Speak to any marketing consultant, and nine out of ten of them are likely to recommend marketing on social media sites. The one question that every business owner should ask is – Is the return on investment for social media worth the time and money?
What Is Social Media Markeing?
Quantifying the return on your social media marketing efforts can be difficult, especially when it comes to organic social media because your entire strategy and content output aren’t related to specific CTAs or attribution links. Even when it comes to paid social, it can be tough to determine how much value your paid advertisements are returning outside of D2C (direct-to-consumer) and e-commerce.
Measuring social media ROI has a number of advantages. One obvious benefit is that it can help you get the most out of your budget, regardless of how tight it is.
Most importantly, calculating ROI can lead to improved company outcomes. You need efficient strategies to expand your organisation, not activities that waste time and effort. “Inspect what you expect,” says an old management adage. It pays to check (monitor and measure) what you expect from your social media marketing activities (your goals). In this article, we explain the steps to define and measure your business’s social media ROI.
What Is Social Media ROI?
The return on investment (ROI) is a metric that measures the amount of value delivered by your social media investments. The return on investment (ROI) is usually expressed in monetary terms. Non-monetary metrics can be used to measure ROI in circumstances where the direct impact on revenue is difficult to attribute.
A positive ROI means you are getting back more in return than you are putting in. The actual formula for ROI is |
When evaluating ROI, the calculation starts with two elements |
The return = the business benefit from the activity (often expressed as revenue generated but could be another measurement).
The investment = the amount you spend to get the benefit (costs).
If you want to express the return on investment as a percentage, you would, multiply the final result by 100.
Steps to Measure Social Media ROI in a Small Business
“If you can’t measure it, you can’t improve it,” says management consultant and author Peter Drucker. That concept applies to social media just as much as it does to any other method of marketing. The beauty of digital marketing, whether it’s social media or not, is that you can track and quantify almost any indicator. However, not all of them are significant.
Which metrics you evaluate are determined by the social media platform you use, as well as your general business and marketing objectives. First and foremost, knowing what you want to achieve will define which metrics you pay attention to.
Calculating social media ROI
Setting goals is the first step in calculating social media ROI. It then calculates the price of software, labour, advertising, and other expenses after deciding on the performance indicators of the social media platforms you utilise.
Here is a step-by-step breakdown of all you need to do to assess your social media ROI accurately.
1. Set Goals
The first step in calculating your social media marketing ROI is to set targets. Your social media marketing goals and objectives should, ideally, be tightly aligned with your overall company and marketing goals and objectives. You must determine why your company wants to use social media and what you hope to achieve as a result.
Is it to increase brand awareness? Drive traffic to your website? Service your customers? Generate leads? Boost sales? Regardless, your goals should be S.M.A.R.T. By that, we mean:
Specific | Set with real numbers and deadlines
Measurable | Trackable using metrics and analytics
Attainable | A goal that is challenging but possible
Realistic | Honest assessment of what you are capable of
Time-bound | Tied to a deadline
Examples of S.M.A.R.T. marketing goals include |
Generate 100 new leads from advertising sales during Q4 2021.
Get 5,000 website visits from organic search in October 2021.
Achieve 100% sales increase from e-commerce site between January 1 – June 30 compared to previous year.
These objectives will not only aid in the development of your social media marketing plan but will also allow you to assess the effectiveness of your efforts. You won’t know if your strategies are worthwhile and helping to business success until you first create quantifiable targets.
2. Decide on Performance Metrics
The next step is to choose which measures you’ll use to assess social media ROI. You can track and measure almost everything in the world of digital marketing. However, in order to achieve your S.M.A.R.T. marketing objectives, you must concentrate solely on the social media metrics that count – those that have an influence on your organisation and are related to your overall marketing goals and objectives.
That, however, may not be as simple as it sounds, because each social network has its own set of measurements and built-in analytics, which are not all the same. Facebook, for example, features Insights, a complete analytics dashboard that includes measures like Page Likes, Post Reach, and Page Followers, among others.
Update analytics (to track the efficacy of your posts), Followers & Visitors analytics (to help you understand follower and visitor demographics and sources), and Talent Brand analytics (to help you understand follower and visitor demographics and sources) are all available on LinkedIn (to track Career pages). Followers, retweets, impressions, and other metrics are tracked on Twitter.
Connecting the right metrics to the stages of the sales funnel (or customer journey) is one approach to go about it |
How many people are aware of your brand on the social media platforms where you have a presence? The following are some examples of useful metrics |
- Number of followers
- Reach or impressions
- Retweets
- Shares or pins
- Mentions
Interest – how many times do people engage with your brand. Metrics at this stage include |
- Comments
- Likes
- Replies
- Favorites
- Website traffic
Conversion – of those who engage, how many take action on an offer. This stage represents the bottom-line impact on your business, so examples of metrics to track are |
- Product sales from social networks
- Leads from downloads, subscriptions, etc.
- Revenue generated from social channels
- Other calls-to-action that have a business impact
To track your success and performance, create Key Performance Indicators (KPIs). You can use any or all of the measures listed above; just don’t forget about KPIs. They can assist you in making more educated decisions on the efficacy of your efforts.
3. Determine Social Media Costs
Setting goals and selecting performance measures are only two aspects of calculating social media ROI. The cost of social media is another important factor to consider. The tools you use, the cost of developing, maintaining, and monitoring content, in-house employee figures, and advertising prices are all factors to consider. To assist you, we created a unique social media budget calculator. The following categories can be used as line items.
Cost of Social Media Tools
To save money, you may manage and measure your social media engagement operations organically. Still, using tools built for that purpose is easier and more effective: social media management, analytics, content production and editing, live-streaming, and more. The majority of them are subscription-based, and you can pay monthly or annually.
Content Creation Costs
The costs of purchasing tools are one thing; the costs of developing and editing videos, blog posts, photography, graphics, and other social media content are another and must be considered.
Depending on who you hire — an agency or a freelancer — and where you locate them, these expenses might range from a few dollars per hour to several hundred. Many small business owners use services such as Upwork, Fiverr, 99designs, Crowd Content, and Freelancer to locate economical talent. Even within those sites, prices can differ significantly.
Social Media Update and Monitoring Costs
The following phase involves the cost of scheduling social updates, monitoring replies, connecting with followers, and reporting. In this section, include any assistance you receive from an agency or freelancers. Any payments given to influencers who help spread the news should be included.
In-House Staff Costs
This is where you’ll keep track of any social media-related activities your in-house staff participates in. You may have employees who are exclusively responsible for your social media outreach, or you may have employees who split that task. In all scenarios, including all employee costs, including as pay and benefits, for the time they spend on those obligations. Remember to account for the value of your time.
Paid Advertising Costs
Another factor of social media ROI is the cost of paid social ads. Because most social networks offer bid-based pay-per-click advertising, including the out-of-pocket costs of Facebook ad campaigns, boosting social posts, and so on if you undertake Facebook advertising for small business (or advertise on any other social network). Don’t include the cost of Google or Bing ads; only include the cost of social media ads.
4. Measure Your Social Media Performance
You must also assess the actual performance of your social media campaigns and engagement activities in addition to measuring social media marketing ROI. Aside from the analytics features incorporated into Facebook Pages, LinkedIn Company Pages, and Twitter accounts, there are a plethora of tools available to assist.
Sprout Social includes a robust analytics dashboard that tracks “throughput” metrics. That is, it tracks engagement in real-time to provide you with a clear view of what’s going on on your social media channels. You can examine statistics from all of your connected social profiles in one place and see if you’re moving the needle in the right way at a look.
Hootsuite, on the other hand, allows you to assess your performance across all of your social networks and build unique reports to highlight the brand’s impact on the bottom line. Hootsuite’s platform offers “Impact,” a tool built specifically to assist organisations to evaluate their ROI by displaying how their social media channels and campaigns drive leads, conversions, and sales.
In-depth social media metrics, such as audience, postings, interaction, and reach, are included in Zoho Social. It consolidates everything into a single dashboard, and users may generate social media performance reports.
Google Analytics is the cornerstone for almost all other types of measurement. It’s free and may be used to track conversion endpoint data like visits to a website from social media or the monetary value of things sold as a result of social media.
5. Calculate ROI
With everything in place — S.M.A.R.T. goals, KPIs based on the customer journey, the cost calculator, and social media performance tools — you can finally calculate your social media marketing ROI.
Additional Tips on Measuring ROI
Here are a few more pointers to get you started calculating social media ROI.
When evaluating the effects of more traditional online marketing, take the same approach to social media marketing. Consider your goals and objectives first, then determine which forms of social media would be most effective in achieving them, as well as what KPIs would be relevant.
To maintain consistency and greater outcomes, schedule your social media posting activity. This template for a social media calendar will assist you.
Benchmark your use of social media against your competitors by doing a competitive analysis. Find out what tools they use, how often they post, how many followers they have, and how engaged they are.
Create a weekly or monthly ROI report to track your progress toward goal completion and conversion rate. Make adjustments based on the outcomes.
Summing-up
The days of thinking about social media marketing in a “touchy-feely, warm-and-fuzzy” way are over. Because social media marketing is still marketing, it is subject to statistical analysis. You need to know if social media can provide a positive return on investment as a business owner. Start tracking the success of your social media marketing using the information in this article.
Our digital marketing experts know what Google likes and what works on social media and before they develop a new strategy they’d look into and understand your current marketing practices, your goals and then they’d work out a marketing plan that will skyrocket your business in no time. So, if you want to lead your marketing in the right direction contact Shergroup today.
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