How to define and measure your social media ROI
A recent study shows that 34% of marketers around the world are uncertain about their ability to measure the return on investment (ROI) of their social media marketing efforts. Most marketers focus on three elements to measure the ROI of their social media strategy which are engagement, traffic, and leads. However, it’s much more than that.
To build a powerful social media strategy and accelerate your marketing efforts, you need to calculate your ROI right. By measuring your social media ROI, you can better understand where to put your efforts and which tactics you should follow.
In this blog, we’ll show you how to track ROI on social media to help you allocate your budget more effectively.
First, let’s get a better understanding of the social media marketing ROI.
Social media ROI definition
Social media ROI means the return on investment you receive from your social media activities and campaigns.
For instance, you might be posting on social media every day, trying to create engagement and direct people to your site. But what’s its ROI? Which social media campaigns are bringing you the best results?
The simplest way to measure your social media ROI is by this formula:
Return / Investment x 100 = Social media ROI %
How do I calculate my return on social media investment?
First, to calculate your return, you need to set your objectives. What do you want to achieve with social media? This can be gaining new followers, generating leads or increasing your online sales. Of course, you can have several objectives.
For each objective, you need to track your activities and analyse your results. For instance, if you want to increase your site traffic with social media, then you can go to Google Analytics and track the site traffic whilst comparing it to your social media activities. When setting your objectives for social media marketing, we highly recommend using the S.M.A.R.T. goal-setting framework. Each objective must be:
To measure your objectives, you also need to define your metrics. When deciding on your metrics, just ask yourself does this metric align with my objectives?. These metrics can be:
Downloads and more
We strongly recommend tracking your metrics and objectives regularly. This can be on a monthly basis or weekly basis, it’s totally up to you. By checking them regularly, you’ll gain more insights into your social media marketing strategy. You can then put your efforts accordingly, and even redefine your objectives or strategy.
Now the tricky part of calculating your return is to put monetary values into your goals. In other words, you need to calculate how much each site visit or how much each new customer worths.
Here’s a benchmark created by Buffer:
|Reach (Facebook)||£0.42 (per thousand impressions)|
|Promoted Tweet (Twitter)||£2.52 (per thousand impressions)|
How do I calculate my total investment on social media?
Now you need to calculate how much time and money you’re investing on your social media. Here’re the key elements that you should take into account whilst calculating the investment:
- Labour cost
How much time you’re spending on content creation and the implementation
- Cost of marketing tools and technologies
How much you’re paying to your social media or marketing tools such as Hootsuite or HubSpot
- Ad and campaign budget
How much you’re allocating for each of your advertising and campaign budget
Measure your social media ROI
You can now easily calculate each of your social media campaign ROI as well as your total social media ROI. Keep in mind that you need to calculate your ROI regularly to optimise your social media performance. We also suggest A/B testing to unlock more insights about your social media engagement and followers.
We can understand that it might seem a bit tricky at first, and that’s why we’re here to help. It’s our responsibility to create an effective social media strategy and analyse its ROI to help you achieve your business goals.
Social Media ROI calculator tool
To calculate your social media ROI, you can use Hootsuite’s free calculation tool.