Don't bother to read Mashable's article "5 Dead Simple Ways to Track Social Media ROI" for the 5 simple ways, because they are so simple you've probably heard them before. (Like coupons, unique phone numbers, and Google Analytics.) But, to give the author credit, he does introduce a bit of the "Can you -- should you? -- measure social media?" discussion right at the end.
You should take a look at the article for the comments, where you'll get an interesting snapshot of what people think about the topic. And definitely don't miss what Olivier Blanchard has to say; his little lesson on how to measure ROI and what to do with it may well teach you more than does the article itself.
Remember that ROI is a specific calculation: Subtract the cost of the investment from the gain of the investment and divide that by the cost of the investment. The equation looks like this:
ROI = (R-I)/I, where R is return and I is investment.
There are plenty of times when an investment's ROI is very difficult to measure, like for instance when you take a client out to lunch, or the office Xmas party, or, yes, social media. That doesn't mean it's a bad investment, it's just hard to express its value with the ROI equation.
What you can often do -- and this is especially useful for social media -- is to express the value of an investment in terms of an organization's goals or objectives. Here's a paragraph from Beth Kanter and Katie Paine's book "Measuring the Networked Nonprofit" on the topic:
What you want to communicate is how your organization has received value from your efforts, that is, the impact that your effort has had on the mission. These are your results expressed in terms of measurable goals. For instance, to express the results of your social media campaign so that leadership will have a clearer picture of your success, say, “Our latest social media outreach program supported our goal to change policy because it generated increased Web traffic and greater exposure of our messages.” Or, conversely, “We found that pod-casts generated 50 percent less engagement among our target donors than we achieved with video, so we are shifting resources accordingly.”
--Bill Paarlberg, editor