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  by Sean Si |

How to Measure the ROI of your Social Media Marketing Efforts

How to Measure the ROI of your Social Media Marketing Efforts

Just like in other marketing strategies, money also talks in social media marketing. Whether doing frequent postings, establishing engagement in the audience or customer-related performances, any activity done regardless of the social media platform that is being used must ensure that it can bring returns and profits. Good thing there are KPI’s that can be measured in being able to check if you are achieving your goals.

This may sound easy, but it takes a lot of adjustments, measurements, and strategy shifting tactics to ensure that current marketing efforts are doing well on social media. In some cases, using more than one method has to be done to maximize social media marketing efforts for wider exposure and better engagement as well. 

The ability to explore and know the right tools and formulas must be done because, through the return of investment (ROI), it will be more visible to identify what technology is working well and what is not. This can be an indicator to know if changing the strategy and what kind of tactic must be executed.

Before knowing the ways to measure the ROI of any social media marketing tactics, it is also essential to know the dynamics of ROI and its importance to any organization especially in making marketing approaches.

In choosing investments and projects to consider, aside from the strategies and priorities that need to be looked out for, the so-called Return-of-Investment (ROI) is another factor that needs to be studied and should be included in making decisions. And unfortunately, people struggle to know and learn its dynamics, also failing to explore the potentials ROI can give convenience to them. 

Failing to learn about this tool will create more confusion as if it is this should even be considered, or if it is used appropriately or incorrectly. This article will provide some basic knowledge about this tool, aiming to help potential users to make out of it without additional stresses and uncertainties.

What is ROI?

Popularly known as the return of investment, it is a financial meter that is used to assess and see an investment’s profitability. By this, it means how much income can be generated from a certain venture.

Generally, ROI is the ratio of the net income from an investment which is turned into the percentage from the total investment expenses.


Why is ROI Essential?

In a society where “money talks”, learning ROI has been mostly used by people and even organizations before spending their hard-earned money for further investments with the hopes that they can get a better yield from doing it.

Knowing the subtleties of ROI is a good way to evaluate the extent of the net income that can be gained to a particular investment. Furthermore, it also helps a person to compare and be assured of a higher potential financial gain from a certain venture.

Whether launching a new project or selling a property, ROI has been an important criterion in ensuring that people will get positive results in considering to take their risks from it. This has also been another determinant of an investment’s success if it can prove that it can give better ROI to its potential investors.


What are the Factors that make ROI popular?

Knowing ROI is already an important factor in any business, and the visible it can be seen, the higher the chances that a particular venture will be considered by potential investors. Along with this, there are other attractive benefits of using this method:


  1.   ROI is not a technical or hard-to-understand financial terminology anymore. People who are able to present it also provides a clearer definition and language of what a particular topic is about and how it can benefit its stockholders.


  1.   Compared to other methods, the ROI calculation applies to any type of investment, making it very flexible. As long as a venture has a cost, it can surely have a guaranteed net income.


  1.   Since the general idea of ROI is that if a negative ROI means an investor loses money and a positive one means gaining more, people think that it is that simple, however, knowing ROI is more than just positive and negative matters on the investment.


  1.   ROI also serves as benchmarks in determining how well an investor’s venture is doing. With this, it can help the stockholder know what areas of the business must be maintained or improved.


How to Calculate ROI?

Generally speaking, ROI can be calculated as:

ROI = 100% * net income / cost of investment or ROI = 100% * (gain of investment – cost of investment) / cost of investment.

This may look very easy to do, but there are further calculations involved before reaching this formula. That is why there are various ROI models used and furtherly improved to make ROI calculations easier and more accessible to anyone.


Social Media ROI

As mentioned, ROI stands for the return of investment. From a social media marketing perspective, ROI is a total value that can be gained from any social media marketing activities made. It can answer the question of “how much” you are making. 

There are various measurable things in identifying the ROI aside from the monetary aspect. For instance, if the company is aiming for awareness of its product or service, its social media ROI is determined not on monetary profit but in terms of audience reach and engagements.


The Importance of Knowing Social Media ROI

  1.   Measuring social media ROI can help identify the social perspective of the organization, and what it can do to improve the perception of the audience.


  1.   It shows where the resources, actions, and efforts are being used, and where it can also be effective.


  1.   Aside from knowing where the sources can be used, it can also identify where it is wasted, if there’s any.


  1.   Knowing the social media ROI helps the organization understand more about the pulse of the audience, and can make adjustments from here if needed.


How to Measure the ROI

Identifying a return to social media marketing can be done using the following steps:


  1.   Define your goals or intentions in doing social media marketing.

Some of the measurable goals to be considered are:

–    Creating awareness about the product/service

–    Increase the website traffic

–    Invite and produce new leads

–    Have new influencers

–    Generate sales


  1.   Prepare a timeline for attaining these identified goals.

By doing this, be realistic and avoid too much pressure. With every strategy or campaign to use, there are different periods before seeing its results, so it is essential to be very particular on this. Avoid setting timelines that are impossible to achieve.


  1.   Still basing on the goals and constructing social media strategies.

Another importance in knowing first the goal is that the actions and efforts can also be identified. By doing so, the tendency to have wasted efforts especially in the resources will be lessened.


  1.   Use metrics to keep track if goals are met

Surely not all of the goals can be easy to recognize if it has already been achieved. Some goals need thorough check-ups and monitoring to ensure that the strategies are still in-line to the goals. This is where the tools are called metrics to come in.


  1.   And once you have those metrics, always have them monitored.

Regardless of whether the goals are still aligned on the set timeline or not, keeping the social media metrics monitored and evaluated is still essential. Remember that many of the social media aspects can change even in just the blink of an eye, so it is important to regularly check what else is going on, and where you can gain more when it comes to ROI matters.


Calculating Investments

Here are some of the aspects that consume and affect your social media ROI, and how it can be calculated:


In identifying the time-related expenses while achieving the social media ROI, you can multiply the labor cost per hour by the number of committed hours at a certain time.

Social Media Tools

To calculate for this, get the total cost of all the tools and services used for social media, then either divide it to 52 to determine the annual cost or divide it by 12 for the monthly cost.

Advertising Schemes

This constitutes the total amount spent on every social media advertising activity. All of the generated costings here should equal your investment.

Key Takeaway

Measuring social media success is an important indicator of the effectiveness of your campaigns. By following these effective steps on measuring your returns, you would be able to create some of the most successful campaigns on any social media platform. 


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