Like was worth. Fast-forward a few years when organic reach is near zero for most brands, and the answer is very close to $0.00. A Like holds no more intrinsic value beyond a person being vaguely aware that you exist and at one point in time proactively made a tenuous connection with your brand.

What’s the ROI of Social Media?

This is a question that has plagued social media managers, directors and anyone who was professional enough not to call themselves a guru. Thankfully, tracking online sales came along, and as marketers we could determine that spending X for a given client would give us an expected ROI of Y. This is great, problem solved. The world finally knows what value to place on an ad on a social media network.

Not So Fast
The problem with this line of thinking and tracking is that it only pertains to online sales. There are a lot of stores that sell most their products in brick and mortar locations. As a result, online tracking is only telling half the story.

The first step towards Facebook solving this issue was coupled when they rolled out their Local Awareness ads. The concept was simple. The platform would display ads to people who lived, and worked in areas close to your storefront.

The next step to solving the problem was to show marketers how many people had seen an ad that were recently within a certain distance of your location. This meant that for the first time on the platform, marketers could confidently determine that someone who viewed or clicked on the ad later made a visit to the store. Finally, social had a starring role in the ROI discussion.

Closing the loop on tracking the influence of social media marketing efforts is tying in actual purchase data to determine what impact your ads had on actual sales in the store. Facebook does this by matching up attributes from your sales data to people that they’ve shown ads to. In a perfect world, you would have the Facebook user ID (so you don’t lose any potential insight due to matching rates) of every single customer who buys something from your store to have a full picture of the ROI of your ads, but that isn’t always realistic.

Short of that, if you have name, email address, phone number, or physical address, you’re off to a good start. Facebook will match up that data to the audience that was shown the ad and as with any matching effort, you’ll find that you won’t find 100% of that audience. Someone may give you a different email address than is associated with their Facebook account, or they might give you a landline phone number rather than their mobile number. Regardless, this information is still helpful in determining ROI. When you’re uploading this data to Facebook, also make sure to update purchase amount so you can track the actual ROI of a given campaign.

In Conclusion…
As with all Facebook efforts, this process is constantly evolving and it will get better over time. Even if you only match a portion of your audience against your sales data, you can learn valuable things about the customers that you are converting and apply those learnings to your campaign. As always, keep testing, iterating and finding new and interesting ways to reach your customers.

Learn more about how Pico can assist in the ROI of social your media.