How to Measure Social Media ROI: A Step-by-Step Guide

Social media marketing can make your brand known, but how would you know if your investment is paying off? Evaluating social media ROI (Return on Investment) is a process of determining the impacts of your social media activities.

It shows whether your campaigns drive results that align with your business goals. It’s not just about having a lot of likes and followers. It’s focused on measurable outcomes that are closely correlated with impacting your business.

Whether you're a small business or a large corporation, tracking the return on investment on social media can guide you toward better decisions and improved outcomes.

This blog will elaborate on the basics of social media and ROI, its importance, ways to calculate it, and tips!

What is Social Media ROI?

Social media ROI is the calculation of sales that results from your social media spendings. It measures the difference between the benefit (like sales, leads, or brand visibility) received from an activity and the cost of that activity. In other words, it highlights whether your social media efforts will be paying off.

Here are two necessary factors to consider for social media ROI:

1. Monetary Value

The first and perhaps easiest way of determining ROI is in terms of value for money.

For instance, was the amount of revenue that your social media campaign earned more or less than the amount you used to pay for it?

2. Non-Monetary Value

Social media ROI includes non-monetary values that can be measured from operations like brand recognition, stakeholder interactions, and the growth of followers.

These are usually difficult to measure but are still considered to be objective markers of success.

Importance of Measuring Social Media ROI

Understanding the return on investment social media provides is crucial for several reasons.

First of all, it assists in the justification of the spending on social media to other interested stakeholders.

Second, it enables you to direct resources efficiently since you are aware of what works and what doesn’t.

Finally, it provides an understanding of the audience’s behaviour and how future campaigns may be adjusted to capture their attention.

• Justify Spending: ROI metrics assist in translating social media efforts into tangible results that can be presented to key decision-makers.

• Optimise Campaigns: By knowing what’s working and what’s not, you can tweak your strategies to improve results.

• Improve Targeting: ROI insights help you understand your audience better, allowing you to create more targeted and effective content.

How to Measure the ROI of Social Media in 5 Steps

Measuring social media and ROI involves several steps. Here’s how to do it effectively:

1. Set Clear Goals

Before you establish benchmarks for return on investment, it is important to define what success for the campaign means. Provide specific, attainable goals for your social media programs.

These could be traffic generation to a website, getting leads, or simply making sales. Your goals will determine your method of calculating the Return on Investment.

2. Track the Right Metrics

Identify the metrics that align with your goals. The most basic examples are reach, engagement, click-through rates, and conversion-driven rates.

For instance, if you want to gain more sales, you should assess the number of conversions and total sales produced by social media campaigns.

3. Calculate Costs

For ROI evaluation, you have to know how much you are willing to spend on social media. This may comprise the money spent on ads, tools, the software used, or the overall time your team spends on social media.

Sum up these costs to arrive at the total investment figure.

4. Analyse Results

Once you have laid out your goals, measures, and costs, you can determine your return on investment. The basic formula is (Return - Investment) / Investment * 100.

For example, if you spent INR 10,000 on a campaign and generated INR 20,000 in sales, your ROI would be 100%.

5. Use Tools and Platforms

Some platforms employed to analyse social media include Google Analytics, Hootsuite, and Sprout Social.

These are some platforms that give out all information regarding your campaigns as well as ease the computation of ROI.

How to Calculate Social Media Spend or Investment for Your Brand

Calculating the total spend on your social media efforts involves accounting for several factors.

Here’s how to do it:

• Ad Spend

Ensure you’re getting the most out of your ad budget by regularly reviewing and optimising your ads. The focus should be on the impact it has on the target population and modify your ad copies and images to enhance the performance.

• Tools and Software

Take some time to figure out if the tools or software used to manage the social networking cost effective. This popularly includes task scheduling tools, analytics platforms, or design software.

• Attention to Team

It is important to reflect on the time that your team spends on managing social media. Determine their corresponding hourly wage, then multiply the outcome with the amount of time spent on social media work.

• Content Creation

Add the operating expenses of the content creation process, which primarily includes graphic designing, photography & videography and writing. These costs should ideally be incorporated into the marketing equation given the importance of quality content in social media marketing.

• Additional Costs

Always ensure to add all extra expenses, including influencer marketing, contests, or events. These can considerably affect your general investment.

Five In-House Expert Tips to Improve Social Media ROI

Improving ROI for social media marketing is a continuous process that demands excellent planning and optimisation. Here are five expert tips to help improve your social media ROI:

• Emphasis on High-Performing Platforms

Every social media site will not guarantee the same level of effectiveness. Determine which social media channels are popular with consumers in relation to your brand and ensure that your brand is most active in those channels.

• Repurpose Content

Extend the reach of your content by repurposing it in different forms to fit various media types. You can always transform a blog post into a sequence of posts on different social media platforms, an infographic, or a video.

This makes it efficient by saving a lot of time and money while providing wider coverage of older content.

• Engage with Your Audience

Social media emphasises the concept of relationships rather than sales. Interact with your followers by answering the comments, reposting the content created by your followers, and launching a discussion.

This increases participation and assists in the development of a reliable and strong bond.

• Run Targeted Ad Campaigns

It is advisable to target particular groups and demographics on social media platforms when placing the ads.

The specific marketing efforts are always effective in influencing the conversion processes thereby leading to increased returns on investment.

• Monitor and Adjust

You should always keep track of your social media results and be ready to tweak the strategies. In case of something which isn’t effective or successful then don't be scared of changes.

It is important to continually optimise to increase the return on investment ratios.

Use Social Media to Drive Brand Awareness and ROI

The role of social media in brand awareness and return on investment is well-defined.

Here’s how to use it effectively:

• Consistent Branding

It is also important to see that all associated accounts are well managed and kept consistent with brand rules. Ideally logos, colour schemes and messages should be similar to help people to relate.

• Partner with Influencers

Work with influencers who share your brand’s ideals, characters, and beliefs. Leveraging influencer marketing for your product will attract a large number of followers who will get to see your message and make a purchase.

• Create Shareable Content

Concentrate on content creation that your audience will want to share with their followers. Shareable content increases your reach and can lead to more followers and potential customers.

• Measure and Optimise

Keep a check on the ROI of your social media and make changes according to what’s working. It is a cycle of measurement and optimisation which provide an assurance of moving to a better result. Does social media produce a high ROI?

Social media will yield a high ROI if used in the right way. The key is to ensure that they attract the right audience, develop interesting content and then follow the progress in these campaigns properly.

Wrapping Up

The evaluation of social media ROI is essential for comprehending the effectiveness of your social media campaign.

Through the tracking of the right metrics, the calculation of that investment and ongoing optimisation of the activities, you can ensure that your social media activities are driving real value for your business.

Don’t only invest in social media—invest in tracking your success and escalating your returns. Reach out to GrowthJockey today!

FAQs

1. What is the ROI in social media?

ROI in social media refers to the return on investment from your social media activities. It measures how much value you gain from your social media efforts compared to the costs involved.

2. Does social media have a high ROI?

Social media can have a high ROI if used effectively. The key is to target the right audience, create engaging content, and track the results to optimise your efforts.

3. What is the ROI of Instagram?

The ROI for social media marketing on Instagram depends on the specific goals of the campaign. Brands often see high engagement and conversion rates, especially through Instagram ads.

4. How to increase ROI on social media?

To increase social media ROI, focus on creating engaging content, optimising ad spend, and tracking the right metrics. Engaging with your audience and testing different strategies also helps improve ROI.