skip to Main Content
How To Calculate Social Media ROI

How to Calculate Social Media ROI

How to Calculate Social Media Marketing ROI

In the year 2019, you’ve probably heard all the hype about social media marketing and how it can benefit you as a business owner. However, one of the drawbacks about social media is that calculating ROI can be an elusive task. In this article, you’re going to explore social media marketing return on investment. you’re going to take a look at the challenges of calculating ROI, before taking a look at the native analytics offered by the big four (Twitter, LinkedIn, Facebook, and Instagram). The main takeaway: take it back to basics, and focus on the measurements that matter.

In conclusion, you’ll be looking at some calculations and realizing the financial and non-financial benefits of social media. 

Why Social Media?

There are many benefits to social media marketing, some nonfinancial. Firstly, social media is excellent for generating and maintaining brand awareness. This can be achieved organically and through paid use of social media. Customer insight is the social media benefit that is most fascinating. The platforms provide an amazing insight into what your audience is thinking, feeling, and doing, and you can really harness this for the benefit of growing our business. Market intelligence takes customer insight a step further.

Social media allows you to observe what’s going on inside your industry and amongst your competitors. The most measurable benefit is lead generation, customer acquisition, and retention. You may not always be able to totally attribute social media to this, but it’s a huge benefit. By knowing what journey our customers take on their path to purchase, we can track our performance and use of social media. Finally, unlike any other marketing channel, social media provides real-time conversation, the ability to talk to your customers, your colleagues, and your peers in real-time.

There’s so much value to be had, and that’s what social media is all about.

Social Media and Business Strategy

A social media marketing strategy needs to be able to tie into your overall business strategy. In order to make the most of social media as a business owner, you need to understand the big picture to know where your heading with your tactics. When you understand the big picture, you’ll know which social media platforms will be most appropriate for your business needs, and you’ll also know what you’re aiming to achieve for that individual social media posts.

It’s not just about the words, images, and videos you post online. It’s about the impact the content has on your audience, and it’s about the impact it has on your business sales. You also need to know what you’re spending on your business and marketing activity. Put all of those numbers together, and that’s the return on investment, a measurement that really does matter.

Setting S.M.A.R.T. Objectives

You may remember this from school but you’re going to be talking about setting S.M.A.R.T. objectives. S.M.A.R.T. is a simple acronym used to set good solid objectives. It stands for Specific, Measurable, Achievable, Relevant and Time-Related. Objectives provide you with the ability to track and measure success, which is what this course is all about. Objectives translate the business strategy into plans and actions. To sell more widgets is not a smart objective. To sell 10% more widgets in the next six months by running an advertising campaign on Facebook, now that’s smart!

Defining ROI

Before you look at the details of social media marketing ROI, let’s take a brief look at what you mean by return on investment. It’s the value that an organization receives from investing in a project or a piece of marketing activity. ROI is a performance measure used to evaluate the efficiency of an investment, and it’s also a measure of the profit earned from each investment. They give us insight and will tell us what actions you may need to take.

Calculating Social Media Marketing ROI 

You can calculate social media marketing ROI if you have set goals in line with your business strategy. If you’re using the right social media platform, that means the right platform for your target audience, and business strategy, and achieving your objectives. And you can measure what matters, that is against those objectives, that is about achieving that business strategy. So, let’s have a look at the calculation. To calculate social media ROI, you’d need to know the revenue from social media and the cost of your social media activity.

you subtract the cost from the revenue and then divide by the cost. At its simplest, a social media ROI calculation could be completed using Google Analytics and sales data. For example, 1,000 clicks from 10 social media campaign posts on Twitter, of those 1,000 clicks, 500 converted to a lead by filling in a form on a landing page. Of those 500 leads, 100 ended up making a purchase. This means that your traffic to lead conversion ratio is 50%, and your lead to sale conversion ratio is 20%.

you know each purchase generates 100 dollars of revenue and 500 dollars of resources was allocated to the 10 campaign posts. The campaign generated 10,000 dollars of revenue, and so the ROI is 19 to one. For every one dollar spent, 19 dollars of profit was generated.

We hope you found that helpful and hope to grow with you soon on your social media strategy!

Back To Top