Let’s kick this off with the three most important social media statistics you should know:
One: More than half of the world’s population uses social media. (Keep consistent with percentages and say “Over 50%”?)
Two: 55% of consumers will buy a product after finding it through social media.
Three: If you talk to digital marketers, 70% of them will tell you that social media is their most useful marketing platform.
Put these three things together, and you can see why social media is an imperative cog in the marketing machine that brands simply shouldn’t do without. But as with other marketing initiatives, social media ROI must be utilized to accurately assess your digital presence.
Keep reading to find out more about social media ROI and why it matters.
What Is Social Media ROI?
The return on investment (ROI) of a social media marketing campaign refers to the amount of money you can expect to make after the initial investment is made to start or implement your social media marketing campaigns.
A social media campaign can potentially yield a higher return on investment than other paid marketing efforts like billboards, television and radio commercials, and print media. Creating photos and video posts to developing outright marketing campaigns on sites like Instagram is essential. This is because social marketing efforts often don’t require much more than time, creative energy, and in some cases, free or discounted products for influencers or giveaways; All the while receiving an infinite number of customers viewing and potentially purchasing products.
Because social media marketing requires a small initial investment but can yield a large amount of money, leads, or customers, it has the potential to have a positive return on investment. Also, if you’re hiring an agency to help you, remember to factor in their costs as part of your initial investment, including creative development and the monitoring of the campaign itself.
The Different Social Media Channels
Before you begin calculating your social media ROI, first make a list of all the relevant platforms your brand is using. Do you know where your brand is online and where you’re interacting with your audience?
The following are the places that need to be included when you calculate your social media ROI:
- Facebook and Facebook Messenger
- WhatsApp and Telegram
Now, this list is not the be-all-and-end-all of social media platforms. There are others, like Google My Business, that your business may be present on, depending on your ideal target audience.
How To Calculate Your Social Media ROI
The first step in determining social media ROI is fairly simple:
Social media ROI percent = profit/investment x 100 (Revenue would be a better word to use here, rather than profit)
Revenue is the amount of money you’ve earned from your social media marketing efforts.
Investment is the total cost of your social media marketing efforts, such as the money allocated toward Facebook ads to achieve a specific objective.
The formula mentioned above is a good starting point, but when considering your business objectives, measuring ROI becomes slightly more complicated. If your social media strategy is aimed at increasing brand awareness, for example, you can begin by defining your ROI in terms of engagement, new fans, or mentions, and then translate that engagement into conversions.
You must follow the campaign results down the marketing funnel to develop a true measure of your social media ROI. Assume you gained 100 new fans as a result of a Facebook campaign to raise awareness. Determining the monetary value of new fans may appear difficult. However, you can do so through simple tracking metrics that report the actions of customers during their interactions with your brand. These metrics can give you insight into how often customers purchase after engaging with your social pages, what their average order value is, and when they return for additional purchases. With this information, you will have a better understanding of your social media revenue.
Set Your Social Media Goals
Setting goals for your social media campaign will play a direct role in determining what needs to be measured to calculate your social media ROI.
For example, if your goal is to get email subscribers, then that’s the metric that will drive your performance analysis. The number of social media followers you receive, though an added benefit of the campaign, would not drive your social media ROI in this particular case.
Yes, at the end of the ROI journey, it’s mainly about the amount of paying customers you’ve created. But social media has opened up an entirely new world of marketing goals, from increased brand awareness to higher search engine rankings, to engagement rate increases, and many more.
Here are some examples of social media goals to keep in mind when determining your campaign’s objective:
- Increase your email subscribers
- Increase your social media following
- Increase your engagement rates
- Increase link clicks
- Increase website visitors
The goals cited above are just a starting point. There are countless other goals you may seek to achieve. For example, if you offer a free eBook, then you may have the goal of increasing downloads. Your goals can be especially specific to your business and your brand. If you’re considering hiring a social media marketing agency to help you, check their services page to make sure they have a digital strategy as part of their offering.
Why Social Media ROI Matters
Social media marketing has become increasingly competitive. To stand out in a sea of companies vying for audiences’ attention, you’ll need to continue investing more and more money into your campaigns. A larger investment, in turn, often necessitates proof that it is yielding tangible results, which is where social media ROI comes in.
Analyzing your social media revenue can help you justify budget requests by demonstrating the value of your investments to the company. If your ROI is low, on the other hand, it can help you identify inefficiencies in your social media strategy and introduce improvements. This demonstrates the importance of measuring ROI for both the business and the marketer’s growth.
Measuring social media ROI can also help you determine the value of your individual ads. A high conversion rate indicates that your message is relevant and compelling to your audience, further confirming that quality content is important in generating social media revenue.
What Are The Top Metrics To Measure?
There are five main metrics that you should always include in your social media performance tracking efforts. These five metrics can give you a good handle on how well you’re doing as well as further insight into your customers and content.
1. Tracking Reach
Reach is a metric that you’re able to track within the platform that you are using. Tracking reach is the number of people who saw your content.
Ideally, the more people who see your content, the higher the chance of increasing your sales.
2. Measuring Traffic
Traffic is all about getting visitors to your website. Traffic can come from organic sources or paid avenues.
In most cases, getting people to your website will be the hardest aspect of the social media challenge. Once they’re there, they become “a lead” if they take the right action.
Tracking traffic is done through Google Analytics or, sometimes, your website provider, depending on the package you have and what widgets they offer.
3. Counting Leads
Leads need to be measured for the poor fact that they will tell you about the qualified interest your efforts are drumming up. This might be measured in how many people sign up for your newsletter or how many downloads you have had of that free eBook.
4. Adding Up Customers
The goal is that, eventually, your leads should become customers. Lead generation can be challenging, but converting a lead to a sale can be just as so.
This is where your CTAs (Call-To-Actions) will play a vital role, as well as your website layout, user-friendliness, and various other factors.
5. Calculating Conversion Rates
Conversion rate is the fifth and final metric you want on your social media ROI radar. You will start by calculating how many followers you gained, email subscriptions you received, website visitors you had, or whatever else you were trying to achieve. Then, you see how many of those turned into a sale or a customer. This is your conversion rate. Taking an audience member and turning them into a customer by using social media to gently mold the buyer’s journey.
Success With Your Social Media ROI
The truth is, it can be incredibly difficult to work out a completely accurate return on investment without having a solid foundation for metric tracking and performance monitoring.
So before you move forward with launching your social media campaigns, ensure you have all your bases covered. You don’t want to find yourself nearing the end of your social media campaign with no data to analyze its performance.
If you think it sounds overwhelming to create and publish content for social media, manage a content calendar, engage with your audience, analyze results, and then do it all over again the next day…yes, it can be.
But, you’ve come to the right place to partner with a digital marketing agency that can help you achieve new social media ROI heights. Contact us now!