Wondering how to calculate social media ROI? If you are overwhelmed and don’t know how to start, then you are not alone. Most marketers find it difficult to calculate ROI, especially from social media, because the connection between social content and conversions is not always completely clear. That is why I have developed this comprehensive article to help you calculate your social ROI from scratch.
Whether you are running social media campaigns to increase brand awareness or to improve customer service, measuring social media ROI informs you of your progress. It also helps you to make better strategies to achieve your business goals. When you get clarification on your social media ROI, you can determine how to shift resources to the marketing campaigns that go from meaningful engagement with your audience to completed purchases.
Social media ROI (return on investment) refers to the amount of value you generate from your social media marketing investments. Simply put, after all that time, money, and efforts invested on social media, how did you get in return?
Even though some companies may measure an increase in revenue against social media ROI, it should not always be the case. There are many other things a company can gain from social media marketing other than revenue. For example, better audience engagement through comments, likes, and shares is a sign of a good improved ROI. You can also look into the actions your audience performed after viewing your content. Did they buy your product? Did they join your email list?
Value in terms of social media ROI should not only be defined in terms of revenue but might also include monitoring the affect conversions along the buyer journey, or any other action of value for your strategy..
To some companies, investing in social media marketing is a time-sink. And this is partially true. Businesses can spend countless hours and money on social media without getting any significant returns. However, many brands are making a killing through both paid and organic campaigns because they provide the right message to the intended audience. What I would emphasize here is that it’s not just about using social in your strategy, but putting in the effort to do it properly.
Social media ROI shows if you are making progress on your campaigns and also reveals how you can improve engagement with your prospects. Analyzing your social media revenue also enables you to be accountable for your marketing efforts. Regardless of the channel, measuring ROI is integral for the growth of both a business and a marketing strategy.
If you want to squeeze the most out of your social media marketing and convert your audience into customers, then measuring your social ROI is a must. You need to know if your messages are compelling and relevant, or otherwise it shows that you don’t understand the needs of your prospects at all. So now let’s dive into the steps of determining social media ROI.
By the way, not all companies use social media to directly improve their revenue. Some are on social media to simply increase their brand awareness, while others are concerned about customer service and community building. You can use social media for all of these reasons, but it is crucial to define the primary purpose. To measure your social ROI, you need to identify the “why” for your social media presence. Once you’ve defined what your “return” is, then you know how to calculate its performance against goals.
It’s impossible to measure your social media ROI without having metrics. You should set measurable and realistic goals for any social media campaign to figure out your social ROI. Metrics such as likes, comments, and shares should not be your main goal. Unless you are focused only on engagement and brand awareness, you should go for bigger goals that are based on defined actions. These actions should be able to convert a casual browser to a lead and finally to a customer. Examples of these actions include email list sign-ups, purchases, downloads of whitepapers, and trials.
A user clicking a link to your website from a Facebook post is not enough. You should be able to track the actions of visitors past the click and learn what they do when they land on your website. Do they perform the action you intended, such as downloading a checklist or joining your email list? Whatever your intention may be, you can clearly track SMART goals with Google Analytics.
After defining your social media goals, you need to monitor them. It is easier to track goals that are defined by actions taken by visitors. And that is why I insist on measuring your ROI using actionable goals.
Here again, Google Analytics will help a lot by tracking metrics such as:
…And much more.
You need to be clear on the amount of money you are spending on social media to be able to determine your ROI. Here are the vital elements to include in your ROI calculations:
Social media tools and platforms: Even though most social platforms are free to use, do you pay for the premium versions? There are also software tools used for social media management so you need to calculate for their monthly costs.
Content creation: Do you outsource writers to create content for your social media campaigns? Does a copywriter create your landing page? Add these costs to your social media expenses. If you personally create social media posts, then you still need to calculate your time as a part of the investment.
Time: How much time does your team spend on social media? Whether it’s promoting content, engaging your audience, or running ads, add them up to a definite value. Then compare this value to the metrics and goals you created for social media campaigns. Are they proportional to the time you have invested? The old saying “time is money” rings true here!
Cost of social ads: if you are running any paid ads on your social media platforms, then you should include their cost to your overall ad spend on social media. This aspect is pretty cut and dry regarding the cost.
Once you have added your total spendings, calculate your social media ROI using this formula:
Earnings ( value of the metric) / Costs (total investment) x 100 = Social Media ROI (%)
Earnings are based on the value of the metric, as shown on Google Analytics. Costs are the total investments you have made within a specific period to realize the metric. They include the time, the ad costs, and the content creation fees, etc.
If the ROI comes out as negative, then you need to adjust your spendings or improve on your social media marketing strategy. If it’s positive, then you’re doing good, but you should still work on improving it or scaling up. The most expert marketers never tire of optimization.
Once you have calculated your ROI, you need to find ways to optimize it to align with your business goals, so here are a few tips for doing just that.
Running A/B test campaigns will save you time and money. The process involves using different variations of your content (posts, ads, copy, and any related aspects) to see which one performs the best. Such information helps you increase social ROI, especially for paid ads, by choosing the right campaign.
You don’t need to use many tools to measure or improve your social ROI. There’s actually quite a lot you can already use for free. Google Analytics is a great example of a free social media tool, because you can use it to monitor your parameters in combination with Google URL Builder to add these parameters to your campaign links. You might also use social management apps to schedule, track, and manage your social media content.
Providing content that addresses the needs of your target customers increases your social media ROI. You can know which types of content work best by testing, especially A/B testing and also by monitoring engagement. However, there always needs to be a balance between content that gets engagement and content that converts. Sometimes they’re the same and sometimes they’re completely different.
Customers love getting personal attention from brands they admire. Respond to comments even if the users are not asking a question. Engaging your followers on social media helps to build trust and loyalty among your existing customers. After all, social media is the best possible way to initiative individual communication with basically the entire globe. Kim Kardashian would know.
The social media platform you use for your campaigns should match your intended audience and as well as your goals. LinkedIn and Twitter are preferred for B2B marketing, while Facebook dominates B2C marketing. YouTube is also the second-largest search engine and you can use it to amplify exposure to your ad campaigns or create your videos. The key point here is that you should use the channels that your audience will be on, or use supporting channels to point your audience to a main channel (which many B2B brands do by going from Facebook to LinkedIn).
Now that you have learned how to calculate your social media ROI, what are you going to do next? We are social media experts ourselves. We will help you improve your social media ROI by presenting workable strategies around your social media goal.
At IDI, our experts will help you define your social media goals, then create measurable metrics to track the progress of each of these goals. Through our social media marketing strategy service, we will define your buyer persona and create content that meets the needs of your audience. Because we understand Google Analytics, evaluating the performance of your metrics is our bread and butter. Let us help you make the most of your social media campaigns. Get in touch with us!
Adriana Stein is an Online Marketing Consultant based in Hamburg, Germany. Originally from the US, she is a native English speaker and specializes in helping companies with their SEO & content marketing strategies, along with graphic design, brand copy and website development.