Many companies are joining social media with enthusiasm as way to reach new customers, but how do you measure a payoff? How can you determine whether you are getting a return on your investment? According to an August 2009 survey, 84% of marketers aren’t measuring ROI on their social media marketing efforts. 40% of the respondents didn’t believe it could be measured.

Many companies that are measuring success of their campaigns are watching for direct measurable results from their campaigns. These will show improvements, but don’t translatedirectly into ROI. These include metrics like.

1. Facebook fans.
2. Followers on Twitter
3. ReTweets
4. Brand mentions or brand searches
5. Page views
6. Unique visitors
7. Time spent on site
8. Search ranking improvement
9. Link acquisition rate
10. Comments and trackbacks

These are great indicators that show a campaign is having success, but they fail to show if they are yielding bottom line results. Senior managers and business owners are looking for financial impact. ROI needs to be tied back to business metrics such as increases in sales, decreases in expenses and profitability.

The best way to do this is to create graphs of the social media indicators that are showing results over time and then overlay these results with key financial results.

As an example, if you can measure an increase of brand mentions by week for the past year against the weekly sales on the company website, you may be able to see a direct correlation to an increase in mentions with an increase in sales. The key is to overlay results from various campaigns to see which are having an impact.

A good presentation of how this works is done by Oliver Blanchard Basics of Social Media ROI.