It's a play on the standard business concept of return on investment, or ROI as it's known, which compares the cost of an activity with its financial yield to calculate a profit or "return."
Some marketing professionals have started abbreviating return on engagement in social media as ROE, although that acronym more often is used to mean "return on equity" in business financial discussions.
Defining EngagementUnderstanding the core concept of return on engagement requires understanding what it means to "engage" in social media, because the phrase is used to emphasize the importance of engagement in evaluating the successful outcomes from social media efforts.
Engagement in social media refers to interacting with other people or participating with them in a media conversation; it's two-way communication, as opposed to one way. Thus, return on engagement first seeks to define meaningful types of engagement occurring in social media, in order to be able to measure them.
Return on engagement seeks to measure how much time and money a company or individual spends communicating with other social media users, and then tries to measure the potential benefits--especially financial ones--in order to calculate a "return" on the initial investment spent to earn that return.
Figuring out the return on social media can be difficult, though, because social media is a fast-evolving environment, and most companies haven't done a great job of quantifying the possible outcomes from their social media expenditures.
To calculate anything meaningful requires having a clear idea of what a company is trying to achieve in social media--in other words, its goals, in order to measure inputs and outputs in the context of particular outcomes.
What Social Media Activities to Measure?One approach is to identify specific social media activities that will be used to reach the defined goals and can actually be measured--will it be Facebook Page posts, comments and likes? Pinterest pins and favorites? YouTube video views? An entirely new field of social metrics has arisen around these activities.
What Kind of "Return" to Measure?What are the measurable "returns" for each of these activities? The nature of returns or outcomes is something that most companies must definefor themselves, because social media marketing is still a young field with a wide variety of possible benefits.
Suffice it to say, though, that revenue is only one type of return from social media activities.
Another type of return in business comes in the form of emotional benefits from improving people's impressions of a company and its brands, products or services.
Yet another benefit stems from the voluminous data surrounding social media--the mere fact that you can now measure many more specific activities, interactions and online communications and therefore learn new insights about customers and demographic groups. The explosion of this data has given rise to a field known as social analytics.