ROI basics
What is the return on your social media investment and how do you measure that? This is a complicated question, and the answer is not so clearly defined, which is the biggest problem with social media. Social media has several clear benefits: (1) Search engine placement improves when you have one or more social media accounts. (2) New keyword combinations appear in your social media -- particularly forums which can lead to a lot more traffic to your site, (3) New customers can be found on social media which can turn into significant additional earnings in the long run, (4) Customer feedback that you wouldn't otherwise get has a value, (5) Having name recognition helps you in the long run, although its value can't be quantified.

Traffic
So, what is it all worth. I have seen, that our web traffic has gone up by about 15% since the inception of our Facebook and Twitter campaigns for one of my web ventures. We have had a forum for years, and it has been picking up 10-20% of our new clicks to our site for years. Our revenue has not gone up by 15% as a result of the 15% additional visits, but there is a value to those visits. Additionally, our search engine placement went up on many keywords. We were at the bottom of the first page on google for many of our primary keywords for years which is not bad. But, after our Facebook and Twitter campaign, we got to be #1 or #2 on many of those terms which is practically impossible under normal circumstances no matter how good you are. So, social media is a powerful muscle for search engine placement.

Increased earnings
There are different stages in a customer relationship, and each stage is different. We often let new customers on to our directories for free in the hopes that they will be an asset to our browsers, and that one day some of them will upgrade to a paid placement. We attract a lot of new free listings from social media every month. We email our forum users, particularly new ones offering them free listings, and we get at least five per month who say yes. We are getting at leat five Facebook browsers to list with us too, in addition to one or two Twitterers per month. In the long run, this spells earnings, because 25% of our free listings turn into paid listings, many of whom stay with us for years purchasing the highest positions on our directory.

Analyzing what its all worth
My eyeball estimate is not based on any hard facts. I feel that we are attracting 3% more revenue from our enhanced search engine placement. I also feel that the new free signups have a potential income of close to $800 per month in our business. The 3% of total revenues plus $800 per month of potential income, plus branding, and network potential is worth close to $2000 per month in our case.

3% enhanced revenues from better search engine placement -- $800
New free signups with potential for future earnings -- $800
Branding & potential for future networking -- $100
Total -- $1700

My assessment is based on a combination of common sense, analytics and guess work. There is no hard and fast way to determine what your social media network is really worth to you.

Potential and viral marketing
Viral marketing is the new fad. Many people talk about it, but how many are good at implementing it? A hot video on youtube can be networked to millions of people overnight. But, how many of us are smart enough to be able to create such an appealing video? Most of us make mediocre videos if we create them at all. I see our networks as ones that are growing virally, but in a slow way. If our total number of followers on our networks is 4000 and we get 75 new followers per month by viral means (followers networking with others to encourage them to follow us), then we are getting a viral growth of 2% per month. As we get older and wiser, we become more adept at identifying which topics will be more pleasing to our audience, which could translate into a much higher viral growth rate in the future. Lets also look at the long term future. 2% per month is about 25% per year, which means that in the long run we could become a giant in the long run. If you can grow to have a million followeers in a few months, thats wonderful, but slow growth is not a losing proposition.

Keyword ranking
Google picks up blog information very quickly. If you post certain keywords on your blog, or other social media networks, you might find that your search engine placement in those terms rises quickly too. No guarantees, but word on the street is that it works this way, and my experience confirms it to a certain degree. How fast you rise or how high you rise is something you have to take notes on and keep watching.