What is a Social Media ROI Pyramid?

March 25, 2022
Megan Andrew

How to figure out the most important to least important aspects of your social media ROI.

Trying to measure social media performance can be challenging, to say the least. In the fast-moving world of social media management new social media platforms are popping up all the time, and tracking these third-party applications can be tricky. So, when someone comes along with a helpful framework to help us all understand how to make sense of (seemingly) endless pages of data, of course, we’re going to be all over it like a funky rash. Jeremiah Owyang’s Social Media ROI Pyramid is an absolute blessing for social media marketers.

It provides a framework for social media strategists, business owners, business stakeholders, and agencies alike to understand and measure their social media results against their business outcomes. It also provides clarity on who should be responsible for what.

Like anything else in the big, wide world of content marketing, you don’t have to follow it down to the letter. Every business is unique, after all, and has its own complicated (or not!) internal structures and processes. But when it comes to making life easier, it’s great to have a structure, even if you need to tweak it a little to suit your needs. So, social media ROI pyramid? We’re here for it!

Keep reading to find out what a social media ROI pyramid is, exactly, how it all works, and how it could help get your social media reporting into top shape.

Why is Social Media ROI so Important?

First up, let’s recap on what social media ROI actually is. In layman’s terms, social media ROI shows you the value generated by your social media efforts in relation to the total cost.

In short, it’s the return on your investment in social media marketing.

The social media ROI calculation is simple. It is:

ROI = [(return – investment)x100/investment]

Then your ROI figure should be displayed as a percentage.

Yet, while the calculation might be simple, getting to the numbers themselves and understanding what they actually mean is a different story. But that doesn’t mean you shouldn’t bother with ROI. Your social media ROI is a crucial part of understanding which parts of your social media marketing strategy are working – and which aren’t. So, it’s definitely worth investing a little time into calculating yours.

Understanding your social media return on investment, or ROI, can help you compare your social media marketing to other channels, like SEO, PPC, and even offline channels. It can also help justify increases (or decreases) in social media spends and ensures that you’re actually optimizing the areas that should be optimized, rather than throwing away money on initiatives that won’t result in a return.

Why is Social Media ROI So Difficult to Understand?

Ok, we’ve established that social media ROI is important to stakeholders, brands, and their wider marketing teams. But why do we need a social media ROI pyramid to understand ROI? Well, social media ROI can be difficult to measure.

Why? Well, it’s easy enough to measure things like conversions, leads, and subscribers. But when it comes to measuring likes, comments, new followers or content downloads, it’s difficult to map how many of these users (if any) actually flow down the path to purchase. Yet just because attribution for these social media activities is difficult doesn’t discount their significance.

This can be why some businesses find it so difficult to quantify their social media ROI or even prove the effectiveness of social media marketing as a whole. In fact, only 34% of social media marketers are confident in their ability to measure success on social media. That’s a lot of businesses who aren’t properly measuring their success, or, assumedly, their social media ROI.

What is a Social Media ROI Pyramid?

When it comes to digital marketing these days, every dollar and cent spent needs to be justified. Social media ROI can help achieve that. But Jeremiah Owyang has gone a step further towards helping marketers understand ROI, by creating a helpful framework. Through his research at Altimeter Group, Owyang realized that many businesses were focusing on engagement and growing followers as a business goal, however, it is difficult for these companies to tie engagement to. He realiszd that there was a need to establish a framework around social media outcomes and measurement systems.

Jeremiah Owyang’s social media ROI pyramid aims to simplify social media ROI for all marketers by providing a measurement framework.

How? Well, first of all, Owyang highlights the importance of recognizing the different roles in social media marketing, as per the below figure.

All of these roles require different information in order to carry out the activities required of them. At the top, we have higher-level business executives. In the middle, we have social strategists and internal teams, and clients. And, at the bottom, we have those people executing and supporting social media strategies, like community managers, agency partners, and IT teams.

Social media ROI pyramid roles view, with Business Executives at the top, business stakeholders in the middle, and community managers and agencies at the bottom.
Source: https://web-strategist.com/blog/2010/12/13/framework-the-social-media-roi-pyramid/]

Next up, you’ll need to understand the kinds of data that should be managed by these roles. If we look at the social media ROI pyramid below, at the top we have business metrics, followed by social media analytics, and finally, engagement data.

Social media roi pyramid metrics view, with business metrics at the top, social media analytics in the middle, and engagement data at the bottom.

Business metrics might include things like revenue and reputation.

Social media analytics include metrics such as share of voice, resonation, WOM, support response, and insights intake.

Finally, engagement data includes things like clicks, fans, followers, views and check-ins.

Here’s the entire social media ROI pyramid in one:

Social media roi pyramid of metric examples, with revenue at the top, share of voice in the middle and clicks, fans and followers at the bottom

Now, of course, every company structure is different. If you’re a business owner doing it all yourself you might occupy all three of these roles! Or if you employ an agency, they might have varying degrees of responsibility. Some agencies will take a less strategic role, for instance, while others undertake more of a full-service approach.

But even if you apply the social media pyramid on a reduced scale, it helps to see how you might want to structure your reporting. Find out how to start using the pyramid below.

How to Start Using the Social Media ROI Pyramid Now

So, how can your business use this social media ROI pyramid to shape your social media marketing efforts?

Let’s get into it!

Step 1: Clarify Your Social Media Goals

Having a clear purpose is critical for your future success, so aim to establish your goal (or goals) early on. Businesses use social media marketing for a range of different purposes, such as:

  • Increasing brand awareness
  • Changing brand perception
  • Lead generation
  • Gaining conversions
  • App downloads
  • Increasing traffic or click-through to a certain page
  • Increasing engagement
  • Improving customer experience

Your business objectives will vary depending on your business. An eCommerce business might want to focus more on increasing conversions, for instance, while a B2B business might be more concerned with lead generation.

Once you have defined your goal (or goals) you’ll also want to choose the social media metrics that you’ll use to measure any progress. Without clear business objectives and key performance indicators, or KPIs, it will be impossible to track your social media ROI.

Remember; set goals that are achievable, measurable, and realistic within any timeframes that you set.

So, instead of just saying your goal is increasing conversions, decide exactly what you’d like to aim for in a specific period. Just be sure that you have the resources and social analytics tools to track your chosen social media metrics for any of the goals you set!

For instance, there’s no point in trying to track brand perception if you don’t have the resources to survey or interview your audience.

Step 2: Enable the Right Roles to Look After Specific Metrics

Different roles within your organization require different types of data. Be sure to share the right types of data with the right groups so that everyone has the information they need to be able to execute their tasks in the right way.

Everyone in your organization (and other stakeholders) needs transparency to be able to make informed decisions within their roles. So, while information should be shared with everyone, keep in mind that each group will use this information differently.

Step 3: Decide on Your Reporting Framework

Your reporting framework will differ according to which reports you’re generating and which group you’re generating them for.

Some groups, like community managers, might need weekly reports so they can make immediate strategic shifts and manage day-to-day content or paid advertising. Other groups, like business executives, will be looking at more in-depth reports however they will only review these on a monthly or even quarterly basis.

You can structure your reporting in several ways, depending on your business structure and your needs. Ask yourself:

  • How many different tiers of groups are involved in social media marketing in some way within my organization?
  • What level of transparency do these groups need to be able to thrive in their roles?
  • How much time do we have to dedicate to reporting?
  • What social media tools do we have on hand?

Having the right social media tools for measurement is crucial in getting the right data to the right groups – but not only that. It will also save you the time of trying to extract and gather data manually. There are several ways you can measure your social media data, such as platform insights (like Instagram Insights), Google Analytics or social media tools. You might even use a combination of these to export the reports your business needs.

Either way, choose social media tools that will save you time, and, ultimately, save you money. For instance, perhaps a social media tool costs you $100 every month. But if you’re saving someone five hours of reporting each month at $60/hour, then you’re already saving money!

We recommend investing in a tool that has multiple functions, such as Sked Social.

Sked Social allows you to schedule posts, edit images, export different reports, compare your performance against competitors, analyze the best posting times for your business, and more! Check it out or sign up for your free 7-day trial today.

Step 4: Customize Your Social Media Reporting Formulas

When it comes to social marketing, there aren’t a lot of formulas and frameworks to choose from – which is why the social media ROI pyramid is so helpful in the first place!

Social media changes all the time. Social media algorithms change, new social media channels pop up, and audiences move from platform to platform. So, it’s important to customize your formulas as necessary and change your reporting formulas as needed.

Invest the time in creating reporting formulas, templates, and benchmarks now. It will likely take some time to refine your reports and reporting processes, so it’s better to figure all this out sooner rather than later.

If needed, review your reporting frameworks, especially if you feel like they’re not working for you.

Step 5: Benchmark, Reflect, and Benchmark Again!

This social media ROI pyramid can help in shaping your social strategy and reporting processes. But when it comes to your actual reports, you need benchmarks. Ideally, you want to utilize different sectors of your business and create multiple reports over time. This will allow you to create realistic benchmarks and map your progress.

To really assess the results of your efforts, you should invest in a social media tool. There are plenty of tools out there, but if you want a comprehensive tool that does everything, Sked Social is the perfect option. It has advanced reporting features that help you deep dive into the data and compare your performance against your top competitors.

Once you’ve nailed down your reports, you’ll need to analyze and benchmark your data, which you can do a number of ways:

  • Use your reports to map your own brand’s past performance. Look back on your own historical data and check against all your social media metrics to compare. If possible, try to compare against the same period of, say, the previous year, taking any seasonal changes into consideration.
  • Use Sked Social to analyze your competitor’s performance and see how it correlates with yours – choose your closest competitors, ideally within the same market as you
  • Do research online. For the most accurate comparison, try to find the most current data you can find from your own industry. It can be tricky to find this information so having the first two options for benchmarking is ideal

The more information you have at hand, the more confident you can be that you have set realistic social media goals and KPIs and that you’re tracking well.

Understanding the social media ROI pyramid is important, but keep in mind that it’s only a framework. To really refine your reporting processes, you need to look at your social media reporting in its entirety and choose the approach that works best for your business.

For instance, perhaps you’ve only got a very small business. In that case, you might only need a small number of reports or less frequent reports to be able to make decisions. You might even analyze your results after each social media campaign. Either way, the proper social media tools are critical for your success.

Ready to Level Up Your Social Media Marketing Game?

Understanding and applying the social media ROI pyramid can help your business to create a more holistic reporting dashboard or framework. Having a better understanding of these reporting metrics can help organizations and the individuals within them see which metrics are working well – and which need to be refined. Ultimately this will help optimize your use of social media, enabling you to see better results.

Reporting also helps you understand how social media marketing fits into your wider content strategy, giving you the confidence to make key decisions for your business.

Now that you have a solid reporting framework for your business, why not slice hours from your social media workflow by signing up for Sked’s 7-day trial? Our all-in-one Instagram scheduler allows you to automatically schedule social media posts including images, carousels, Instagram Stories, Reels, videos, retweets, and more. Tag locations, users, and products, and manage all your hashtags in one place to save hours each week. And it doesn’t just work for Instagram. Use it to schedule for all your social networks, including Facebook, Twitter, LinkedIn, and more. Level up your reporting frameworks and give it a try!

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