Social media ROI (return-on-investment) measurement is an essential part of every social media manager’s job. This allows you to measure the effectiveness of your work and show value to your organization. You can also refine your strategy over time to increase returns.
This post will give you all the tools and tips (including a free ROI calculator), you need to show and improve your social ROI.
BonusDownload this free checklist and guide to help convince your boss to spend more on social media. Expert tips on proving ROI.
ROI stands for return-on-investment. This can be extended to social media ROI, which means you will get the return of investment from both your social media expenses and activities.
Social media ROI, as it is commonly known, measures the value of social media actions, divided by your investment to achieve them. What is the tangible return on investment for your business after all the effort, time and money you have put in?
Here’s how to calculate the ROI of social media.
(Value attained – investment made)/investment made X 100 = social networking ROI
Your ROI should be greater than 0. This means that your investment is making money for your business. Negative ROI is an indication that your investment was more than its value (a.k.a. you lost money).
It’s crucial to measure social media ROI. This is because it will help you build and refine your social marketing strategy. It will show you what is working and what isn’t, allowing you to adjust resources and tactics to make your social media strategy more efficient.
Social media ROI was once a difficult concept to quantify. But that is changing quickly. Hootsuite 2022’s Social Trends survey found that more than 80 percent of respondents are confident in quantifying the social ROI. This is a significant increase from the 68% who responded last year.
Effectively communicating your social ROI can help you increase your social budget and expand the scope of your strategy. It’s much easier to justify spending more on strategies that offer greater value than their cost.
How you calculate ROI will depend on the objectives of your company (brand awareness, revenue, customer service, etc.). ).
This is why the formula used value as the starting point, instead of revenue or profit.
36%) is the most used metric content executives use for measuring content performance. Conversions are fourth most common metric, with 17%.
Source: eMarketer
Engagement is not like conversions. It doesn’t have a dollar value. Engagement is clearly valuable because brand awareness is the top content goal (35%). Brand awareness is more important than revenue or sales. It is hoped that brand awareness will result in real dollars and cents later on.
How to measure ROI using social media
You might have to pay for social media:
Cost of social platforms and tools If you use them, agencies and consultants
Clarifying social media goals will help you define how your social actions are aligned with departmental and business goals.
These goals are not required to measure your social media marketing’s ROI.
Although theoretically, it is possible, real social ROI meaning can only be achieved when social returns are connected to the larger picture.
Consider the many ways that your social media investments could create value.
Conversions to business (such as lead generation and newsletter signups)Brand awareness and sentimentCustomer experience, loyaltyEmployee confidencePartner and supplier confidenceSecurity, and risk mitigation
Hootsuite 2022’s Social Trends Survey revealed that more than half (55%) said that their social media ads were fully integrated with other marketing activities. The top goal of brands that are most confident in measuring social ROI, is to expand social’s reach into other departments.
Step 3: Track metrics that are in line with your objectives
Social media metrics can give you information about your progress towards your goals and objectives. To fully understand your social ROI, it is crucial to track the right metrics.
To prove ROI, you can track the following metrics:
ReachAudience EngagementSite trafficLeads generationSign-ups, conversionsRevenue generated
Consider how you will use the data when deciding which metrics to use. Consider:
Is there anything the target audience does after being exposed to a campaign? Does it align with my larger business objectives? Can it help me make decisions about what to do (more, less, etc.)? Do I have the ability to effectively measure it?
Regularly review your metrics. You should have automated reports sent to you so that you don’t have the task of pulling them manually.
Tip: Use your sales cycle to measure your returns and calculate your returns over a period. LinkedIn research revealed that 77% marketers measured ROI within the first month of a campaign even though they knew that their sales cycle would last three months or longer. Only 4% of marketers measured ROI over a period of six months.
BonusDownload this free checklist and guide to help convince your boss to spend more on social media. Expert tips on proving ROI.
Get the guide for free right now!
LinkedIn found that the pandemic caused a longer sales cycle for B2B customers. To ensure that you know the reporting timeframe, coordinate with your sales department.
Once you have your data, share it with the right people to show how social media marketing impacts your bottom line. These are some tips to make your report standout:
Use a template. Avoid jargon and acronyms.
1. Optimize and test
Are you using social ads? Try different audience segments and ad formats.
You can adjust many things to get the best results. When you are reporting your social media marketing ROI make sure you clearly state what lessons you have learned and how they can be applied to improve your business.
Monster Energy, for example, had a standard approach to Facebook ads. They designed campaigns around reach and video views. They tested the combination of reach and video views in one campaign to launch two new Monster Ultra flavors. The sales saw an increase of 9.2%. They decided to implement this strategy across all brands in the Monster portfolio based on their improved ROI.
Source: Meta for Business
You can also test your organic content. Hootsuite tested whether using “Link in Bio” in an Instagram caption would decrease engagement and reach. The verdict? The verdict?
Hootsuite conducted a test to see how links affect engagement on Twitter and found that posts without links performed the best.
It is important to understand which strategies are best for each audience in order to increase your ROI. It’s another reason you shouldn’t cross post content without adapting it to each social network’s requirements.
2. Collect intelligence and iterate
Social media is constantly changing. Your audience might not be as engaged with the content, strategies, or channels you use today. Your strategy should be constantly updated and adapted.
Are customer requirements and pain points changing? Is your business shifting priorities or resources? Which new platforms or technologies are changing how your audience uses social media?
Social listening is a great way to learn about what’s going on in your market.
Take, for example, the change in perceived value over the past year. Facebook and Instagram saw drops in effectiveness for reaching business goals. However, TikTok and Snapchat saw remarkable gains.
Source: Hootsuite 2022 Social Trends Report
Don’t forget that just gathering the information can bring value to your company. It is a great way to increase your ROI and to use the information to inform future iterations in your social strategy.
3. Keep in mind the bigger picture
Do not chase short-term ROI. This will cause you to lose sight of what makes your brand unique and valuable.
If a trend is annoying your audience or makes your brand voice less clear, jumping on it to gain likes and comments won’t add value. This can also cause long-term damage to your brand.
Remember that social media ROI does not only include returns from the marketing department. When considering ROI, social media can be used for customer service improvement and employee relations strengthening. These are both valuable and worthwhile achievements.
Here are some tools that will help you understand the theory behind social ROI measurement.
1. Calculator for Social ROI
This tool is free and can be used to calculate the return on social media investments for specific campaigns. Simply enter your data and hit the button to get an easy, shareable ROI calculation that is based on lifetime customer values.
Hootsuite social ROI calculator
2. Hootsuite Social Advertising
Hootsuite Social Advertising allows you to manage paid and organic social media campaigns in one platform. You can also analyze and report on the return on ads from all platforms.
You can see the performance of organic and paid content together to create a cohesive social strategy that maximizes both your ad spend as well as in-house resources. This will help you quickly increase social ROI.
3. Google Analytics
Google’s free analytics tool is essential for tracking website traffic, conversions and sign-ups via social media campaigns.
This allows you to track and monitor the success of your social media campaigns over time.
Google Analytics also has made improvements to its tracking systems in order to allow digital marketers to access campaign data without using first- or second-party cookies.
Source: Google Marketing Platform Blog
4. Parameters of UTM
These short text codes can be added to URLs shared on social media for important information about website visitors and traffic sources.
UTM parameters, when combined with analytics programs, give you a complete picture of your social media success. From a high-level view (which networks perform best), down to the finer details (which post drove most traffic to a particular page).
You can manually add UTM parameters or use Hootsuite link settings.
5. Facebook Pixel and Conversions API
The Facebook Pixel allows you to track conversions to Facebook ads, from leads to sales. This allows you to see the entire value of each Facebook ad, not just clicks.
This helps to increase your social ROI. It ensures that your Instagram and Facebook ads are shown to the most relevant audiences, including through Remarketing.
With the introduction of iOS14.5, and continued changes to the use and management of first- and second-party cookies, the effectiveness of the Facebook Pixel is decreasing. Conversions API is a tool that collects information directly from your server to help you mitigate these changes.
Source: Meta for Business
Our detailed guides provide more information about the Facebook Conversions API and the Facebook Pixel.
6. Hootsuite Impact
Hootsuite Impact measures social media marketing ROI across earned, paid and owned channels.
Impact can connect to your existing analytics systems, allowing you to integrate social data with other business metrics. Impact makes it easy to produce reports and provides simple-to-understand recommendations to optimize your social strategies (and thus improve your social ROI).
Hootsuite Impact allows you to get simple-language reports on your social data. This will allow you to identify what is driving your business’s results and where you can improve your social media ROI.
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Hootsuite Impact can help you prove and improve your social ROI. Monitor conversions, conversations, performance, and more across all channels.
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