Achieving ROI on social media requires a formula that compares your return to the investment you make. This usually involves monetary returns like website traffic, generated leads, or sales and non-monetary returns like brand awareness or customer engagement.
It is also important to consider the monetary costs of your social media strategy, including employee time, content creation, and ad spending.
Engagement
A key measure of social media ROI is engagement. Whether it’s likes, follows, or shares, this metric measures the impact of your content on your target audience and can help you predict future trends in the behavior of your followers.
It’s easy to track engagement through a tool such as Google Analytics, which allows you to define goals tracked when someone completes them. These goals include anything from signing up for an email newsletter to purchasing a product. You can also track goal completions with a social media management guide and analytics tools and create reports to show the effectiveness of your content.
However, measuring non-monetary returns, such as brand awareness or increased traffic from a viral video, is harder. This makes it difficult to calculate true social media ROI.
Reach
Whether your social media campaign’s goal is to increase reach, engagement, or conversions, measuring the impact on each is important. Using a tool like Google Analytics, you can easily track and prove the ROI of your campaigns, including their total earned revenue and cost.
It’s also important to share your performance insights with stakeholders. Explain how your non-monetary ROI metrics, such as increased visibility or a more engaged community, contribute to your business’s success.
Keep in mind that ROI can mean different things to different people. For example, an e-commerce company’s ROI might be measured regarding a return on its inventory or new staffing investment. In contrast, another brand might be measured in terms of a return based on the sales generated from its ads.
Conversions
When you’re investing your time and money into social media marketing, you want to see the results of that investment. A key to this is conversions. Adding up clicks from a post or ad is great, but it’s even better when those clicks lead to a desired action like an email newsletter signup or contact form submission.
Setting goals for your social media campaigns and tracking the associated metrics is important. This way, you can compare actual monetary value to the cost of your social media tool and any ad costs you’ve incurred on platforms like Facebook or Twitter. This data helps you demonstrate the value of your social media efforts to clients and other stakeholders.
Traffic
Regarding measuring ROI, traffic is a key measure for business owners. This metric helps determine whether social media campaigns produce valuable website and conversion traffic for your business.
Traffic can be determined by monitoring unique visitors and pageviews over a given period. It can also be measured by analyzing the number of clicks on a specific post or campaign. This can be a great indicator of the effectiveness of your marketing content, especially when combined with social media ad tracking. When calculating ROI, be sure to take into account all costs associated with your efforts. This can include tools, social media management software, and ad spending. Break down these costs per campaign to gauge your overall ROI accurately.
Revenue
Even though it is challenging to attribute monetary value to non-direct marketing results, like new subscriptions, increased follower count, or brand awareness, you should always track them. After all, you put much effort and resources into your social media campaigns and want to see the return on those efforts. Measuring ROI for ad campaigns is easier because you can easily track the ad clicks. However, it is still important to establish clear goals, focus your message, optimize landing pages, and only use ads as a strategic campaign component.
To prove your social media ROI, create a report that compares your earnings against your costs. The total cost should include all your tools, content, and any other expenses you can calculate (like paid ad campaigns).