I’ve been working in social media marketing for a little over five years now and the one thing I find difficult at times is measuring ROI for Social Media pages. I’m not only talking about the math’s here but more the inability to tie social media to business outcomes or just having inconsistent data.
You can never go on how many likes or followers a page has, just because not everyone likes and follow. I’ve managed social media pages, where the messages received are from clients that didn’t like any post or follow the page but they have bought products and visit the stores just because they saw an ad. And I’m always wondering which customers have seen the ad.
Sometimes as a consumer, I’ll search for a product check out the page and go and buy the product without thinking about liking and following.
Some business it’s easy as pie and others business you can’t tell.
With that being said, measuring ROI of your social media marketing efforts isn’t impossible. The goal of social media marketing is to get seen, and hope that the public will like to connect with your business by following or asking questions. Now, that interest might not play out today or next week but, that person will know what your business is about.
What is Social Media ROI?
You can answer this depending on what your specific goals are. But let us say this is what your company is getting back from time, money and resources you’re putting towards social media marketing.
If you measured ROI by revenue, for example, a simple formula to do that looks like this:
Profit / total investment (people hours, ad budget, etc.) X 100 = social media ROI (as a percentage)
So, if you made $1,000 in revenue from social media on a $500 investment, your profit is $500 (remember: profit = revenue – investment). And then your calculation would be:
$500 profit / $500 investment X 100 = 100% return on your investment.
But that’s not a catch-all formula for proving social ROI. Again, there isn’t one.
Not every organization will be able to attribute revenue directly to social media. Remember, the value isn’t always measured in dollars and cents. Tethering the ROI of social media to such a narrowly defined objective prevents you from identifying the many other ways your investment in social is paying off.
If your goal is to drive brand awareness, you would measure success against metrics such as audience reach and engagement, not profit.
Why should you measure Social Media ROI?
The simple answer is, you don’t want to waste time, resources or money.
You need to see where you can improve your efforts and decide on which social media channel is bringing in the most revenue.
Steps to measure Social Media ROI
1 – Push campaigns where users are taking measurable actions.
Such as asking them to sign up for product or service info, or contact form inquiries, or download an eBook.
2 – Track and measure your goals.
From all of the queries make sure send them a personalized thank you message. Now it’s time to tackle the monetary value of these goals. Here are a few methods to choose from:
Lifetime value: How much do you earn from each customer on average?
Lifetime value multiplied by conversion rate: How much is each possible visit worth to you based on the percentage that converts?
Average sale: How much is the average purchase through your site?
PPC valuation: How much would you end up paying if you were to use ads to achieve the same social media results?
3 – Track your social media expenses
You can figure out the specific ROI for each social network by segmenting your earnings and costs per social channel and using that same formula above. After looking at the numbers, you’ll be able to decide which social platforms are doing the best for your company, and focus in on those. For any social networks or campaigns that are bringing in a negative ROI, you can either try to adjust by spending less, or by making your campaigns more effective.
4 – Review Results and reset goals
After all of that, I’m sure you have an idea if your business is wasting time and money on social media or not. And even though tracking can be difficult, it’s not impossible.
Keep in mind, that social media also benefits you by brand building. It’s also a determining factor whether social media marketing is helping your company.