Social media can be very dynamic. From platforms that are comprised primarily of texts to channels that display multimedia, social media promotes user to user interactions. It has been at least a decade since social media became prominent in our daily lives connecting millions of users to one another. Many large companies already have social media campaigns and strategies in place. However, many small to medium enterprises (SMEs) struggle to see the ROI in social media. In 2012, three researchers, Fabian Kaske, Maurice Kugler and Stefan Smolnik published an article in the IEEE Computer Society journal on ROI, including the measurement of customer lifetime value (CLV) and customer equity.
In the article, Kaske et al. explains that social media amplifies the 3-M framework first introduced by Gallaugher and Ransbotham which states that there are 3 relationships between customer and firms.
- Customer to firm
- Firm to customer
- Customer-to-customer
They also explained that social media amplifies these connections greatly which will in turn affect the ROI of a company.
Kaske et al. uses the traditional ROI formula and substitutes profits with the change in customer equity and the cost as discounted expenditures (total marketing costs and expense put into social media campaigns)
However, the first set of data Kaske et al. chose for their study, this includes large companies such as Dell, Cisco, and Dominos, did not display a clear percentage of ROI in there data. Their final conclusion was that using social media, companies can expect to see ROI in their effects. However, how much of that figure and a ROI percentage figure was not provided.
It seems that there are many articles that provide very insightful ways of measuring social media such as Twitter followers, influencers, and reach or Facebook likes, shares and comments. None of these articles are able to come up with a way to measure social media in its entirety.
Is this really possible? We will see…
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