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In 2022, more than 50% of marketers are planning to increase their investment in social media marketing, highlighting just how valuable it is for businesses.
Determining your social media ROI is crucial for understanding the impact of your social media strategy. In 2022, more than 50% of marketers are planning to increase their investment in social media marketing, highlighting just how valuable it is for businesses.
There are many business benefits to social media, from increased exposure and web traffic to lead generation. However, it can be challenging to place a monetary value on these metrics, making it tricky for business owners to calculate social media ROI.
Shockingly, as much as 44% of CMOs say they are unable to measure the impact social media has on their business. This begs the question: how the heck do you measure your social media ROI?
The good news is that you can and should be tracking your social media ROI - you just need to know a few trade secrets. Measuring your social media success is a great way to be sure you're fulfilling your business objectives and is an essential component of any social media strategy.
We've created this easy-to-follow guide to help you measure the ROI of social media. Once you' finish, you'll better understand the costs and returns of your social media marketing.
What is Social Media ROI?
ROI is a term commonly used in business and finance and refers to return on investment. Your social media ROI looks explicitly at the return on investment generated by your social media efforts.
Your social ROI looks at whether you are receiving enough value to justify your costs. It’s usually calculated in dollars and cents, but the returns and costs of social media are not always expressed as a clear monetary value. Costs can include the time, effort, and resources dedicated to your end goal, while returns are expressed by increased follower counts, engagement and reach.
Why is Social Media ROI Important?
If you're putting time, effort and money into anything, you'll want to know you're getting something worthwhile out of it.
Your social media ROI is a vital measurement for your business. It can help identify which social media platforms are best for your goals and help you optimize your social media strategy.
For example, if your goal is to generate more leads through a social media campaign, you can track email sign-ups or contact form completions. If you find your campaign was unsuccessful at increasing email sign-ups, it's a good indicator that your investments are not resulting in the returns you want.
How To Determine Your Social Media ROI
Before you start:
Be sure you select the right social channels to attract potential customers for your business.
Social media is powerful, but it's not magic. Start by researching your target audience, and then start creating content on the social networks they use.
Not sure where to start? Look at the types of content marketing your competitors are doing. This will give you some great insight into where your consumers might be.
Top social media platforms used by B2C marketers in 2022:
Of course, you can use many other platforms to find new customers, such as TikTok, LinkedIn, YouTube, or Pinterest. The sky's the limit.
1. Understand the purpose of your social media marketing
Start by asking yourself the following question: What do I hope to achieve through social media marketing?
This is an important goal to define, as social media has multiple benefits. For every brand, the goals will differ. Simply looking to achieve followers is not enough nowadays. You must understand why you want those followers and how they benefit your business.
Common social media marketing goals include:
- Increasing brand awareness
- Community building and improving customer service
- Running ads in search of conversions and leads
- Expanding reach and engagement
If you find yourself saying, "I want to do all of those things", great! Whether you want to achieve one or all of the above, defining your goals when formulating your social media marketing strategy is crucial. This makes it much easier to calculate your ROI since you'll know exactly what to track.
Defining the goals of specific social media campaigns
It's important to understand the overall purpose of your social media, but you must also set clear goals for your social media campaigns.
For example, let's say that your purpose for using social media is to increase conversions. You'll likely create social media campaigns that serve that purpose.
Example: To track an increase in conversions, set your campaign goal to increase the number of newsletter sign-ups. Each time a user converts by signing up, you'll be able to measure that data and relate it to your bottom line.
By examining measurable actions and metrics like email sign-ups instead of just followers and engagement, you'll be better able to track how effective your calls to action are across your social media platforms. These metrics are critical to calculating your social media ROI correctly.
2. Monitor analytics and metrics
Once you've clearly defined your goals, you must have a way to track them. Do this by monitoring analytics and social metrics, clearly understanding the difference between the two.
Social Media Metrics
Metrics look into precisely what a social media post is trying to achieve. Social media metrics include things like:
- Engagement
- Likes, shares, comments etc.
- Reach
- Number of followers, post views, account mentions, and impressions
- Conversions
- Downloads, sign-ups, new followers, and sales
Social Media Analytics
Analytics refers to how you analyze the data from your socials. It's easy to confuse this with metrics, as they're often lumped together.
Metrics simply report whether or not your follower count increased, but social media analytics help you understand the why. If the metrics are the branches, the analytics are the entire tree.
Best metrics and analytics for proving ROI:
- Website traffic
- Reach
- Engagement
- Sign-ups and conversions
How do I track my social media data for ROI?
There are multiple social media tools on the market, but how do you know which is right for you?
Most tools will provide real-time performance benchmarks and rankings for your socials, though the formats and styles will differ.
One of the most popular all-in-one solutions is Google Analytics.
Google Analytics is a powerful tool that can monitor everything from website traffic and performance to Facebook ads and social media campaigns.
Google Analytics is crucial for calculating your ROI. Thanks to its ability to track UTM tags, you can monitor traffic directly from your campaigns and illustrate cause and effect relationships.
For example, if you want to see how much traffic from your link in bio is going to a specific landing page, you'd use a UTM tag.
Confused? Don't stress. We wrote an in-depth guide on how to set up your UTM tags in Google Analytics to help you out.
Here are some other great social media management tools:
- Sked Social
- Hopper HQ
- Hootsuite
- Sprout Social
Read our detailed Hootsuite vs Sprout Social vs Sked Social comparison to see how they compare!
3. Track the cost of your social media efforts
One of the main reasons to evaluate the ROI of social media is to understand if your costs are worth the investment. This is important for determining whether you are generating a positive or negative ROI.
Common costs that go into social media marketing include:
- Man-hours
- Place a monetary value on every hour of work spent on social media
- Content creation and development
- Paying employees or hiring freelancers (i.e., writers, graphic designers)
- Social media tools
- Subscription costs for analytics tools, design tools, visual content planners, SEO optimizers etc.
- Advertising costs
- Are you running Facebook and Instagram ads? How much did they cost per day? How about per campaign?
Once you have a numerical cost associated with each area above, you're ready to calculate your return on investment.
4. Calculating your ROI
There is a simple equation marketers use to calculate their return:
(Earnings – Investment Made) x 100/ Investment Made = Social Media ROI
What you are looking for here is a positive number. If your value comes out in the negatives, that means you are currently spending more than you are earning. This is a red flag that signals changes must be made.
How to use the ROI formula:
Let's quickly summarize the steps above so that you can plug the right numbers into this formula:
- Step One: Define your business goals of using social media
- Step Two: Monitor your metrics and measure impact with analytics
- Step Three: Track how much you're spending on social marketing
To find your earnings value, you'll be looking into the impact of your social campaigns, which you collected in Step Two.
Your investments made refers to all the costs you rounded up in Step Three.
Once you've plugged those into the formula, you're left with your social media ROI. This number can be used to inform your future social marketing plans.
Looking to prove the ROI of a single social platform? Simply use the same formula, but only include earnings and investments made within that specific platform.
It's incredibly helpful to have the ROI of social media on hand for stakeholders meetings, especially for B2C companies where social media can play a vital role in gaining new customers.
Quick tips for Increasing Your Social Media ROI
Did the equation above leave you feeling less than stoked?
Don't panic: we can fix that!
Social media is constantly adapting to the market, and you should too. Here are some quick tips that will help boost those numbers and build an impressive social ROI.
1. Optimize for your target audience
Once you have your social media management tools set up, use them to understand what content works for your core audience and what doesn't.
If your brand is new to social media, you might have to test multiple campaigns or content forms to understand your audience.
Are your Instagram influencer marketing campaigns bringing in significant traffic? Or are your YouTube videos driving more newsletter sign-ups? What time of day are users interacting with your posts?
Understanding where your audience is and what they need is key to increasing your social ROI.
2. Talk to your customers!
One of the best ways to reach new customers is to provide value to existing customers.
Your existing customers are a great place to strum up content ideas, promotions, and educational content that will resonate with potential customers.
67% of buyers expect brands to use social media for customer service. What are common questions you receive from customers? What support are they asking for?
Build your content around your current customers, and more will follow. This will lead to increased reach, engagement, and help build a trusted online persona for your business.
3. Link your e-commerce shop directly to your socials
If you want to prove that you're driving sales through social media, you need to track the amount of store traffic from social media directly. The best way is by linking your e-commerce store in your bio, dropping the link in a Story post, or adding it to the caption of your next Reel.
Social commerce shoppers are growing every year, and it's forecasted that by 2023, over 100 million people will buy items directly through apps like Instagram. If you want a slice of that pie (which we're sure you do), check out our guide on setting up an Instagram shop with our Instagram shopping feature!
4. Always stay true to your brand goals and vision
Even if the ROI of your socials isn't where you want it to be, don't throw away your vision and goals just yet.
Viral trends might be great for a short-term boost in numbers, but do the trends align with your brand voice and goals?
Don't hop on just any viral hype train. Make sure that the content you're producing is consistent and fits with your brand. This will build a follower base primed for conversions and sales.
Ready to Rock Social Media?
Now that you know what social media is doing for you, you're primed to become a social media marketing genius.
With the tips and tricks above, you're sure to increase engagement, conversions, and send those sales numbers soaring.
Got any extra social media tips? We want to hear it! Connect with us on Instagram @getskedsocial. We want to hear how you're building positive social ROI for your business! If you're looking for more help with managing your socials, get started with the 7-day free trial of our automatic Instagram scheduler.
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