As a digital marketer, you can so far acknowledge that Social Media brings value to an organization. But can you measure the ROI of social media marketing efforts? Social Media ROI can often be tricky to demonstrate.
Moreover, Measuring social media ROI is also key to building and refining a social marketing strategy. It shows you what’s working and what’s not, allowing you to shift resources and schemes to be more effective.
In this post, we’ll give you the tips and tools you need to manifest and improve social ROI.
Social media ROI represents social media activities from the return on investment.
Generally speaking, social media ROI is a measure of all social media actions that create value, divided by the investment you made to achieve those actions. But, Do you know? After all the time, money, and resources put in what’s the return?
And Here’s a simple formula for how to calculate ROI for social media:
Value / investment (hours spend, ad budget, etc.) X 100 = social media ROI (in %)
Now how to measure Social Media ROI for your business.
Step 1: Define clear social media Goals
In this place where you define what value, in terms of social media results, means to your brand. Clear social media goals may help you define how social actions align with brands and departmental goals.
Think about various ways your social media investment might create value, like
- Business conversions (such as lead generation or customer acquisition )
- Brand awareness or perception
- Customer experience and loyalty
- Employee trust
- Partner confidence
- Security and risk mitigation
Make sure you count all your audience. Whether it’s employees, suppliers and partners, and shareholders — all identified as important audiences, too.
Step 2: Set smart targets
Once you’ve established clear goals that link your Social Media ROI to real business results, you need to set smart targets.
Goals define where you want to go. Targets define how and when you will get there.
We recommend using the S.M.A.R.T. framework. Each target must be:
- Relevant, and
If your goal is to grow conversions, a good target might be a specific number of leads you want to drive via social for the quarter. Or, maybe increasing landing page conversions by 10 % by the end of the year.
Whatever the target, be sure to measure past performance to establish benchmarks. Then set targets for improvement. And be clear about how much value each target brings to your brand.
Step 3: Track the right performance metrics
You need to track social media metrics, i.e. awareness, engagement, conversions, and consumer. To determine whether you’re achieving objectives and meeting your goals.
Metrics you could track:
- Audience engagement
- Site traffic
- Leads generated
- Sign-ups and conversions
- Revenue generated
Check your metrics regularly. You can have reports sent to your inbox on specific days of the week so you don’t have to remember to pull them yourself.
Step 4: Evaluate how much you spend on social media
You need to recognize your full investment in social media to determine whether you’re getting a good return. There are several key things you need to include:
- Cost of social media tools and platforms
- The budget allocated to social ad spends
- Cost during Content creation
- Calculate the time spent by your social media team
- Agencies and consultants
Step 5: Test and optimize
Measuring the ROI of social media is about justifying past actions. But, afresh, it can also help optimize your strategy going forward.
For running social Media ads. Experiment with different audience segments and ad formats accordingly.
There are countless things you can tweak to see which deliver the best results, as to A/B testing. As you report your social media marketing ROI, make it clear what you are learning and how those lessons impact value and returns.
For instance, while started using Facebook ads, if you didn’t hit your ROI revenue goals right off the first ad. You don’t need to stop there.
But you have to consistently gain value by learning what worked and did not work for the organization.
Just continue to iterate and test whatever you can weather, try different audiences, ad copy, messaging, images, videos, carousel ads, etc.—until you hit success.
Even use data to create hypotheses.
Social media ROI tools
Now that you know the theory behind measuring social ROI, here are some tools to make the process easier.
Social ROI calculator – Hootsuite
This free tool helps you calculate the return on your social media investment. You can use it to measure ROI for a paid or organic campaign.
Your Return on Investment –
(Total Revenue – Total Investment ) = Total Investment
This handy free tool from Google is a must for tracking website traffic, conversions, and sign-ups from social media campaigns.
It allows you to go beyond one-off actions and track the value of your social campaigns over time by creating and tracking a conversion funnel
This is a piece of code for your website that allows you to track conversions from Facebook ads—from leads to sales. That way you can see the full value each Facebook ad creates, rather than just clicks or immediate sales.
You can use the pixel feature within Facebook’s own ad platform or with other social ad optimization and targeting tools.