As a digital or social media marketer, you need to be able to track and calculate your social media ROI (Return on Investment). It shows the value of your social campaigns in dollars, euros or yen so you can double down on the tactics that work and avoid those that don’t.
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.
First of all, let’s define what social media ROI is. Like anything that refers to a Return on Investment, it’s the value of your social media activities divided by the investment made.
The formula to calculate ROI for social media is:
(return – investment made) / investment made X 100 = social media 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.
“34% of marketers said they were uncertain about their ability to measure the ROI of their social media marketing efforts ” Statista
How you calculate ROI depends on the objectives of your organization and the metrics you use. You can download our social media campaign ROI calculator to keep track of your goals, costs and returns.
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.
There are many social media goals you can choose. It really depends on your core objective, which could be:
Common metrics to help measure social media ROI include:
Once you select a goal or goals for your social media activities, you will need to set up a system for tracking your ROI.
Note: Be aware that Google Analytics 4 has replaced Universal Analytics (which most marketers use), so make sure you’re up to speed with changes so you can account for them in your campaigns.
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 if you lack historical data. It’s the best place to start. Look at what your average purchase is through your site or what your PPC budget is for social ad conversions to determine a realistic value. This paid media budget forecasting tool may help you figure out costs.
To calculate your social media ROI, you need to know how much you spend on creating and implementing campaigns. Examples of spend include:
No matter what your average ROI for social media is, there’s always room for improvement!
For example, online furniture retailer Made used augmented reality ads on Facebook to boost sales and brand awareness. The immersive experience allowed people with iOS devices to position 3D virtual furniture in their homes. The campaign saw purchases increase by 2.5X, ad recall increase by 40% and 3X add to cart rate.
As more customers use social media to browse, connect and purchase, marketers need to have social media know-how. Learn the fundamentals with DMI’s Professional Diploma in Social Media Marketing such as social research, social commerce, and social strategy. You’ll also get to grips with the ins and outs of the biggest social media channels including Facebook, Instagram, LinkedIn, YouTube, and TikTok.