How does social media help in measuring the return of investment of a company?

[IndiaMART]

With social media being a prominent mode to gain popularity, companies streamline their efforts to build an entire presence through twitter, facebook & other popular social media outlets.
Talking about ROI, it is indispensable to form parameters before measuring the profits for a company.
Hence, business and marketing professionals who embark on the journey of social media should define what they want to achieve from using social media outlets

[Jack M]

Honestly, they don't measure it because it's nearly impossible to measure. The fact of the matter is that social media is free (or extremely cheap) and the exposure couldn't hurt. I don't believe there is a tool yet to measure the added ROI a company receives from said exposure yet. That may be a very rewarding task for a young entrepreneur, though.

[Proud Indian]

Comapnies and Business Services using FREE social media for their presence are investing a very small negligible amount for doing so. Say, by appointing some internet surfer or a marketing company to register them on several social media, creating blogs, registering with Directories, etc. If the business is of Website base, then the ROI is expected to be measured by parameters of no. of manhours and the expenses + Internet charges if they do it of their own at their own office, and the no. of visitors they get back in a month or so, on a regular basis.

If the business is not web based, then their full exercise is going to be simply a FREE advertisement for them, which may or may not have an impact, as compared to the conventional print media advertisement or Paid Membership in Directories such as IndiaMart. Yellowpages etc.

I expect the craze of FREE social media will end up abruptly sometime in the future, when everyone tries to feel his presence there. Also the social media is unreliable due to their irresponsible behaviour as has been the case with Facebook.

[AiDASiNC]

Social Media is a good indicator about how your brand is faring in the online markets. Most companies like Dell and ICICI are using the social sphere aggressively to address their target markets. Be it discount offers or customer care issues.

This makes it important for organisations to monitor this media to explore business opportunities and intercept bad word of mouth.

So while it might be difficult to measure the ROI in financial terms, I guess it is something Brand Owners cannot miss out.

[Nan Ross]

There are number of factors to measure the ROI of a company. These would be metrics and measurements that can contribute to a company's longevity. These measurement includes but not limited to: reach (# of website visits, relay and #post), relevance (engagement and authority) and outcomes. The outcome is the ROI that can result in exposure, as Jack mentioned, customers satisfaction, increase in leads and sales.

Try reading the book: Implementing Word of Mouth Marketing by Idil Cakim. She has a whole chapter on measuring word of mouth. http://budurl.com/642k
A matter of fact, she will be my upcoming guest on my show.

[Natalie C.]

Investment in social media efforts CAN be measured and should be tracked with a beginning baseline and an end goal in mind. Mashable has a great article about social media ROI that includes an informative and entertaining slideshow by Olivier Blanchard. (http://mashable.com/2009/10/27/social-media-roi/ )

Here's the overview:
A business that wants to track their ROI from social media should start with a baseline of your company's current growth, website visitors, online transactions, telephone inquiries, etc. If you don't have this information, start tracking it.

Next, create an activity timeline that tracks all new social media projects: blog launches, new Twitter campaigns, press releases, etc.,

By stacking these timelines on top of one another, your company can create a picture of which efforts are working, and which ones aren't. Over several months, you can graph your progress and watch for correlations between events, such as certain blog articles equaling more customer calls, or positive online mentions and a jump in site visitors.

Keep in mind, though, that another part of a good social media campaign and tracking ROI is having a goal in mind when you start so you know where you want to be. Your goal could be monetary return (more sales), or non-monetary (brand awareness, increase in social media mentions). It's not too late to start tracking your progress so your business will know how your social media efforts are affecting your company.

-natalie, Red Humpy Design
http://www.RedHumpy.com/blog