ROI stands for "Return On Investment" and it means: What tangible value we get in return when making any investment, in the Finance ground ROI means: "the money we get back from any Dollar invested".
The technical formula is:
ROI= (gain from investment - cost of investment)
cost of investment
Oliver Blanchard (http://www.slideshare.net/thebrandbuilder/olivier-blanchard-basics-of-social-media-roi) proposed a way to measure ROI for Social media taking in account the time "before Social Media" and "after Social Media. This means that before we were investing in Social Media we had specific results in revenues, transacctions and more, and that we can measure results after investing in Social Media, because, although most Social Media is free in the Internet, it has a cost to manage it, you have to pay for people, computers, technical connections, designers and more.
Three different methods to measure ROI of Social Media marketing are:
- Sales revenue
- Number of transactions
- Net new customers
FRY (stands for frequency, reach, yield)
- How often customers transact.
- How many customers you are reaching.
- How much they spend.
