Measuring Social Media ROI: The Illusion of Last Source Conversion

By in Social Marketing,

Social media is a conversion point for less than two percent of online purchases.

As most web conversion analytics assign leads to the point of conversion, the relative conversation about social media marketing is unflattering to the medium.

These are frequent comments made about social media marketing:

In cases where a brand has been ill-defined or not defined and/or there is a lack of strategy or intent, some or all of these may be true. They may also, in those cases, be true to some degree of additional, possibly all, additional channels a business uses to generate leads.

But let’s stick to social. More data:

Let’s juxtapose this info against the change in the purchasing paradigm:

The “Traditional” Purchase Process:
Meet → Relationship → Familiarity → Trust → Customer

  1. A prospective customer might “meet” you or your product as a result of advertising, relationship marketing or other means.
  2. An ensuing dialogue spawns a relationship that begins to provide initial understanding of each other.
  3. If things feel right, the dialogue continues with each other and third parties.  Provided everything checks out and continues to feel right, trust develops in the relationship.
  4. A customer relationship emerges, either directly or through referrals.

Today’s Purchase Process:
Issue → Search → Education/Value → Expert → Trust → Customer

A person identifies a need. At this juncture the need is “diffused,” meaning broad in nature. The problem is known but options for solving it are not.

  1. A person goes on a search. For 97 percent of all purchases, this begins with an Internet search.
  2. The person becomes increasingly educated about options for meeting the identified need. The “diffused” need is becoming increasingly “focused,” as a specific course of action forms.
  3. Within those options, the person identifies resources she regards as experts providing unique, valuable information helping her solve her problem.
  4. The person researches the resources providing her the most useful information.
  5. She makes contact with the expert. Or, in the case of low-barrier, transactional items, makes the purchase.

In marketing, this process is known as the “Purchasing Phase.” Social media comes into play in steps 2 through 5 above.

Let’s address Step 6: Many marketers see social as a conversion point. Why isn’t it? Because so far, of the more than one billion people who have created a Facebook account, zero of them have done so hoping for the hard sell. Also because 84 percent of the people who like your Facebook page already do business with you. About half of them are following your updates to make sure they get the best available deal when they repurchase.

Email marketing and e-newsletters usually work in similar fashion. Existing and prospective customers who have opted in to these messages may consume content on a regular basis for months, even years, before purchasing or repurchasing, and when they do, it’s probably not directly through the email. It’s because an article in the enewsletter linked through to the website, which became the point of conversion. Similar for online press releases.

Even the most active businesses in social media marketers don’t provide a conversion point for social media. A social media post may funnel the reader to the website/blog, which may contain a link to a conversion point (Hey – wanna buy some marketing?)

In the way most companies track web analytics, this lead would be credited to the website. The mistaken assumption made by the analytics is the prospect came to the website and converted. In fact, she may have made any number of visits to the website, Facebook page, Yelp listing and any number of other online assets over a longer period of time before reaching out via the website or Pay Per Click advertisement or whatever point of conversion was most convenient to her at the moment.

But rarely, if ever, will the conversion come the first time a person has seen your brand name or interacted at some level with your company. Or the second. Or the third…

How to use this Information
Social media is not direct response advertising so ROI cannot be accurately measured in the same way. Understand that most people consume information anonymously and identify themselves only at their point of greatest need. While social media metrics indicate few conversions through that channel, if your content is dependable and compelling, the channel is influencing purchases by pulling prospects further through the funnel.

Being active and present across multiple media is a successful formula used by many marketers. An incomplete view of analytics can trick you into devaluing any individual channel. Understand social media’s role in your integrated marketing strategy and measure its contribution to your overall ROI measurements.

Sources: BIA/Kelsey, Advertising Research Foundation, US Commerce Dept, Fleishmann-Hillard

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A 26-year marketing industry veteran, Mike has assumed active leadership roles at Webolutions since 2010. Achievements include overseeing the digital marketing team and contributing to the marketing success of many of the more than 2,000 websites Webolutions has launched since 1994. Certifications include social media, inbound marketing and local search marketing. Mike’s mom thinks he is witty and insightful. Learn more about Mike Hanbery.

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