Key Takeaways

• Social media ROI is an important measure to ensure that you are receiving value for your investment in social media, despite being challenging to measure.

• Determining social media ROI involves more than just measuring website traffic and tracking links.

• A negative ROI is an opportunity to look deeper into your strategy and tactics and not a reason to cut spend immediately. 

What is ROI and how does it apply to social media?

ROI (Return on investment) is the measure of what you get in return for your investment in your social media marketing, in other words, how much output you get for your input. Social media ROI does not only have to measure monetary input and output, it can also include time invested, resources used and returns like brand awareness and loyalty. In fact, the non-monetary inputs and outputs are often what can complicate the measurement of social media ROI.

Why is it difficult to get an exact ROI for social media?

Social media returns can become quite abstract, which can make them difficult to match to an exact figure. For example, there is no real number that can be attached to the way a social media post made someone feel. Reporting tools like sentiment analysis can give you a statistical estimate, but the true measurement is often not available. Social media often blurs into other marketing channels. There is, for example, no measurement attached to how many times people have screenshotted a social media post to pass along to their friends. 

Attributing a specific result to one single platform is also a common challenge. If someone discovers your brand on an ad placed on Instagram but then decides to follow you on LinkedIn and uses that platform to visit your website, then which platform does the result belong to?

Why is measuring social media ROI important?

Despite the difficulty that can come with getting an accurate number, measuring the ROI of your social media marketing is, nevertheless, important. It ensures that you are getting value for the efforts you are putting into your social media, and to measure the effectiveness of any third party tools or services that you have implemented in this regard. Moreover, measuring your return can also tell you whether the social media strategies and tactics that you are employing are working and how to optimise these strategies to get the best value from your social media marketing.

How to measure social media ROI 

Decide on your social media goals

Before you can determine the value that your social media marketing is providing, you need to determine what value means to you and your business. Creating social media goals streamlines the ROI calculation and ensures that you measure the correct variables. Social media goals include increasing website traffic, getting more DMs or increasing email sign-ups.

Determine your social media investment

Add up all of your social media spend for the period you are calculating. Examples of investments include:

• Social media ad spend

• Social media app subscriptions

• The cost of editing and design apps you use

• The retainer or invoicing from a social media management or content creation team

Don’t forget to include the time you or your team invest in working on your social media marketing. This is time spent that could also be spent on other business goals.

Calculate your social media output

It is important to track social media output beyond just website traffic and link clicks, as much of social media marketing’s value can happen higher up in your business’s sales funnel. For example, social media impressions may not lead to a direct sale, but they are an important measure of brand awareness. Assigning a monetary value to the social media metrics at each stage of the funnel can get you to a more accurate ROI. Ask yourself, if these metrics were for sale, how much would you be willing to pay for each one.

Thankfully, social media advertising simplifies this process as advertising platforms calculate the cost for you. Nevertheless, having a look beyond your stated output can also be beneficial. Important metrics linked to social media ads include:

• CPM (Cost per mille) - this is the amount of spend that was used to get every 1,000 impressions

• CPC (Cost per click) - the amount of spend used to get every click to your social media or website

To make the calculation of your social media output easier, implement measures like UTM tagging (adding a short tracking code to social links) or special social media discount codes for products to be better able to directly track results from social media.

Calculate your social media ROI

Once you have your input and output, you can calculate your ROI.

ROI = ((social media output – social media investment) / social media investment) x 100

The result will give you the percentage of monetary value that you gained or lost from your investment in social media. 

What if my social media ROI is negative?

A negative ROI is not a death sentence for your marketing, in fact, it’s why you calculate your ROI in the first place - to adjust our strategy to ensure we are driving value from our efforts.

First, verify your inputs and outputs. Ensure you're accurately tracking links, metrics and website traffic across platforms. If your data is accurate, you can move on to deeper analysis.

Next it’s time to get granular. Tie each investment to specific outputs, such as clicks from an Instagram post or impressions from a LinkedIn ad. Make sure that the output can definitely be traced back to that exact investment. Calculating the ROI for each channel will highlight exactly which ones are underperforming.

Once you’ve identified investments with negative ROIs, analyse why. Look at the strategies and tactics that have been implemented with the investment. Is there a different approach that you can take before simply cutting spending?Also ensure that new investments have enough time to  give results before cutting them. If an investment consistently returns a negative ROI after three months despite adjustments, it’s time to reallocate that budget elsewhere.

Frequently Asked Questions

What tool is the best to track my social media ROI?

There are many social media management tools available that simplify the tracking of metrics and results for social media ROI, however, these tools can be expensive. You can still track your social media ROI using the free analytics tools from social media platforms you’re on and other free analytics tools like Google analytics.

Do my influencer partnerships impact my social media ROI?

Influencer investment definitely has an impact on your social media ROI, both good and bad. Calculating the ROI of your influencer partnerships can not only lead to better quality results but can also allow you to forge long-term relationships with influencers who are best suited to your brand and its goals.

Is your social media marketing investment giving you a negative ROI and you’re unsure of where to go next? Reach out. Let’s see how we can make your social media work better for you.