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How do you measure the ROI of social media?
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Since the advent of social media in popular culture, with major players such as LinkedIn and Facebook providing a great platform for businesses to engage with new audiences, businesses have been afforded a great opportunity to gain a great Return on Investment (ROI) by adding social media to their marketing campaigns.
It can be a complicated task to quantify the ROI of your social media marketing efforts. In particular, when it comes to organic social media since your overall strategy and content output isn’t tied directly to a specific call to action or attribution links. Even when it comes to paid social, outside of direct-to-customer and e-commerce, it can be difficult to measure how much value your paid ads are returning.
In this article, we’ll go over the critical things to know and the basic steps to take to quantify and measure the ROI of your social media marketing efforts.
Measuring the success of various campaigns is a core aspect of a marketer’s job. It’s essential to see how your marketing efforts are contributing to the business’s bottom line. Yet according to Social Media Today, a great number of online businesses that use social media don’t bother to measure ROI.
It’s odd to discover that most online businesses are conducting their social media marketing completely in the dark, with no clues as to how social media contributes to the success of their businesses. To be fair, it’s not entirely their fault – social media ROI is a tough beast to tame, the bane of marketers around the world.
Social media is a prime tool for developing brand identity and familiarity, building engagement, and creating “soft” leads. There is a good amount of confusion about where social media exists on the conversion funnel, and understanding how social media serves as a place to gather soft leads helps provide some illumination.
Social media ROI is a metric showing the amount of value generated by your investments in social media. ROI is typically measured in terms of monetary value. However, in cases where the direct impact on revenue is difficult to attribute, ROI can first be quantified by non-monetary metrics.
For example, if the goal of a paid campaign on social is to increase brand awareness and influence, growth could measure ROI in follower count or post-impressions.
The metrics used to quantify social media ROI for your own business should depend entirely on your objectives.
Some say that measuring the ROI of social media simply can’t be done! Like traditional billboard advertising, some businesses throw up their social media campaigns and hope for the best, trusting that something good will come of their efforts.
Part of the reason that measuring social media ROI is so difficult is that many companies marketers try to quantify the success of social media campaigns through the social channel, examining such metrics as “likes” and “tweets” that aren’t easy to monetize, while businesses are primarily concerned with website visits, email subscribers, calls and sales. Throwing around foreign terminology that doesn’t relate to the bottom line confuses business executives and can often make marketers sound like snake oil salesmen.
When measuring ROI with social media, it’s helpful to consider how you measure other advertising channels and incorporate familiar business phrasing. If you use PPC advertising, try assessing social media in terms of cost-per-click or cost-per-impression. If you focus on lead gen, try measuring in terms of cost per acquisition, etc. This adds credibility to your efforts and makes it easier to compare social media marketing with other forms of online marketing.
So, to say it briefly, the measurement can show the value of your social media marketing efforts to your brand, prove that your social media marketing strategies are effective and are driving the desired results, identify the areas of your strategy that are most successful, so you can double down on what works and fix what doesn’t. Eventually, It can back up and inform budget allocations for social media.
The most basic social media ROI formula appears as follows:
Profit / Investment x 100 = social media ROI %
It’s easy to use this formula to calculate ROI for social media campaigns and initiatives that can be easily attributed to revenue (for example, paid ads for e-commerce products). Although, things get more complicated when dealing with the investments in social media that bring in less tangible value.
As mentioned, in cases where the direct impact on revenue is difficult to attribute, ROI can first be quantified by non-monetary metrics (increase in audience, number of sign-ups for the newsletter, etc).
While you could simply state your ROI in terms of these figures, the end-game is still to attribute the corresponding monetary value of your investment in social.
To do this, you need to take a closer look at your marketing funnel and customer journey to identify where social media comes into play.
They are just indicators that dissect each portion of your campaign and tell you how it is performing. Each metric will have to be co-related with the results that come from it and translated into financial value to arrive at the total monetary gain from the campaign.
This divided by the cost of the campaign (Manning costs, outsourcing costs, Agency fees, Ad spends) will give you the net Return on Investment. To reiterate, the entire process will be a futile exercise if you don’t have clear specific goals in the first place because then you have nothing to measure against.
So get on with brainstorming that crucial first step and let the campaign roll. Social media done correctly definitely delivers excellent results. Keep monitoring what you’re getting out of it and optimize your strategy accordingly.
Measuring the ROI of paid social media efforts may be more of an exact science compared to organic campaigns. However, it’s important to be able to quantify the value of your brand’s presence on social channels for any type of campaign.
Marketing in social media has matured to a point where measuring its ROI is a critical component of any marketing team’s day-to-day agenda. Whereas a basic social media presence was simply a box for brands to check in the past, today, the way brands leverage social media can profoundly impact the overall success of their business.
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