Measuring Social Media ROI
Many marketers find ROI for social media marketing a challenge. For most, their SMM (Social Media Marketing) efforts are not apparent. Did last month’s Facebook posts improve your revenue? What about that Instagram video that received numerous views, did it improve sales?
Many businesses are having a rough time proving that their marketing efforts are working. In a recent survey, 41% of respondents had absolutely no idea of their social media marketing’s financial impact.
Many companies are not measuring their ROI. Whether it’s because of their inability to tie social media to outcomes, their lack of the proper tools or not having sufficient experience, they just are not doing it. That’s a mistake!
Another mistake is what marketers are measuring. Most businesses make the mistake of concentrating too much on number of “likes” to a Facebook post or the number of followers on Instagram. Many users click “like” and then don’t take further action. Users also “follow” and then move on and never look back. Likes and follows and even comments and shares should not be your focus when looking at the big picture.
Here you will learn what you should be measuring but first, let’s define Social Media Marketing ROI?
The long description differs depending on your company’s goals. We’ll get to that later. For now, here’s the simplified answer that works across the board, “Social Media ROI is what a company gets back from its social media marketing efforts (time and money).”
First determine your SMM budget, that’s the easy part. Then because it’s ideal to measure your return in dollars, determine how much money each goal is worth. This is a bit more of a task but it will be simplified.
Why Measure SMM ROI
Why do you engage in social media marketing? Most do because the marketing experts and everyone else tells you that it’s a necessity, “it’s where your customers are!”
But unless you track what you’re putting in and what you’re getting out, regulating whether your efforts are working or not is tough. We measure our ROI to avoid wasting time, money and energy on strategies that are not working.
Measuring your ROI is also important because it will assist you in correctly:
- Making improvements where needed
- Picking the correct social media channels
- Making changes to specifically impact your goals
Following are simple and clear steps for measuring your companies Social Media Marketing ROI.
Defining Your Goals
Setting goals is important for measuring the return on your efforts. Your goals should have a number attached to them and they should be linked to a campaign. Following are a few examples of commonly used goals to get you started:
- Newsletter signups
- Contact form submissions
- Polls & Quizzes
- Purchases & Trials
All of the above goals track a targeted action taken by a user. Tracking engagement on social media sites are useful but like stated earlier shouldn’t be your primary goal.
You need to focus on goals that convert website visitors to leads that later can be converted into purchasers. Someone sees your Facebook post and clicks on the link to your site, that’s fantastic and it’s an accomplishment but not good enough. Good enough is lead conversions.
Now let’s talk about linking a campaign to your goal. A campaign is a coordinated marketing effort strategy that focuses around a goal. Your campaign should be focused, targeted, and measurable. Check out these examples of social media marketing campaigns to give you some ideas.
For each campaign set up traceable links with Google’s URL builder. This allows you to set up a different link for every share on each social media channel (Facebook, Twitter, etc.) This will allow you to attribute visits from the exact source. Now you can tell how well a campaign is working and what social media channel is producing the best results.
Track & Measure Your Goals
Once your goals are set, it’s time to set up tracking. Since your goals will be created based on visitors taking action, we can track them easily with Google Analytics.
The following video is a quick tutorial on setting up goal using this tool.
When setting up goals it’s important to add a dollar value to each conversion so that you can determine earnings which will be needed when calculating ROI. This will be discussed in the next section.
Track Your Social Media Expenses
Now let’s discuss the amount being spent on each campaign so that we can determine profit or loss. Consider the following:
- Hours Spent: Your time is valuable. Whether you’re a one-man-shop or the head of a marketing team keep track of the hours going into each campaign over a period of time.
- Content: This includes the cost for a professional copywriter, purchased articles & post updates and all other content related payments.
- Social Media Tools: Most social media site like Facebook and LinkedIn are free but if you are paying for ads or boosting post these costs need to be noted. As well any paid social media management tools like Hootsuite.
Remember: Each expense should be calculated separately per campaign and then each type of expense should be added together to come up with the total expense for each campaign.
Once expenses are calculated you are ready to determine your ROI for each campaign with this simple formula.
(Earnings – Costs) x 100 / Costs
In addition, it’s important to define your ROI for each social media platform. Segment your expenses for each platform and total it up. Then estimate the amount of earning from each channel by evaluation the links created with Google URL builder. Now use the same formula to calculate ROI for each social media platform. This will give you the data you need to decide which is performing best. And for those showing a loss, you should consider making adjustments to cost and/or campaign strategy.
There are other benefits to consider
There are indirect event that occur on social media that can be hugely beneficial. For example, say an influencer shares your post with his numerous and dedicated followers, image how this can affect exposure and brand improvement. It isn’t traceable but you should still consider these occurrences when deciding what’s working and what not.
Now You See…Tracking Social Media ROI isn’t impossible!
It’s all about planning and being strategic. Pay close attention to your set up and be organized in this process so that in the end you have a clear and accurate picture of what you are getting in return for you efforts.
What are you ideas or thoughts?
For Internet Marketing assistance contact me at 312 798 9332 or [email protected].