Return on investment (ROI) is a key component to evaluating your marketing success. Not only is it helpful in the case of traditional advertising but also in digital advertisement result analysis. Since social media is an important digital marketing platform, what your investment there is returning you is crucial to know. This is what we call social media ROI. In simple terms, it means how much you are getting in return for every penny you are spending on social media marketing and management.
Trust me; your business needs to know about social media ROI, especially in the contemporary social media-dominated world where more social interaction of individuals is done through such platforms rather than through traditional avenues. For that very reason, UnityDiv has decided to bring a blog explaining to you in detail the procedure for measuring social media ROI. Scroll down for a complete guide;
What is ROI?
ROI stands for return on investment. That means how much profit you earned from your marketing and advertising investment. You can calculate the return on investment (ROI) for every investment you make, be it in real estate, stocks, or social media. The point is whenever you are expecting to multiply your money by way of using your money, you measure return on investment. In the case of social media, it is about calculating the monetary outcome of investment in an advertising campaign, social media marketing software, labor wages, and more.
Social Media ROI Calculator
The general formula for calculating social media ROI;
Revenue-Investment/Investment x 100
Here, the revenue is the total profit the business earns from social media advertising. The investment is the amount of money you direct to your social media management and marketing purpose. Last but not least, ROI is the profit you acquire out of your investment.
Social Media ROI Example
As an example, consider you invested $100 into your social media marketing and management. You got 50 leads out of this investment, each becoming a conversion, contributing to $10 per product. Based on that, your total revenue earned is;
50×10=$500
That means for your investment of $100 in social media marketing and management, you earned a total of $500. But what is the ROI? To calculate that, put the given and acquired values in the above-given social media ROI formula;
500-100/100×100=$400
How to Measure Social Media ROI?
Let’s know how to measure social media ROI;
Know the Budget
Tracking the expenses is the first step in calculating ROI. Without knowing how much and where you are investing, you can never get a definite answer for the ROI achieved. For that, keep track of your budget, which is directed at social media content development, paid advertisements, social media agencies or labor, and software used. Everything that you are spending your money on needs to be accounted for.
Revenue Attribution
Revenue attribution is an indicator used to assess the viability and effectiveness of marketing strategies on social media. They play a huge role in the assessment of your social media ROI. For example, questions for assessments that come under it are;
- Is the social media marketing campaign generating my business-qualified leads?
- How many conversions or direct sales is the business getting from social media marketing?
- How many email signups, product downloads, and purchases have the business gotten from the marketing campaigns?
- Is the brand identity and awareness improved? This can come under sentiment analysis and brand equity, which checks how your customers view your brand. In other words, what is the value of your brand in the minds of your potential customers?
Use Tools to Measure ROI
For the accurate calculation of your social media ROI, it is preferable to use ROI calculator tools available for free on the internet. One such and very popular tool is Google Analytics. Here, you can measure the result of your social media advertising campaigns by checking and analyzing where you are getting the most traffic, which ads are working better, which are dead, and which strategies are likely to yield maximum output.
All this helps you monitor the progress of metrics that influence your conversion metrics, like traffic source, leads, and sales. In the case of Facebook, you can most definitely go for Facebook Pixel for calculating your social media ROI. It also guides you on the ways to help you maximize your ROI. To your surprise, all these tools are free, and you don’t need any extra investment for that.
Ways to Improve Social Media ROI
Here are a few ways that can help you improve social media ROI;
- Identify the successful strategies for your business. For example, what best suits your business: Influencer marketing or paid advertisements?
- Optimize and increase the frequency of your social uploads. Remember the trick: the more you are on social media, the more algorithm-friendly your social media profile becomes. However, it’s not just the quantity of posts; the quality does matter a lot. One engaging and captivating post is much better than five daily but boring posts.
- Engagement is the heaven door to increased conversions. In this regard, posting at the right time, using the right kind of color contrasts, compelling copy, and catchy visuals are the key.
- Give special offers, discount packages, and coupons to the consumers coming to your landing page and making a conversion from social media.
This way, they will keep following your social media profiles to stay informed about the recent updates and incentives. Not only that but there are increased chances that first-time customers who pitched your product out of some incentives offered might become your loyal, repeated, long-term customers.
Final Thoughts
Indeed, measuring the social media ROI is the basic interest of every business these days. After all, it helps businesses a lot in data-driven and informed decision-making. As a professional digital marketing and social media management service provider agency in the market, UnityDiv stresses greatly the importance of calculating social media ROI for future decision-making.
If you want to leverage our highly active, objective, and data-driven social media management and marketing campaigns, contact us now to get the best quote.
