Is it possible to calculate the return on investment (ROI) of Social Media Marketing activities? I’m sure that this question haunts the minds of many investors, but also of many experts in this field.

Let’s start by saying that there are several agencies / portals that suggest some formulas that might be useful.
For example Marketo.com suggests the usefulness of calculating the SOV (on Facebook pages), acronym of Share of Voice, with the following formula: Number of 
 shares / Number of “Likes”. 
 In this way it is possible to measure the influence of each individual “Like” .
Instead, to calculate the increase in visits generated by a “Like”, Radian6, suggests the formula 
 Number of page visits per month / Total number of “Likes” 
. But these operations do not return the ROI that we want to know!
In the particular case of Facebook, with the Facebook advertising tools it is possible to  know the “value” of each Fan, and before making an investment, you must consider three different aspects:

1. Degree of commitment or loyalty that the user shows towards the Brand

2. Increase in sales or revenue generated by the increased number Likes

3. Influence, that is, to understand what can be the influence of a single fan of the brand on    non-fan Facebook users

From this we can say that the higher is the number of purchases made by the user on a page,  the number of actions taken on a page, the number of friends the user has on Facebook, the higher is the “value” of this user. Unfortunately in numerical terms we can not yet determine a number which is able to assign a value to a user.
The only way to actually calculate the ROI in Social Media Marketing (for now), is to implement campaigns that allow you to send a unique code for social, see the purchases made by people with codes and that, for sure, came from the Social Media channel.

As I said before, many researches have been done in order to understand how to effectively calculate the ROI on Social Media Marketing Activities. I had found also this guide that provides practical advice for developing a goal-based approach to measuring your social media marketing return on investment (ROI).

http://www.icontact.com/static/pdf/Calculating_Social_Media_ROI.pdf 

Enjoy the reading!

Chiara