Return on Investment is a performance measure used to assess the efficiency of an investment. ROI tries to directly measure the amount of return on a particular investment. Social media ROI is a metric showing how much value is generated with the investments made towards social media. In other words, social media ROI is the sum of all social media actions that create value. Value isn’t always measured in monetary terms for social media. If the goal is to drive brand awareness, then success can be measured against reach and engagement metrics
Having a social media marketing strategy is essential for most businesses today. Measuring the success of this is even more important to understand what efforts are paying off and what is not working to shift resources or alter the efforts to gain maximum results. Let us get a better understanding of Social Media ROI.
What is Social Media ROI?
Social media ROI is the metric that shows how much value has been generated with all the investments made for social media. This is usually measured in terms of money but can vary for companies depending on the objectives set.
Why do we need Social Media ROI?
There are numerous reasons why it is important to measure ROI on social media.
It can help a company
- Establish the value of social media for the business.
- Show the potential impact social media can have across the business.
- Help evaluate where the efforts and resources are reaping benefits and where they are not being utilized so that the shift in the strategy can be done.
- Help in understanding the audience.
- Support social media budget requirements.
How to measure Social Media ROI?
ROI for social media is a very tricky element to measure as it has many different meanings for different companies. Hence it becomes imperative for the company to have
- Clear Objective– social media can create brand awareness but it is not always enough. To show value created by social media, the company needs to have clearly defined objectives for it which are aligned with overall objectives of the company. They can be based on lead generation, customer acquisition, brand awareness, customer experience amongst other things.
- Goal setting– while the objectives define what social media will help the company achieve, the goals represent how and when these objectives will be achieved. Each goal must be specific, measurable, attainable, relevant, and timely.
- Track the goals– social media metrics are required to ascertain if the objectives are being achieved and the goals are met. Some of the common metrics to track for ROI are reach, audience engagement, lead generation, revenue generation, site traffic among other metrics like comments, likes, and shares.
- Social media spend– clarity about the investment in social media is necessary to determine the ROI. Four things that should be kept in mind are time spent by employees on social media, money spent on tools and platforms to achieve the goals, content creation, and funds allocated towards social ads.
Let us now look at the tools needed to calculate social media ROI
- Social ROI calculator-it is a free tool that makes it easy to calculate the return on social media investment.
- Google Analytics with UTM parameters–adding it to the social media ads’ URL will help determine how much traffic and conversions social media marketing efforts are generating.
- Hootsuite Impact: it measures the ROI of social media across paid, owned, and earned social channels.
- Facebook Pixel: allows tracking engagement and conversions from Facebook ads
- Socialbakers Ads Benchmarks– measure your social media ROI in context by understanding how the return on Facebook ads investment is fluctuating day-by-day across regions and industries
- Hootsuite Insights: helps identify conversations and trends within the industry, reach, brand sentiment, and more. It’s all backed by 100 million data sources, real-time results, and an easy-to-use interface.
How to report Social Media ROI?
- Analysis of each social media platform, ad format, and ad placement is required to assess which of them is the biggest contributor.
- Align the company’s objective with the metrics you want to Align metrics you want to incorporate in the report.
- Present data for a period of time to determine the impact of social media marketing efforts.
- Highlight the key Insights that show how social media marketing has led to the growth in business.
- Identify profitable areas and those that fell short of with an explanation.
- Work out a plan for the future that will help generate better social media ROI.
Steps to Improve the ROI on Social Media
The goal of a social media marketer is to improve the ROI. To achieve that the focus needs to be on social media optimization which means spending money where the best possible returns are expected. Let us look at ways in which ROI can be improved.
- Social media management platform should be used to track the performance of posts and investment should be made where there is the highest potential to get results.
- Content should be published at a time when maximum traction can be gained. It helps in making the most of the resources that are put in creating content.
- The study of the competitors should be done to see what content are they promoting. This will help in making decisions about future posts and how to be ahead of the competition.
- Social media is always evolving. The channels, content, and strategies that are used to connect with the target audience may be ineffective in the future.it is very essential for any organisation to adapt and change the strategy with time.
Social media is an incredible tool that helps a business achieve its objectives. Measuring social media ROI gives valuable insight into the success of the present and the past campaigns and pave the way for the future. But one must not forget that with its continuous evolution, there is always more to learn, assess, and more to achieve.