Does Social Media Create an

Increase in Return on
Investments (ROI)?
Kate Colosimo

MMC 4420

Abstract
Social media marketing is becoming crucial for any business. However,
most marketers report to be frustrated with their social media. They feel it is
ineffective because their social media strategies are disconnected to their
business objectives including a measurement system that can correlate their
social media to an increase in financial ROI. The purpose of the project is to
interview several individuals, who use social media, over the course of one
year. These interviews aim to demonstrate and measure engagements in
social media that can be undeniably linked to business outcomes such as
increases in revenue. Candidates will be chosen based on a released on
social media discussing social media habits. The final data will be analyzed
by trained coders using emergent coding methods to categorize the results.

Introduction
The roles of both the consumer and the company are changing. Social
media and viral marketing are the cause of this conversion. Whereas,
traditionally, companies were in control of their messages and the shaping of
the brands, customers now have a great influence on a companys
promotion, reputation and overall brand. Viral marketing has created
possibilities for information to be quickly dispersed and can influence a large
number of people. Social media is being used by most companies to increase
the companys reach and impressions at an alarming rate. These trends
create some definite complications. One main theoretical issue is it is difficult
to measure social media ROI. Many companies are concerned that the time,
money and manpower that is put into their social media are not translating
into increasing their profits despite the companys exposure.
With social media being such a prevalent force in everyday lives, it is
important for companies to know that their exposure can turn into profits
both on- and offline. Continued research is necessary to guarantee that the
time and money spent on social media does lead to an increase in ROI. With
this guarantee companies can feel safe continuing to invest into their social
media accounts.
There have been several articles and books written about profitability
in social media, but many times the objectives that are measured are only
the companys reach, engagement, brand mentions and sentiments.

(Littlewood, 2015). That is why this research project is significant. There

needs to be more research on how people interact with these companies
social media. Clear social media marketing objectives must include
traditional measurable business outcomes. Questions such as, do social
media impressions turn into purchases, must be able to be answered. There
are a number of different metrics currently used to measure profits.
However, it is necessary to find a way for these metrics to connect
engagement to financial gain.

Literature Review
Viral marketing and social media are important for the growth of any
business as of recently. However, there has been some major challenges with
the use in social media. Although most companies use social media many
feel that they are not gaining the most possible. Marketers understand there
are benefits, but are unaware if simple impressions and engagement are
turning social media into sales.
Wilson (2000) defined viral marketing as any strategy that
encourages individuals to pass on a marketing message to others, creating
the potential for exponential growth in the message's exposure and
influence. He continued, Like viruses, such strategies take advantage of
rapid multiplication to explode the message to thousands, to millions.

There is no doubt that when people talk of viral marketing they are referring
to the Internet especially social media. Kimmel and Kitchen (2014) confirm
this trend, although WOM is as old as the oral tradition, it has gained new
prominence today, in marketing and other areas, as a result of the greater
connectedness of people via social media and the considerable speed with
which interpersonal messages can spread. (pp. 5)
Most businesses incorporate social media into their marketing
strategies because they understand the attachment that people have to
social media. There is a substantial interest in marketing about social media
because of that connection. VanMeter, Grisaffe, and Chonko (2015) discuss
the potential for incredible ROI for a company if there is a correlation
between peoples strong attachment to social media and a positive WOM
dissemination about a product/ company amongst those social media
platforms. In short, Marketers sense that social media is a catalyst to
capitalize on customer generated word-of-mouth.
However, this presents a difficulty in measuring the ROI of social media
and viral marketing. Many studies and articles have discussed this obstacle.
There are several factors that influence social media and viral marketing
statistics such as likes, shares and retweets, but is unclear how to determine
if those impressions turn into definite measureable revenue. (Cronin, 2014).
Drell and Davis (2014) researched that over half of marketers said that they
felt like there social media campaigns were ineffective due to the incapability
of linking social media to business outcomes. Some researchers states that

social media engagement should be used exclusively to judge the

effectiveness of viral marketing and social media when it comes to
profitability within a company. According to Drell and Davis (2014), social
media engagement is not vanity metrics (likes, shares, followers and
retweets), but more so the ability to pull in new customers and build gain
loyalty among old customers via social media interaction. Sponder (2012)
echoes this mentality. He discusses that the social media ROI is increased
brand awareness and customer loyalty.
However, there are others that believe to properly know how social
media affects a companys ROI, it must see that there is a clear correlation
between marketing investment tactics and social media. Powell (2011)
believes that ROI is not determined by brand reach, loyalty and attention,
but can be assessed using the Media Engagement Framework to yield
traditional methods of ROI such as revenue, profitability, sales and statistical
data. He quotes, Our encouragement to the reader is to not be sidetracked
by non-financial ROI arguments; social media can be, and should be, put in a
similar framework as traditional media and the ROI can, and should, be
assessed. (pg. 12)
The two competing theories create the central question to this project:
is there a way to measure financial outcomes based on social engagement
and interaction? What is the most accurate way to measure the success of a
social media? I predict that there are methods that can be utilized that can
demonstrate an increase revenue directly related to social media

engagement. However, I believe this will involve significant and planned

engagement and will take at least one year to discover metrics that can be
used consistently to verify the desired results.

Summary of Pilot Studies

The first round of research was qualitative interviews of individuals
from different backgrounds. There were men and woman, aged from 25 to
58. The education levels were from some college up to a masters degree.
The purpose of the interviews was to observe how everyday people use the
Internet, their social media usage and their online purchasing habits
including what influenced those transactions. Finally, each interview
concluded with the interviewees being asked what viral marketing meant to
them.
There were some similarities amongst the candidates. Everyone had
access to the Internet, and they admitted to spending between two and five
hours online daily. Additionally, everyone was enlisted in some social media
accounts and all had a Facebook account. The interviewees said they went
to a social media website at least once each day, yet not necessarily
Facebook. LinkedIn, Twitter and Teacher Ease were other social media sites
that were frequently visited. They went to these social networks for several
reasons. The main reason all stated was to stay in touch with friends and

family. However, 50% of the candidates followed blogs and articles to keep
up with emerging trends, and 50% said for entertainment value.
The online purchasing habits showed some interesting trends as well.
All candidates admitted to regularly buying products online. The younger
generation said they would browse through social media to get ideas for
purchases. Even two older candidates admitted to purchasing items via
Facebook within the last six months. One interviewee said, I used to always
ignore the advertisements because they were always like Lose 15 pounds by
not eating these five foods. But now I noticed more and more the
advertisements relate to me.
The second round of quantitative research involved a web based
survey. The goal of this survey was to get a more in-depth understanding of
how different people use the Internet and the ways this usage can increase
revenue for companies via online advertising. Moreover, this survey was
collected to see if this rising trend of social media can combat data overload
to help companies achieve profits. The following questions help drive the
survey: does being connected to social media help create online purchases,
and can we use peoples preferences for what drives them to the Internet to
produce advertisements and social media campaigns that will yield clear
financial return on investments?
There were some significant trends in the findings. Everyone had
access to the Internet and used it daily. Although most were connected

online from one to three hours daily,

29.58% said they spend 10 or more hours
online. The number one reason people
went online was to purpose items and the
next most popular reason was to access
social media.

As previously stated, people

purchase items online regularly. They
reported more likely to choose an
advertisement that they were interested in, yet the entertainment value and
suggestions from friends and family had a lot of significance as well.

Research Design and Methods

I believe a mixed method design using both quantitative and

qualitative methods would result in the most accurate findings. It should be
a sequential study starting with a web based survey distributed throughout
different social media platforms. The focus group of this study is Internet
users that spend a place importance on social media. By distributing the
survey through several popular social media such as Facebook, Twitter and
LinkedIn, there is the possibility to gain a general idea about who uses social
media, their social media habits and their social media objectives. This
information will help us greatly for the qualitative portion of the experiment.
As Powell (2011) states it will take a substantial amount of time to
accurately access business outcomes with social media marketing. This is
where qualitative portion of the experiment will show consistent trends and
potential profitability of social media. In depth interviews along with closely
monitoring social media usage of select individuals can lead to inferences
about social media engagement and business outcomes. Business outcomes
include not solely purchases, but also engaging new potential clients and
creating loyalty among older customers while promoting ones brand.
There are several advantages to this type of research. The quantitative
portion will be easy to quickly send out a ton of surveys with little costs.
Additionally, it can be sent to a variety of individuals from different places
and walks of life to help discover significant conclusions about certain groups
of people and their social media usage. Hopefully, this will lead to better
qualitative questions and candidates to confirm and pinpoint the

correlations. These individuals will be asked more accurate and focused

questions that will provide more pertinent data.
There are disadvantages as well. Chances are most people will not
answer the initial quantitative survey on social media sites. Thus, the survey
might have to be posted several times in order to get enough responsive
before getting some clear results that can aid the qualitative section. There
is always the possibility of people lying as well. Since the survey will be
online, anonymous and without video, there will be no way to indicate
whether the person is being honest or not. A disadvantage of the qualitative
work is in order to truly gain whether a person is loyal and promoting a
specific brand, it will take a substantial amount of time. Additionally, due to
the long time period need with the desire for face to face interviews, there is
the potential for higher costs. There is the possibility of several qualitative
candidates choosing to stop participation before the end of the experiment.
Many believe that only the younger generations are using social media
currently. However, the pilot study indicated that people of all ages, gender,
income levels and education are engaged with at least one form of social
media. The initial quantitative study is completely open to any person who
has at least one social media account and agrees to take the survey. The one
stipulation is the person must be at least 18 years old. He or she must sign a
waiver stating that to be true.

Using the results from the quantitative survey, candidates should be

chosen from all demographics. Yet, the number of subjects from each
demographic must directly correlate with the percentages from the
quantitative survey. For example, if 25% of the respondents of the initial
survey are female, 25- 30 year olds with some college education, then 25%
of the qualitative subjects must be female, 25 year olds with some college
education. The reason for this is to help hone tactics of measurement for
social media marketing. It must be a fair representation of the demographics
and ensure accurate, real-world results.
The time allotted for the quantitative portion of research is not
restricted to a time frame but a minimum amount of respondents. This is to
ensure that the base data received will lead to productive answers in the
qualitative interviews. The interviews should be over the course of at least
12 months. This will confirm customer loyalty, and it can spot potential
seasonal results that can produce misleading results. To reduce the effects of
ethical issues everyone that takes part in either the quantitative or
qualitative survey must sign a waiver form that states that they understand
why they are taking the survey, give consent and are at least 18 years old.
The key variables that are studied are the social media engagement
(searches, comments, promotions, shares, recommendations) along with
business outcomes (recommendations, revenue and sales.) By holding faceto-face interviews with social media users and reporting the results of that
behavior, we hope to find a measurable correlation between social media

impressions and profitability. Is the relationship superficial? Can engagement

lead to financial profits? Will the social media campaign achieve the
marketing objectives?
The validity of the experiment will derive mainly from the personal
interviews that will be asked over the course of a year. The main questions
asked during the interviews will be consistent and will ask specific questions
about engagement. One example is after clicking on so-and-sos Twitter feed
did you purchase or inquire further into that company? Those qualitative
questions will be created after receiving ample information about social
media habits and interactions from the initial survey.

Data Analysis
Data will be collected and stored online. For the qualitative research
emergent coding will be used. There will be categories that measure both
business outcome metrics and engagement metrics based on the preliminary
survey. Coders will be trained to have specific and mutually exclusive
categories to assign answers. Every three months or so the data must be
analyzed and the coders will use the Holsti Reliability formula: Reliability=
2M/N1+N2 where M is the number of coding decisions on which two coders
agree and N1 and N2 are the total number of coding decisions by the first and
second coder, respectively. (Wimmer and Dominick, 2014, pp.175). The

results can lead to molding the questions to attain more consistent and
detailed results. Additionally, at that point it can be determined if the
questions are still valid to the subject or if they need to be revised.

References:
Berger, R. (2000, August 14). Money talks: New streams of revenue spark
new argot.
Electronic Media, 19, 12
Cronin, J.J. (2014). Teaching ROI Analysis in an Era of Social Media. Journal of
Advertising
Education Advertising
Education,18 (2), 28-35.
Going Viral is Infectious. (2015,July 31). Slogan, 20(7). Retrieved from
http://go.galegroup.com.dax.lib.unf.edu/ps/i.do?id=GALE
%7CA423528504&v=2.1&u=jack91990&it=r&p=PPCM&sw=w&asid=8
596a0455d03bd532076244a5d8e6917

Kimmel, A., & Kitchen, P. (2014). WOM and social media: presaging future
directions
for research and practice. Journal of Marketing Communications,
20, 5.

Littlewood, K. K., & Bick, G. G. (2015). Developing the Social Media Value
Chain: A Conceptual Framework for the Measurement of Social
Media. Proceedings Of The European Conference On E-Learning,
297-305.

Powell, G. R., Dimos, J., & Groves, S.W. (2011). ROI of $ocial Media : How to
Improve the Return on Your Social Marketing Investment.
Singapore: Wiley.

Sponder, M. (2011). Social Media Analytics: Effective Tools for Building,

Interpreting, and Using Metric. New York: McGraw- Hill.

VanMetera, R. A. , Grisaffe, D.B. & Chonko, L. (2015). Of Likes and Pins:

The Effects of Consumers' Attachment to Social Media. Journal of
Interactive Marketing, 32, 70-88.

Wilson, R. (2000, February 1). The Six Simple Principles of Viral Marketing.
Web Marking Today, 70. Retrieved from
http://crmodyssey.com/Documentation/Documentation_PDF/Principles_viral_
marketing.PDF

Wimmer, R.D. & Doiminick, J.R. (2014) Content analysis. In Lyn Uhl (Ed.),
Mass media research (pp.159-176.) Austrailia: Wadsworth
CENGAGE Learning.

Appendix:
Quantitative Survey Question Example

Here is the template for the online survey.

1. Do you have access to the Internet?
2. In a typical day, how much of your time do you spend connected to the
Internet (including using your cellphone, tablet or computer)?
3. In a typical week, what do you most often use the social media for?
(Check all that apply)
a. Find local events
b. Find people you know
c. Find recipes
d. Get directions
e. Keep in touch with friends or colleagues
f. Keep up with current events
g. Play games
h. Play music
i. Play videos (not video games)
j. Purchase products and services
k. Start new relationships
l. Send/ receive photos/
m. Send or receive videos
n. Research academic articles or books
o. Read other people's comments (on blogs, news stories, etc.)
4. In a typical week, how often do you visit the following social media
websites?
a. Facebook
b. Twitter
c. Instagram
d. Google+
e. YouTube
f. Pinterest
g. Reddit
h. Tumblr
i. Flickr
j. LinkedIn
5. In a typical week, how often do you visit the following social media
websites?
a. Never
b. Seldom
c. Often
d. Always

6. What type of engagement do you participate in while using social

media and how often 0- never 10 always?
a. Like/ Dislike
b. Share
c. Comment
d. Recommend
e. Purchase
f. Look up additional information
g. Review
7. Please, list the reason(s) you choose to shop Online?
8. On a scale of 1 (does not affect my decision) - 5 (highly affects my
decision), please rate the following factors that may influence you to
click on or view an online advertisement?
a. My interest in content
b. Website that advertisement is on
c. Recommendation from friend, family or colleague
d. Entertainment value
e. Number of likes
f. Number of shares
g. Reviews
9. What is your gender?
10.
What is your age?
11.
What is your approximate household income?
12.
What is your highest school level completed?
13.
What is your employment status?
14.
Where do you live?

** The qualitative interview will depend on information gained from the

quantitative survey results. However, some examples include:
1. Will you please explain to me your social media habits including what forms
of social media accounts do you participate, how often what draws your
attention and why those particular sites?

2. Why do you most often go to a companys social media account for the
first time?
3. Will describe why you engage with specific companies on social media?
4. What type of engagement do you most commonly preform?

5. What brings you back to your favorite companies social media

account?
6. How often do you recommend those companies social media
accounts?
7. How often do you make financial purchases, donations, etc. to those
specific companies?
8. What is the longest relationship you have engaged with a companys
social media?

The coders will use be educated to group specific responses into categories.
Once every three months the coders will meet to quantify finds and check
validity and reliability using the Holsti Reliability formula: Reliability=
2M/N1+N2 where M is the number of coding decisions on which two coders
agree and N1 and N2 are the total number of coding decisions by the first
and second coder, respectively.