As a marketer, or a marketing consultant, you are likely asked to show your ROI (Return on Investment). It shows the value of your social campaigns in dollars so that you know what is working – and what isn’t. And if you are an agency with clients, this is a key metric in understanding the value of your services.
Social media is a powerful part of any marketing strategy to drive brand awareness and growth. It’s also one of the most effective ways to stretch a marketing budget. In this blog, we’ll show you how to measure your ROI and provide tips to improve it so you can boost the value of your social media activities.
So, how do I find out ROI?
It’s pretty simple. The formula to calculate ROI for social media is:
(return – investment made) / investment made X 100 = (social media or PPC) ROI.
If your ROI value is more than 0 percent, you’re making money from your social media campaigns. Anything below that means you are losing money.
What can I calculate ROI on?
How you calculate ROI depends on the objectives of your organization and the metrics you use. For example, is brand awareness a priority for your social media, or is it lead capture or sales? When creating your ROI metrics, bring them back to the objective and goal of your activities to prove value.
Some common goals marketers have are:
- New followers
- Click-through rates
- Conversions
- Completed lead generation forms
- Downloaded files (e.g. eBook, whitepaper)
How do you track ROI?
Once you select a goal or goals for your social media activities, you will need to set up a system for tracking it. This is extremely important to understand growth over periods of time, such as MoM or YoY (month over month, year over year).
At My Social Biz we recommend the following preliminary steps to set yourself up for success:
- Set up a goal in Google Analytics. You can do this by setting up goals and event tracking. Read through our Google Analytics Goals Guide to understand all that’s involved and what you need to do.
- Keep a close eye on your insights and demographic information from native advertising websites like Instagram or Facebook, and enable a pixel to track converting traffic.
- Use bit.ly’s or trackable links where innate metrics cannot track.
So how do you know how much to assign a metric?
The next step is to assign monetary values to calculate your social media ROI. The best way to do this is to use historical data. That way you can calculate the Lifetime Value (LV) of each customer. For example, if your average LV is $100 then that means 1 in 10 people who view your content become a customer. So the value of getting a visitor to convert is $10 ($100 divided by 10).
The other way to calculate monetary values is to estimate. This is not the more reliable way to do it, but it works if you are missing historical data. It’s the best place to start. If you are e-commerce, look at what your average purchase is through your site. For consulting or non-product based services, what is the average closing deal cost? That is your baseline information to equate to 1 conversion. However many clicks/calls/visits it takes to reach 1 conversion is that conversion divided by that number. Simple!
Ways to improve your social media ROI
After reading this, you probably want to improve your ROI. And the good news is, no matter what your average ROI for social media is, there’s always room for improvement! Here are a few pro tips from the experts:
- Understand your audience – The key to ROI and social media success is understanding your audience. Make sure you know who is interacting with you and on what platforms so you can provide content that engages.
- Be clever with your content – It can be hard to get noticed on social media platforms with so much content out there. Make sure what you post resonates with your key audience.
- Test and optimize – Tweak and optimize your organic social posts using new imagery, keywords and headlines. On paid media try out new ad types and audiences to see the results.
Improving your ROI just got easier
As more customers use social media to browse, connect and purchase, marketers need to have social media know-how. Learning how to navigate these tools and post effectively is a key component of generating great ROI. My Social Biz assists our clients with generating powerful and persuasive social calendars that target their desired social media, and tap into their ideal audience. Let us show you how to do more with less!