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How to Measure Social Media ROI?

by christie Callihoo - 02 Aug 2022, Tuesday 153 Views Like (0)
How to Measure Social Media ROI?

If you work in a digital marketing agency or a social media marketing team, you must be able to monitor and determine your social media ROI (Return On Investment). It shows the cost of your social media campaigns in dollars or euros, so you can invest more in successful strategies and less in unsuccessful ones.

The relevancy of social media is increasing as shopping posts and social commerce become a reality. Social media is a significant component of any marketing  advertising strategy  to increase brand awareness and ROI.

Calculating the ROI of your social media marketing efforts can be challenging since your entire strategy and content output aren't connected to certain CTAs or attribution links when it comes to organic social media.

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.

What Is Social Media ROI?

The social media ROI is a measure that demonstrates how much value your social media investments have produced. ROI is frequently quantified in terms of money. However, ROI can first be measured by non-financial criteria in situations when it is difficult to trace the direct influence on revenue.

For instance, if the objective of a paid social media campaign is to boost brand awareness and impact, ROI could be determined by an increase in the number of followers or post impressions.

Your goals should be the only determinant of the metrics you employ to measure social media ROI for your own company.

Why Is It Critical to Measure ROI on Social Media?

For your company, tracking social media ROI should be a top priority for several reasons:

  • Show how important your social media marketing is to your company's success.
  • Demonstrate the effectiveness of your social media marketing initiatives and how they are contributing to the desired outcomes.
  • Determine the components of your approach that are working the best so you may focus more on those elements and improve the ones that aren't.
  • Budget allocations for social media are supported and informed.

How Do You Calculate Social Media ROI?

The simplest formula to calculate the ROI is:

Profit/Investment X 100 = Social Media ROI

However, your company’s goals and the measures you choose will determine how you calculate ROI. You can select from a wide range of social media objectives. It relies on your main objective, which can be:

  • New followers
  • Click-through rate
  • Conversions
  • Lead generation forms
  • Downloaded content (e.g. eBook, whitepaper)

Common metrics to help measure social media ROI include:

Engagement: Engagement on social media, one of the most popular and useful metrics, reveals the frequency with which users connect with your content and brand.

Reach:  The focus of this metric is to find who sees and engages with you on social media. It considers audience size, shares, and the number of times your social media post is viewed.

Leads: Social media contributes to lead generation, thus it's critical to understand which platforms deliver leads and what content encourages those leads. Knowing your lead counts is helpful to demonstrate execution.

Conversions: Knowing at what level your social media material and posts convert is crucial when you invest so much effort into them. Using UTM parameters on the links to track clicks by campaign and platform is the simplest way to accomplish this.

How Do You Track ROI For Social Media?

You must create a strategy for tracking your ROI after choosing a goal for your social media campaigns.

  • Setting a target in Google Analytics is the most straightforward way to achieve this. Goal-setting and event-tracking are two ways to do this.
  • Use a tool like Buffer or Ahrefs to track other analytics, such as likes, shares, and brand mentions.
  • Facebook Pixel provides crucial breakdowns of traffic, attribution, and conversion data for paid ads.

How To Report on Social Media Performance and ROI?

You’ve calculated your revenue. Now, it’s time to report on it. Not sure where to begin? You should follow these easy practices to produce an insightful social media ROI report:

  • Determine which aspect of each social media platform, such as ad type, and ad placement, is most important to your income generation.
  • Align the report's metrics you intend to use with the company's marketing goals.
  • Measure and provide data that spans a sufficient amount of time to show the effect of your social media marketing efforts.
  • Include crucial observations and statistics that demonstrate how your social strategy's less obvious elements impacted the bottom line.
  • Determine the components of your approach that were successful and those that were not.
  • Outline the changes and improvements that will be done to increase ROI and demonstrate how the data is actionable.

Over To You

Calculating ROI in digital and social media marketing can be a daunting task. While you can take these suggestions to decide what’s best for your business, it is preferred to take help from a professional and experienced digital marketing agency for your one-stop social media marketing solutions. It will help you understand the fundamentals and intricacies of social media marketing.