Investment In Social Media Research Paper Example | Topics and Well Written Essays - 1750 words

Investment In Social Media - Research Paper Example As such, business owners and online shoppers are finding it irresistible. However, even as more business owners continue to use social media for business, they face the challenge of measuring the time they should consume online and assessing the value of social media investment (Ghali, 2011). Specifically, business owners lack the knowledge of determining the Return on Investment (ROI) with respect to social media investment (Burg, 2013). This paper seeks to address ROI in perspective of social media and equally draw the relationship between social media, E-commerce and social commerce. Moreover, the paper will also discuss marketing through social media. It is quite clear that business owners encounter various challenges with respect to investing in social media. Among the social media challenges they face include lack of time, lack of knowledge on how to determine the return on investment, and absence of social media operational skills. Nevertheless, determining the social media RO I remains as the fundamental problem to most business owners (Kelly, 2012). In addressing this challenge, we should first define ROI. ROI is the most common profitability ratio that establishes the efficiency of an investment. In this context, ROI will measure the returns from a social media investment. However, it is factual that calculating ROI is difficult, may not be perfect, and depends on the applied returns and costs. Actually, there is no universal way of measuring the ROI of the social media commitments (Kelly, 2012). As such, some business owners tend to count how many Facebook fans and Twitter followers they have or how many retweets and likes they enjoy. However, this may not be an effective measure of ROI. We can measure ROI using metric tools that foster conversion measurement and  optimized CPM, which enables Facebook ads to reach the target audience (Burg, 2013). This enables the investor to know who clicked through their ads thus enhancing future business planning . In addition, we can measure ROI by analyzing interactions by multiplying the number of received likes by the number of friends of those likes witnessed the action. This defines how far the advert went. Moreover, we can analyze traffic to determine the ROI in social media efforts (Harden & Heyman, 2011). Indeed, different social media understand the business owners need to evaluate their ROI in social media and thus there is a provision for built-in analytics tools for following engagement, likes, and shares (Burg, 2013). This helps the marketers to determine how often people find the marketer’s page through the social sites. For example, on Facebook, one can analyze the comment to like a ratio of posts while on Twitter, one can analyze the retweets to tweet ratio. Notably, the higher the ratios, the higher the ROI is. In addition, we can analyze the website analytics against pay per click or the average cost of those PPC campaigns per person in relation to the free social m edia placements (Burg, 2013). This derives a clear picture of the effectiveness of the social media investment. Another mode of measuring ROI is by determining the number of people that has a potential of interacting with the marketer while using the social media (Ghali, 2011). This enables th