For most companies, social media marketing is a source of engagement that usually occurs near the top of the conversion funnel. It’s generally accepted that visitors from social media sources typically don’t perform macro conversions (e.g. ecommerce sales or contact form submissions) directly from their social media visit, but usually come back later through another medium such as organic search, paid search, or an affiliate site.

In the past, these bottom of the funnel sources that perform better at closing have received all of the credit for online conversions, thus making it harder for social media professionals to prove the economic value of their efforts. As a result, the industry standard for social media effectiveness has been measured primarily by shares, Likes, Retweets, Pluses, and so on.

But when making a case for social media to acquire a greater percentage of the marketing budget (or even keep its current level), marketers need to prove the economic value of social media. There are ways that marketers can attempt to gain deeper insights into their social campaigns through tagging shared links with campaign data, but this brings up another issue that has been difficult to quantify: the intrinsic value of the individuals who share and promote your content.

For example, if Google were to introduce a completely new web analytics tool tomorrow (completely hypothetical of course) and I were to share the blog post with my friends and colleagues, the Google Analytics blog would probably get a few additional visits they wouldn’t have otherwise. However, the moment an industry rock god like Avinash Kaushik tweeted about the post, the Google Analytics blog would surely get hundreds, if not thousands, of visits from those who are a part of Avinash’s devout following, as well as a tidal wave of Retweets resulting in increased exposure to those not already familiar with Avinash or the Google Analytics blog. Social media measurement companies have attempted to shed some light on this issue with measurement models (like the Klout score), but it is still very difficult, if not impossible, to tie this back to economic value for your site.

Google just announced social reporting at SES New York, which will help marketers more efficiently and effectively manage their social media strategy in two key ways.

Proving the economic value of your social media efforts.

Similar to Google Analytics’ previous launch of Multi-Channel Funnel reports, Social Analytics will allow marketers to view and report on the value that social media adds throughout the conversion process. To accomplish this, marketers can view the amount of social assisted conversions (conversion paths where a visit from a social media site was a part of the visitor’s site session(s) before converting), as well as the number of last interaction conversions that resulted from social networks (conversion paths where the visitor’s source and medium were from a referring social site at the time of conversion). Using this data, marketers can deep dive into the different networks to see which ones deliver high value, which under-deliver, and which show underutilized potential.

Once armed with this data, marketers can reallocate their budgets and resources toward what is working, cut off sources that aren’t performing, and finally deliver metrics to stakeholders that substantiate their request for a higher budget.

Reducing research time spent looking for valuable influencers.

In addition to realizing actual value driven by the various social networks, the Social Analytics reporting section integrates with Google’s Social Data Hub. This allows marketers to tap into data from sites that are members of the Social Data Hub and view the actual shares, comments, posts, etc. that people are posting about your site in your Google Analytics account.

This feature allows your social media team members to more easily identify the actual people that bring value to your business through their social media activity. Through performing this analysis, marketers can then reach out to valuable influencers and create relationships that provide value to each through actions such as leaking content, guest blogging, etc.

As web analytics has rapidly evolved over the past two years, the interactive marketing industry has continued to more effectively prove its value. Advancements like Social Analytics will provide marketers with the ability to connect channels and provide valuable insights that were previously unavailable. Who knows, 2012 may just be the best ‘Year of Social’ yet.