Measuring the ROI of Social Media for IT Companies

Proving the Value of Your Social Media Efforts

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 – I’m not alone on this either. In fact, 96% of marketers agree that social media delivers positive returns. And now it’s time to prove it.

In this article, we’ll walk 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 strategy compared to its costs. It’s a way to assess whether your efforts are generating a positive outcome for your financial or strategic goals.

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 you to prove your efforts’ value. 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. If you want to hang onto your budget, you better be able to prove why you need it.

Aligning Social Media Metrics to Your Business Goals

How you calculate ROI varies from business to business. Measuring ROI depends on which objectives matter most to your company. These priorities might include brand awareness, revenue, or customer satisfaction. Our 2023 Social Media Trends research found that marketing practitioners and leadership perceive the value of social through different metrics.

This perception mismatch explains why the formula above uses “value” rather than revenue or profit as the starting point. It allows for combining many metrics to find the total value. Here’s how to measure ROI with social media:

1. Understand your business objectives: The first step to calculating ROI 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 generating revenue, improving customer retention, or strengthening brand awareness.

2. Choose the right metrics: 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. Metrics you can track to prove ROI include website traffic, lead generation, customer retention, and revenue.

3. Measure consistently: You should get automated reports sent to your inbox so you don’t have to remember to pull them yourself. Tip: When calculating your returns, choose a reporting period based on your sales cycle. LinkedIn research found that 77% of marketers measured results within the first month of a campaign, even though the average B2B sales cycle is two months.

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, tools, and advertising spend.

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.

You should then be ready to input your total value and costs into the formula above to calculate your ROI. If you’re not a fan of spreadsheets or manual calculations, Hootsuite has built this free social media ROI calculator to make the process easier.

Communicating 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 reports: Use charts, graphs, and other visual elements to clearly communicate your findings.
• Highlight key takeaways: Summarize the most important insights and recommendations in a concise, easy-to-digest format.
• Tell a story: Use narrative elements to bring your data to life and make it more relatable for your audience.
• Provide actionable next steps: Outline specific actions you plan to take based on your analysis to improve future performance.

Continuously Optimizing Your Social Media Strategy

Social media is constantly changing – if it’s not the algorithm, it’s your audiences’ preferences. The content strategies and channels that work today might fall flat tomorrow. You need to update and adapt your strategy over time.

Knowing how to understand and extract insights from your social media analytics is a powerful skill for marketers. Hootsuite Advanced Analytics helps marketers flex that skill. It uses powerful integrations to help you track conversion and business goals, and includes recommendations, easy-to-share reports, top-performing posts, and suggestions for improvement.

Clear and actionable reports bring value to your team and stakeholders. Even better, using the insights to create new iterations of your social strategy. Your ability to adapt will lead to increased ROI over time.

Experimenting to Boost Your Social Media 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.

You can run experiments through organic social accounts and paid ad campaigns. For example, we ran this experiment to test whether Instagram carousels perform better than Reels. After three weeks, we found carousels earned better engagement and reach. Check out all our social media experiments here.

There are many factors you can test, including post format, messaging, visuals, and targeting. Testing and 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 that content or ad and increase your social media ROI.

Benchmarking Your Social Media Performance

Are you looking for ideas on what to test or how to gauge the success of your metrics? It might be time to do some competitive analysis. I’m sure I’m not the only marketer who’s spent hours pulling together average engagement and click-through rates, only to wonder, “How do I know if these numbers are actually good?”

In those cases, benchmarks are my go-to resource. Hootsuite has built-in industry benchmarks so you can compare your own post performances side-by-side with averages from other companies in your industry. Want to compare your results with your direct competition? Competitor benchmarks are even better than industry benchmarks. Here’s how to use competitor benchmarks in Hootsuite.

Tools to Simplify Social Media ROI Measurement

Now that you know the theory behind measuring social ROI, here are some tools to make the process easier:

1. Hootsuite Social Advertising: This is a cross-platform dashboard for managing paid and organic campaigns. It allows you to analyze the ROI of ads and organic content in one place. When you can review your entire social strategy in one place, you can look at the big picture to maximize your resources and improve social ROI.

2. Google Analytics: This free analytics tool is a must-have. It helps you track website traffic, conversions, and signups from social media campaigns. Google Analytics enables you to go beyond reach and engagement, and even track the value of your social campaigns over time via conversion funnels.

3. UTM Parameters: These short text codes within URLs enable marketers to attribute and track website visitors from traffic sources like social media. UTM parameters feed information to analytics tools like Google Analytics, Adobe Analytics, and Hotjar.

4. Tracking Pixels: If you’re running social media ad campaigns, tracking pixels are essential for measuring the return on your ad spend. Pixels allow you to track visitors that come from social ads and their actions, such as purchases.

5. Hootsuite Advanced Analytics: This is Hootsuite’s most powerful analytics solution yet. It measures social media marketing ROI across paid, owned, and earned social channels. Advanced Analytics connects to your existing performance measurement systems, making it easier to integrate social data with the rest of your business metrics.

Wrap Up

Measuring the ROI of your social media efforts doesn’t have to be a guessing game. By aligning your social media metrics to your business objectives, experimenting to optimize your strategy, and leveraging the right tools, you can prove the value of your social media investments and continue to improve your results over time.

At the end of the day, your ability to adapt and learn from your social media analytics will be the key to driving long-term ROI for your IT company. So keep testing, keep iterating, and keep proving the power of social media to your stakeholders. And if you ever find yourself in that dreaded ROI meeting, you’ll be ready to knock it out of the park.

Ready to take your social media ROI to the next level? Visit https://itfix.org.uk to learn more about our IT services and how we can help you maximize the return on your digital marketing investments.