Few can argue the efficacy of social media marketing in today’s business world. It’s a well-known fact that 54% of social media users use social media to research products and services.
Social media offers unparalleled opportunities for growing your brand awareness and increasing customer engagement, as well as providing a platform to spread your inbound and content marketing.
Calculating social media ROI isn’t as simple as measuring other marketing metrics, however, despite how omnipresent social media marketing is in 2021.
We’re going to show you how to calculate social media to help determine the return on investment of your social media marketing. This way, you’ll know exactly how your digital marketing is performing so it’s possible to fine-tune your social media marketing.
Analyzing Social Media ROI
The concept of return on investment has its roots in traditional business. In older business models, calculating ROI is straightforward. You plug in the cost of an investment and how much you earned in return.
Social media ROI is not nearly so cut-and-dry. To examine this complexity, let’s consider a brief definition of social media ROI.
One definition for social media ROI is the return on investment you receive from everything you put into your social media marketing. This includes time, money, effort, and resources. It’s best measured in actual revenue.
The first complication in how to measure social media ROI becomes obvious at this point. How much is someone sharing some of your content marketing on Twitter, for instance? How do you specify how much an Instagram post costs you and your business?
To determine your social media ROI, you’ll need to perform some calculations.
Calculating Social Media ROI
The principal ingredients to getting a clear indication of your social media ROI are:
- The monetary investment in social media marketing
- Putting a dollar amount on social media goals
Determining the return is the most complicated aspect of measuring social media ROI. A little creativity is necessary to translate social media metrics into monetary terms.
It even determines which metrics are worth paying attention to.
Decide On Social Media Goals For Your Business
The first step of how to measure social media ROI is deciding which social media goals you’re focusing on. Yes, conversions are the final goal. A number of steps often occur before your customer spends any money with your business, however.
Increasing brand awareness might be an example of a social media goal for business. To measure your brand awareness, you might track the number of mentions your brand generates on Twitter. Or you might keep track of new followers on your main accounts.
Keep Track Of Your Goals
The next step in calculating social media ROI is translating your social media cues into quantifiable data. Monitoring and measuring social media metrics is an art form in and of itself. It’s also a science. That’s one reason it’s beneficial to work with social media marketing experts, who know how to translate clicks and social cues into measurable data.
Measuring social media metrics is unique for every business. It’s all a manner of what tools you and your marketing team are familiar with. You’ll also need some form of analytics engine to transform raw data into actionable insights.
Assigning A Monetary Value
The third step in calculating social media ROI is to prescribe your goals a monetary value. This can be an esoteric science in-and-of-itself.
Start by determining the lifetime value of one of your customers. Once you’ve determined the lifetime value of one of your customers, you’ll better be able to ascribe a value to individual interactions.
When attempting to determine the value of individual interactions, multiply your customer’s lifetime value by the conversion rate. You should also track the value of an average visit to your website.
Finally, chart how much it would cost to achieve those same business goals using PPC marketing. This will give baseline to measure your social marketing against.
It also gives a numerical value for your social media marketing goals.
Imagine that it would cost $1,000 to add 1000 new subscribers to your email list using PPC. This means 1000 new email subscribers would be worth $1,000.
Calculating Your Social Media Investment
Factoring in the investment in your social media marketing is your next step. This can also be trickier than it seems at first glance.
The first step in calculating social media investment is how much time you’re spending on your social media marketing. This is relatively straightforward if you have a dedicated social media team.
Even calculating the time investment can be complicated. Generating quality social media content involves far more than the time it takes to create a post. There’s also the time it takes for research and finding, creating, or editing high-quality visuals for your social media posts.
Calculating the cost of any paid social media tools is also necessary. The cost of social media scheduling apps, editing software, and SaaS are should all be calculated.
Finally, you need to track your advertising budget for social media. Any spending on promoting Facebook ads, tweets, or Instagram posts all need to be tracked.
Assessing these three factors will reveal a figure for your social media investment. Once you’ve converted all of these signals into quantifiable data, your social media ROI becomes readily available!
If you’ve spent much time or effort on social media marketing, however, you’ll likely know that even this is a bit of an oversimplification. Not all social media engagement is created equal. Social media experts can further refine these impressions via more advanced marketing techniques like sales funnels and audience segmentation.
Someone willing to sign up for your mailing list to download premium content like a white-paper is more likely to be a qualified lead, for example. Social media combined with traditional marketing expertise is a powerful combination, indeed!
Taking the time to assess your social media ROI is an investment in and of itself. These measurements help you to see where best to spend your time, money, energy, and resources. They also ensure that everyone in your organization is on the same page.
Measuring social media ROI blends the best of both worlds – the traditional and the innovative. You’re set up for success when you understand how to use the powerful tools at your disposal.
Looking For Help With Your Digital Marketing?
As a truly 21st Century industry, social media marketing evolves faster than other disciplines. This also means there are powerful new tools and skills emerging each and every day.
Whether you’re looking for help calculating and tracking social media ROI or a website redesign or SEO audit, we have everything you need to help you and your brand flourish. Contact us today with any questions or to schedule a consultation!