One of the biggest obstacles to Social Media being perceived as a legitimate marketing activity is its measurability, especially for companies with an annual revenue of $1 million or less. Paid Search and SEO have fairly specific metrics of effectiveness that can be easily related to the bottom line. Social Media, on the other hand, is less focused on end-result outcomes and is therefore harder to measure.

Yet in a lot of ways Social Media is a very familiar kind of marketing. Social Media can be broken up into two broad categories:

• its creation and dissemination, and
• its consumption.

The majority of participants in Social Media are not involved in its creation or dissemination, but instead simply consume it, in much the same way as people consume news or broadcast media: through a trusted channel that provides new and novel content.

This insight suggests a simple way to measure social media: essentially in the same ways as you would measure traditional marketing efforts.

This strategy doesn’t capture many key benefits of Social Media, and also doesn’t take into account the emergent and interactive effects of combined marketing strategies. However, with this strategy you can start your company down a path where the simplest benefits of Social Media can be implemented and measured.

Charlene Li at the excellent Forrester Research group has explored this topic extensively, both in research articles and in a blog post outlining some of the key benefits of Social Media and its value. She argues, for example, that raw blog traffic can be compared to the effort of print media to get a similar number of visitors to the site. Li argues that companies can start to do analysis of Social Media immediately with this approach.

How would this work for your company? There are five steps:

1. Characterize your current marketing efforts. Make a list of all the marketing or client-focused activities your company is involved in and their costs, including resource costs. This list would typically include things like trade shows, focus groups, PR efforts, and print advertising.
2. Define your efforts’ value. For each effort, identify an item of value that is an outcome for that effort. This could be leads, page views, user feedback on a product, etc. Try to keep these values as close as possible to traditional marketing measures of success, such as “views”.
3. Develop or estimate a “cost per value” metric. This should be based on the costs and values identified in (1) and (2).
4. Contextualize your Social Media effort based on the values of your marketing. Categorize the expected outcomes of a Social Media effort in the context of the values defined in (3) so that you can compare the costs of the Social Media effort with existing efforts.
5. Test and Review. Run your Social Media campaign for a quarter and review the results. Use this time to identify both new “values” and to tweak your cost estimates.

Strong supporters of Social Media and marketing have objected to this model as being too simplistic and atomic. We accept those limitations because in order to be able to measure the emergent values of Social Media, we have to be able to measure the ways it matches up with older marketing efforts, particularly in environments where its essential value must be measured in order to justify further effort.