Measuring the ROI of Your Business' Social Media Efforts

When you measure the ROI of social media, there is a temptation to look at it from too simplistic of a view. You spend x amount of dollars on an ad that produces x amount of revenue. Equations like this are merely a fraction of the truth, however. 

To understand this $32 billion industry (and growing), you need to weigh a variety of factors. Let's look at each one! 

Start With Your Objective

Just remember that it might not always be the dollars you're measuring. Businesses can and should use social media for a variety of purposes. So when asking the question can you measure the ROI of your social media marketing, figure out what you want to accomplish.

Are you hoping to expand your follower count? Grow revenue or conversions? We'll go into a little more detail with this when discussing metrics, but for now, it's good to just have a general idea of why you're on social media in the first place.

Determine How You Will Reach Your Goals

Increasing the ROI of social media marketing is not possible without a clear action plan. Once you know your objective, it's easy to translate that into a tangible goal and, more importantly, the individual steps for getting there.

Start by taking the generic term of "social media," and translate it to specific networks. How do you plan to use Facebook, Twitter, TikTok, Pinterest, LinkedIn? The list goes on.

And the objectives and action plans will change by each network. Take some time to learn the types of posts that do well, the length, the words, the visuals, the way people engage. Create your strategy from there.

Familiarize Yourself With Social Media Metrics

While each social network differs in the way it's used and the purpose that it serves, some commonalities link measuring the ROI of social media campaigns together. Namely, metrics.

Metrics will determine whether your campaign was a success or a failure. They will also determine the extent to which those outcomes are true. Popular metrics include the following:

• Reach: how many people see your message on their screens

• Engagement: how many interact with the post through a like, share, or comment

• Site visits: how many clicks through the post to visit the landing page of your website

• Conversions: how many sign up for your course, email list, or updates

• Revenue: how many spend money as a result of visiting through your social media post

Determine which one or several of these you wish to use. They will help you work towards your final ROI numbers.

Figure Out What You Are Spending

Focusing on specific metrics is just one part of knowing the overall ROI of social media advertising. You also have to know what it's costing you to get those metrics active. How much are you spending, in other words? 

This isn't as cut-and-dry as the cost incurred when someone clicks your advertisement. It also entails the time that it took to produce the ad, any visuals that you had to pay for, employees who helped in its creation. Any resource that you used in creating, posting, and tracking ad performances is a cost.

Taking Nos. 2 and 3 gives you something with which to work. Let's say your ad campaign creates $1,000 in revenue, and it cost you $750 to put together. Dividing the former by the latter leaves you with a 33 percent return on your investment.

Start Reporting

Something to remember about the comparison of the ROI on social media channels, however, is this. You're not going to have an accurate number with one math problem. Your social media campaigns will continue. They will grow more refined and efficient if you're doing them correctly.

That's where reporting comes into play. Take your results on each network. See which ones are producing the best results.

You don't have to be equally active on every network. If you notice a stark disparity in the success of one social network over another, you might wish to shift your future marketing dollars into that particular network while easing up on the other.

Strive for Improvement

Through the reporting process, you will see trends start to develop. Those trends will show you which networks are performing better. They'll also show you which ads on an individual network are better than others.

Test often. Always try to beat your best-performing ad. Along the way, keep your ear to the ground for new tools and consider outsourcing the work to a professional trained in social media marketing.

Improving your ROI will depend on ongoing testing, reporting, and experimentation. It's not a one-and-done, or it will be a failure.

Be Ready for Change

As you go, make note of the tools you're using. Do you pay anything extra to a third-party application for help with scheduling and posting? Which plan are you signed upon, and can you cut expenses along the way?

Factors like these will affect your overall ROI. Also, try to be ready for the ever-evolving state of the social media industry. TikTok was unheard of by most just three years ago, and now it's a major player. 

Be malleable. In other words, be ready to drop old networks, apps, and tactics, and pick up new ones. Keeping your options open certainly plays to your advantage in this space, and it will influence the long-term outcome of your investment.

Embrace Intangibles 

Along the way, you get a chance to develop your brand voice and get better at knowing and interacting with your customers. You can also use social media as a way of adding to your team.

These are additional factors that you'll need to weigh into the overall ROI of your social media investment. Furthermore, shifting to social media could lead to the negation of print advertising and other costlier forms of outreach. This, too, should be considered when determining the return on investment. 

Follow These Tips to Measure the ROI of Social Media

To measure the ROI of social media, you can't take a two-dimensional approach. It's not about ad spending versus revenue. It's also about what you hope to achieve from the post, the resources you pour in, and the technologies that you use to grow and develop. 

Ready to get more out of your social media investment? Now's the time for expert help like you'll find at COASTR. Contact us today to maximize your social media game.