Many people consider that social media are a free communication channel, because some free tools are used and because those who first started to use social media tools did so because they liked to share and to be cool.

Nevertheless, social media is not free, since any organization needs some resources in order to be efficient in terms of social media:

- talented people, who should be spontaneous and skillful enough in order to represent an organization in the social media;
- technology, in order to generate diversified content (e.g. video), and not lastly to analyze and measure the impact of this communication channel;
- time.

How and what should we measure?

Most of the time, most people measure social media with social media indicators, probably because the word “media” exists in the name… so it comes to evaluation most people speak about:
- followers
- number of comments
- retweets
- referrals
etc
… which are very okay to look at, but they are NOT business indicators.

Okay, these indicators will help you measure how much your audience is involved, you can see whether you are popular or not… but what is happening with the money?
Generally speaking, the flow of an investment would look like that:
1. Investment
2. Action
3. Reactions of clients, followers, etc.
4. Non-financial impact;
5. Financial impact.

The non-financial impact can be measured by calculating how many times your organization’s name has been mentioned, and it can be mentioned in contexts that are associated to feelings: positive, negative or neutral.

But in order to get closer to how the ROI of social media should be evaluated, we should take the “F.R.Y.” factor into account, i.e.:

Frequency – how often your organization interacts with clients and how often your clients will interact with your organization, which is ultimately quantified based on the number of transactions;
Reach – the number of persons your social media reach to, which is ultimately quantified according to the number of persons from whom those transactions were generated.
Yield – the average value per transaction.

Measuring and analyzing data are again activities that generate costs, and these actions are critical in order to evaluate or success or failure of your presence in the social media. And this is where a very interesting issue occurs: what would happen whether you did not actually do it, whether you were not present in the social media?

This issue is almost impossible to asses. One option is that – for a limited amount of time – the proportion of the sums that are allocated to the various communication channels should change and that FRY indicators should be monitored, in order to see what happens when you appropriate to the social media budgets that are higher than those which you set aside in another period when the funds were lower.