Social Media & The Concept Of ROI
Posted by Mitch Mitchell on Jan 15, 2012
I belong to a consultant’s group where monthly we have a presentation on something that most consultant’s probably need to know for their business.
A few months ago I was the presenter, and I gave a shortened presentation of the one I did back in 2010 on social media, which was a 5 hour presentation. I had to strip it down to 50 minutes, which wasn’t all that hard since I concentrated only on certain things for these folks, most of whom are older than me.
It’s that “older than me” part that makes it interesting because I always get the same question from the same guy: “Have you gotten any business from it?” When I say I have the next question is “what’s your ROI?”
That, for the uninitiated, stands for “return on investment”, and for many businesses it’s a critical question that has to be addressed. For instance, if you spent $25,000 on a print campaign that involved paying someone to create flyers, going to the printers, mailing everything out, and it resulted in an overall loss or a profit of less than $5,000, you’d probably have to say that your ROI was pretty bad.
When it comes to social media, evaluating ROI is much different. If you’re going to base everything on costs, they could end up being minimal or costly; it’s up to you. For instance, you could start a campaign of Twitter posts and if you do it yourself there is no cost, assuming you’ve already got everything else in place if you’re sending traffic somewhere. The same goes for Facebook, LinkedIn, Google+, or anywhere else, even if you own a brick and mortar business.
Or is it cost free? See, with social media, even if you do it all yourself there’s an inherent cost; it’s just how you decide to evaluate it. The cost is in time and what your time is worth.
Let’s look at this in two ways. One, do you count the time if it’s outside of 40 hours, which is the American standard for working hours? Some might, since many of us (yeah, even me) work more than 40 hours if we own our own businesses. Some might not if they stick with traditional times and consider anything else as free time.
For someone like me, based on which business I’m doing at the time, I get paid anywhere between $50 and $250 an hour; yeah, I’m like that. Anyway, this means that if I’m putting in a 10-hour day and 2 hours of that happens to be writing my blog posts, which you might not think about like this but at least 4 of them I consider as business related in some fashion, then it’s costing anywhere from $12.50 to $62.50 each time I write a blog post (I average 10 to 15 minutes per post most of the time). If we look at one of my business blogs, where I try to write a post every 3 days, that averages out to around 120 posts a year, and if I use the lower figure it means it costs me about $1,500 a year of an investment towards writing that blog; that’s not counting responding to comments (I don’t have a lot yet so y’all need to go check it out).
Since posting a link to these social media platforms takes almost no time whatsoever, this pretty much means that I need to generate at least $1,500 a year from that business to break even. Of course I just started that blog in August, but already I’ve made that much, though it wasn’t from blogging, but it doesn’t matter. The thing is that as a marketing campaign, one isn’t always sure where they’re getting their business from, but even if it was related to the blog I could still say that, based on time, I’ve about tripled my initial investment.
Here comes the next stage though. What if you want to pay someone else to handle certain social media aspects of your business? For instance, say you hired someone like me to write your blog posts for you. I’m not saying this is necessarily my fee, but say it costs you $400 a month for a certain number of blog posts, and those posts automatically go out to Twitter, LinkedIn and Facebook (although I know Facebook just shut down one program and I’m not sure if there are others still working right now)? The approximate cost to your business is $4,800 a year; do you have the kind of business to overcome that amount of outlay? Is there the possibility that your business will generate that kind of money online, or will it come from offline sources?
That’s just it; you don’t know. Do you consider it offline if someone found you on Google and called you up, as opposed to contacting you via email? I don’t, and we all know that more content on one’s site helps them gain more prominence on the search engines. If you’re someone like a Marcus Sheridan, whose business is swimming pools, how many sales would he have to make because someone called him because they found him on Google to have made back all of his money if he paid someone to write his posts (which he doesn’t)? For that matter what’s his ROI now from blogging and obtaining business? I’m thinking it’s probably pretty good.
Every person has to evaluate for themselves whether they think they’re getting out of social media what they’re putting into it. However, you can’t make an evaluation if you don’t try. So, what are you waiting for?