Engagement happens in an instant on social media. One minute, a post catches fire; the next, it falls flat. This rollercoaster can leave marketers questioning which efforts deliver results.
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Understanding your social media return on investment (ROI) brings clarity. It enables you to allocate budgets strategically over time to boost outcomes.
In this blog, you’ll find practical measurement strategies and actionable tips to improve ROI based on what the data shows.
What is Social Media ROI
In simple terms, social media ROI calculates the business results you receive in return for your social media investments. It could show how social media posts generate leads, drive traffic to your website, or increase brand awareness.
Why Social Media ROI Matters
Measuring social media ROI is crucial for several reasons:
Performance Insights
Your social media manager’s nightmare is to be asked in a boardroom what content is truly working. While good instincts help guide decisions, hard proof directs your optimal social media use by showing where to double down and cut back.
Analyzing ROI lets you pinpoint what content and tactics perform best. These insights direct future efforts, showing where to double down and what to avoid.
For example, testing Facebook carousels against Instagram Reels over three weeks allowed a retailer to learn carousels drove higher reach and engagement. With this data, they scaled carousel content further.
Budget Allocation
Speaking of those tough board meetings, being able to showcase previous ROI helps justify requests for more staff, tools, and paid campaigns. Proving ROI justifies social media budgets. Quantifying value guides optimal investment across paid/organic efforts.
For instance, a B2B SaaS startup uses Google Analytics to track social media conversions. From month to month, they determine which channels and campaigns bring the highest ROI. This information guides budget allocation for future campaigns.
Value Proposition
Finally, hard ROI data demonstrates the concrete impact of social media on businesses. When stakeholders understand how social efforts contribute, they’re more willing to invest further. You likely have a strong social media presence, so prove its worth.
How to Measure Social Media ROI
Measuring social media ROI is often a complex process, as it involves tracking multiple data points. Attribution is also not always straightforward, as social media may not be the sole driver of a conversion.
Select Relevant Metrics:
With goals set, determine what metrics will indicate the clearest indication of progress toward hitting your targets. Relevant metrics fall into two main categories:
Activity Metrics:
- Impressions
- Reach
- Mentions
- Engagement rate
Business Impact Metrics:
- Website sessions
- Conversions
- Revenue per conversion
Track Costs
Next, add up all costs of social efforts over your set period. Be sure to tally all expenses associated with your social media initiatives across the defined time period you are analyzing.
Some of the main costs to track include:
- Ad spend
- Asset design/creation
- Software subscriptions
- Staff hours
Accurately documenting all these expenses over your selected time frame provides the “cost of investment” component needed to ultimately calculate ROI. Revisit these totals each period to identify trends or particularly costly elements.
Calculate ROI
With all this data, you are ready to plug the metrics into the ROI formula. The formula to calculate social media ROI is as follows:
(Value from social efforts – Social media costs) / Social media costs x 100 = Social Media ROI
A positive percentage means your social media use is profitable. If negative, you are currently investing more than earning. For example, a cybersecurity startup runs LinkedIn ad campaigns to promote a guide on ransomware protection. The campaigns generate 500 downloads and 15 SQLs. With a $5,000 total in ad spending and staff time, costs are moderate.
But through sales tracking, those 15 SQLs convert to $30,000 in new business over the next quarter – a 500% ROI from the social campaign.
Monitor and Report on Trends
Once you have your social media ROI baseline calculated for a campaign or initiative, ongoing monitoring, and reporting are key to continuing progress. Set reminders to re-evaluate your core metrics and costs and compute ROI at consistent intervals – whether monthly, quarterly, or annually.
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Capture key ROI trends, insights, and campaign recaps by building reports or presentations. Visualizing the data for stakeholders is crucial for steering budget or resource decisions. Aim to showcase elements like:
- ROI progression over a set time horizon
- Goal achievement analysis
- Notable partnerships, campaigns, or content
- What strategies amplified impact & which underperformed
- Lookbacks compared to past periods
- Recommendations to reallocate funds or shift directions
Steps to Improve Social Media ROI
Now that we’ve covered what social ROI entails and the steps for tracking it, let’s get into everyone’s favorite part. Here are proven ways to enhance the results over time:
Set the Right Goals
Social media goals must align with wider business objectives. But don’t just set broad “awareness” targets. Get specific on tangible goals that ladder up – such as email signups, lower cost per lead, or increased revenue. Define measurable outcomes. This keeps plans focused and lets you clearly showcase the ROI impact later when reporting to executives.
Goals should be Specific, Measurable, Achievable, Relevant, and Time-based (SMART). For example, instead of a vague goal like “increase social media engagement,” your objective could be to increase Instagram story replies by 20% within the next quarter. This allows you to track progress and adjust strategies accordingly.
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Get to Know Your Audience Well
Understanding customer psychographics allows you to create social content that deeply resonates. Research by Marketing Insider Group found that 56% of companies leveraging detailed buyer personas generate high-quality leads.
Run surveys and interviews with current top followers. Learn what posts they love versus ignore. Mapping detailed audience personas shines a light on core values and interests. And that should inform content development and community management approaches.
This information can be gathered in various ways. Perhaps try running polls and Q&A sessions on social media. You can also send out email surveys or even host focus groups. Alternatively, you could leverage existing data from customer relationship management (CRM) systems.
Understand the Algorithms
Study how each major platform algorithmically surfaces content to users. It usually revolves around factors like engagement, interests, or recency. These algorithms are key to visibility. Optimizing based on relevance signals like hashtags and personalization lifts reach. Evaluate algorithms quarterly as they rapidly change.
For instance, TikTok’s algorithm places great emphasis on the ‘Discover Tab’ and previous interactions. On the other hand, Instagram ranking signals include specific interests and relationships with people you follow.
The best way to stay in the loop is to follow platform blogs and attend webinars. Consider asking your account manager for tips as well.
Do Competitive Analysis
Audit competitor’ social media presence to unravel what engages their audiences. Compare follower counts, community growth rates, and content themes that attract engagement. This spots effective tactics to inspire your strategy. You can emulate what content works elsewhere while putting your unique stamp and voice on it.
There are even tools available to help with this process, such as Determ’s social media monitoring and analytics platform. Determ uses AI and machine learning algorithms to track rival brands across every social platform, 24/7. This reveals the type of content and messaging that most engage their audiences.
Monitoring highlights content approaches and themes you may wish to experiment with. You can put your unique stamp on emulating or repurposing what tactical angles demonstrate traction elsewhere.
Determ even contextualizes whether your share of voice and reach compares favorably or trails rivals. This quickly spotlights where there is white space to strengthen your presence and voice.
Experiment with Your Content
As you’re creating content, think about mixing up the format – try something beyond your regular posts. Instead of just text and photos, what happens when you use Stories, Reels, or short video clips?
Draft variations of a post using different formats. Make a few versions: a photo carousel, a Stories video, a short Reel, etc. And don’t forget to switch up the caption and call-to-action for each one, too.
Then, publish them all over a few days and watch the data roll in. Pay attention to the engagement metrics for reach and clicks. See if any particular format stands out from the others. Making little tests like this can reveal some surprising results about what your audience best responds to.
Tactics like A/B testing can be used to identify the most effective content for your target audience. It’s important to continuously monitor and analyze results to make data-driven decisions.
Boost Engagement
Prioritize driving social engagement through likes, clicks, shares, and comments. Follower echo chambers easily develop as they only see posts that reinforce existing passions and beliefs. Thoughtful content that provides entertainment value, education, or exclusives breaks through effectively.
There are also certain formats that lend themselves better to engagement. Namely, visual content like photos and videos. According to Twitter, posts with GIFs receive 55% more engagement than those without.
Responding to feedback and encouraging user-generated posts also lift engagement.
Test and Optimize
Allocate a portion of budgets to trying emerging platforms, new targeting parameters, and different creatives. You can learn a lot by frequently reviewing performance data, tweaking poor performers, and shifting dollars to high ROI elements.
According to Statista, social media marketing accounted for 17% of the marketing budgets. These practices can help squeeze more value from investments. Optimization through constant testing is essential as this landscape evolves.
Keep an Eye on Social Media Trends
Speaking of which, consumption patterns, algorithms, and ad offerings continuously shift. Remain vigilant. Identify relevant innovations early, before competitors. Read industry analyses, attend events, and use tools like Determ.
Jumping on opportunities early also generates fresh buzz. Success stories typically require a mix of planning, timing, and luck. The sooner you know about new developments, the more likely you are to reap outsized rewards from them.
In a Nutshell
Measuring and boosting social media ROI is an ongoing effort. But brands willing to dive into the data, test new approaches, and realign based on insights will see their social media efforts contribute tangibly to strategic goals.
Michael Meyer is the growth strategist at Leads at Scale – a lead generation service provider. His main areas of expertise are communication & business growth. He loves traveling, delicious food, and cars.
