A phone screen explaining how to measure social media marketing

How to Measure Social Media Marketing ROI

An essential component of any brand’s marketing plan is social media. The return on investment (ROI) of social media activities is also challenging to quantify. For instance, you cannot directly connect a Facebook post with a purchase made in person, or even an online conversion. Instead, you must rely on indirect measures and have faith that your efforts are yielding results.

Can you Measure the ROI of Your Social Media Marketing Strategy?

Yes! The above challenges are the reason why so many marketers find it challenging to accurately gauge their social media ROI. However, things don’t have to be that way! The good news is that there are ways to analyse your social media activity and assess the value it adds to your company. Let’s take a look at how you can measure the ROI of your social media in a few simple steps:

Define Your Roi Measurement Strategy

You must first comprehend the methodology for measuring your social media ROI before you can do so effectively. Establishing your measurement strategy will help you achieve this. This is essentially a plan for what, how and when you’ll track with regards to the return on investment from social media. 

  • What do you plan to measure? 
  • How are you going to measure it? 
  • When are you going to measure it? 
 

The ‘what’ part is easy to understand. You’ll evaluate the impact of your social media efforts on your revenue. However, how you go about doing this will depend on your target market and business objectives. For instance, if your business is a B2B one, you might want to track how many leads are coming from social media. If you’re a B2C company, you may want to track sales made directly from social media. There are plenty of other examples, but you get the point! You can measure your social media ROI in a variety of ways. You can, for example, track website traffic, engagement or customer satisfaction.

 

Different Companies will measure ROI differently and so need different strategies:

Establish a Baseline

You must first establish a baseline before you can track your social media ROI. The expected result of your current social media efforts is referred to as a baseline. It will be difficult to assess whether your efforts are yielding the desired ROI if you don’t have a baseline. Fortunately, the marketing data you already have can provide insights. The expected volume of website traffic and engagement from your social media activities can be calculated using past data. You can use this information to estimate sales and conversion rates. You can review your historical data from the previous three to six months to establish your baseline. Don’t forget to include information about site traffic, user engagement, and sales from before you started using social media. Following that, you’ll be able to observe changes in engagement, traffic, and sales as a result of your social media activity. This will provide you with precise baseline metrics.

A Baseline helps you to estimate future results, metrics, and sales and lets you know whether your Social Media is yielding results

Track KPIs

Now that your baseline has been created, it’s time to monitor your most crucial KPIs.

 

KPIs = Key Performance Indicators

 

KPI tracking describes the tools and procedures businesses employ to keep track of performance indicators. This involves capturing particular data and translating it into useful metrics that can be evaluated and published in clearly understandable charts and dashboards. They typically have something to do with consumer behaviour, like purchases, sales, leads, and recommendations.

You might wish to track a different set of KPIs depending on your aims. You might wish to keep track of the number of leads produced via social media if you run a B2B business and are trying to generate leads, for instance.

KPIs are what you monitor during your social media campaigns, they tell you how your social media efforts are performing and help you calculate your ROI

Track Ad-Equivalents and Behaviours

Your most crucial KPIs have been chosen, and you are monitoring them. It’s time to start tracking ad-equivalents and behaviours right now. 

Software for tracking social media ads, like Sprout Social, can be used to monitor Facebook and Instagram ads as well as their equivalents (engagement generated by sponsored posts). 

You may learn more about how visitors interact with your posts and sponsored content by using ad tracking. You can keep track of the number of shares, likes, and comments that each post receives.

Summary & Next Steps

In order to learn from your findings, you should ultimately summarise them. This is the most crucial step in your social media ROI process. You’ll have a wealth of information at your disposal, including details about the posts that received the most engagement and those that require improvement. You can use this data to tailor and target your upcoming social media plan. This can be accomplished by looking over your data and deciding what action to take next. 

 

Do your social media efforts have a profitable return on investment? Keep up the good work if so! But think about what you’re doing well and what is getting you those results. Think about the cause of this positive ROI rather than just accepting it! Split test your Social Media posts and ads to find out which elements you want to include more of in the future and which can be improved on or left out.

 

Not getting the desired results? If this is the case, make sure to review your plan and figure out how to make it better. Again this can be done through trial and error split testing which we will cover in a future blog post.

Time Constraints on Social Media - Return on Time Investment

This is not necessarily a way to measure ROI, but it can have a big impact on your ROI. A big part of social media involves engaging with your followers or community. Replying to comments and reviews, creating posts and posting on social media all require your time and attention. 

Cutting down your time is a big factor in improving ROI, since your time is worth a lot – in terms of what else you could be doing with it. Many marketers hugely reduce the time spent on the manual Social Media Marketing activities by using automated software like hootsuite (link) to schedule posts, and chatbots like a chatbot example (link) to cut down on time replying unnecessarily to customers. Have a look at tools that help you improve your efficiency to help improve social media marketing ROI.  

Conclusion

Make sure you define what ROI means for your business. Ask yourself:

 

  • What do you plan to measure?
  • How are you going to measure it?
  • When are you going to measure it?

 

Establish a baseline so that you have something to compare to, and track Key Performance Indicators (KPIs) over time. Once these have been established, track Ad-equivalents and behaviours using ad tracking software, and split test ads to find out what’s working well and what can be improved.

You can assess the return on investment from your social media by using these simple steps. Good luck!

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