The Nightmare That Haunts Every Social Media Manager
As a social media manager, one of my recurring nightmares is being pulled into a meeting with executives and asked to prove our social media ROI. This scenario haunts me, and not because I don’t believe in the value of social media. Proving ROI is a multi-step process with several variables, inputs, and considerations. Still, I know that social media does make an impact, and I’m not alone in this struggle.
In fact, 96% of marketers agree that social media delivers positive returns. But now it’s time to prove it. In this article, we’ll walk you through the steps to calculate and improve your social media ROI, including a list of our go-to tools. Nightmares begone!
Understanding Social Media ROI
ROI stands for return on investment. For our purposes, social media ROI means the business value returned from social media marketing and advertising. In other words, social media ROI measures the results of your social media efforts compared to the costs.
Here’s a simple formula to calculate social media ROI:
Social media ROI = (Value generated from social media – Costs of social media investment) / Costs x 100
The result of the formula is usually expressed as a percentage. Any ROI percentage greater than 0 means that your social media efforts have generated more value than the resources you invested. In contrast, a negative ROI means you invested more than you made back, aka you lost money.
Measuring social media ROI empowers marketers to prove the value of their efforts. By calculating ROI, you can determine what’s working and what’s not, and attribute real business results to social media. And if you want to earn more budget and resources to scale up your social media strategy, you’ll need to communicate these results to key stakeholders and executives.
Setting Measurable Social Media Goals
If you want to hang onto your budget, you better be able to prove why you need it. But how do you calculate ROI when social media can’t always be tied directly to revenue or profit?
The first step is understanding your business as a whole. What are the main objectives, and how can social media contribute to those goals? There are various ways your social media investment can create value, such as:
- Increasing brand awareness
- Generating leads
- Improving customer retention
- Enhancing customer service
- Fostering partnerships and collaborations
That said, you shouldn’t expect your social media strategy to achieve all of the above. Focus on objectives that are most likely to contribute to your business and department goals.
Now that you’ve determined your social media objectives, the next step is to track their performance. Many social media metrics can give you insights into how your strategy is performing, but choosing the right metrics is essential to fully understanding your social ROI.
Some key metrics to consider include:
- Website traffic from social
- Conversion rates from social
- Customer acquisition cost (CAC) from social
- Engagement rates
- Follower growth
- Share of voice
Deciding which metrics to use depends on your specific objectives. Consider what actions you want your audience to take, and choose metrics that align with those goals.
Calculating the Costs and Returns
Once you’ve measured the value created based on your chosen metrics, you can move on to calculating the cost side of the equation. Social media costs should include all expenses required to create and publish content, such as:
- Labor (e.g., salaries for your social media team)
- Content creation (e.g., graphics, video production)
- Advertising (e.g., boosted posts, social media ads)
- Analytics and reporting tools
Before adding up your costs, you should know the returns you’re looking for. This may be based on a specific time period, campaign, post format, or otherwise. This will help you narrow down which costs to include in your total.
With your total value and costs in hand, you can input them into the formula above to calculate your ROI. If you’re not a fan of spreadsheets or manual calculations, we’ve built this free social media ROI calculator to do the work for you.
Sharing Your Social Media ROI
Now that you know your ROI, it’s time to share those results. Your report should show stakeholders how your social media efforts impact the bottom line. Here are some ways to make your report stand out:
- Create visually appealing, easy-to-understand charts and graphs
- Highlight key insights and recommendations for improvement
- Tie social media metrics directly to business objectives and outcomes
- Compare your performance to industry benchmarks or your competitors
Even better, use the insights you’ve gained to create new iterations of your social strategy. Your ability to adapt will lead to increased ROI over time.
Optimizing for Improved ROI
No matter the strength of your social media skills, you can never predict how your audience will respond. All audiences are different, but experimentation is the best way to mitigate this.
You can run A/B tests on social media to test different factors and optimize your content based on the outcomes. For example, we ran an experiment to test whether Instagram carousels perform better than Reels. After three weeks, we found carousels earned better engagement and reach.
There are many factors you can test, including:
- Content format (e.g., image, video, carousel)
- Messaging and copy
- Hashtag usage
- Posting times and frequency
Reviewing your social media analytics helps you learn what types of content actually resonate with your followers. Based on those insights, you can scale up what’s working and increase your social media ROI.
Leveraging the Right Tools
Measuring social media ROI isn’t a one-size-fits-all affair. The right tools are as important as the right method of calculation. Here are some must-have tools for your arsenal:
- Emplifi Social Marketing Cloud: A comprehensive social media management platform that helps you track conversions, conversations, and performance across all channels.
- Google Analytics: The industry-standard for website analytics, allowing you to track traffic, conversions, and the value of your social campaigns.
- Hootsuite: A popular social media management tool with built-in analytics and reporting capabilities.
- Sprout Social: An all-in-one social media management platform with powerful ROI tracking and reporting features.
Remember, social media is constantly evolving, and what works today might not work tomorrow. By mastering the art of measuring social media ROI, you’ll be able to adapt your strategy and squeeze the most out of your social media efforts.
Ready to take your social media ROI to the next level? Check out itfix.org.uk for more tips and resources to help your IT business thrive.
