Digital Lessons: How to Measure Business Social Media ROI
Social media marketing also has its own definition of Return On Investments (ROI) as indicators of success. It can be said that measuring social media ROI is critical to the organisation’s ongoing marketing efforts as it charts the rate of success and its percentages when weighted against costs.
Social Media ROI
But first, what is ROI? Social Media Marketing ROI is the profit or returns that organisations receive as a result from their investment on social media marketing. Like other marketing strategies, this type of digital marketing requires resources — time, human resources, and money in order to maintain.
In knowing the effort and resources poured into the social media marketing campaign, the returns can be in a form of sales, new followers, email subscribers; increase in traffic, amount of downloads, extended brand visibility or increasing brand awareness.
In being a successful social media marketer, knowing how to measure ROI from social media campaigns are essential in the course of the strategy as ROI are determinants that state whether the campaign is a success or not, whether the campaign is getting the results it had hoped or the money for digital advertisements are being spent wisely.
Why does social media ROI matter?
Measuring social media ROI is important because we are accounting the numbers based on the performance of the campaign and its effectiveness. In a nutshell, measuring ROI helps you identify which campaigns were able to produce the desired results, thereby letting you know which campaign, strategy or methodology is effective and ineffective.
ROI also identifies which social media platforms have the most engagement, areas that need more improvement and efforts that are going nowhere.
Unfortunately, recent data revealed a harsh reality. Data from MGA Advertising reveal that a huge number of organisations are struggling with measuring their ROIs.
According to the data, 44 per cent of Chief Marketing Officers (CMO) as respondents admitted that they have never measured the impact of social media on their organisation. Only 20 per cent of respondents said they were able to provide metrics on how social media impacted their organisations. On the other hand, 28 per cent said they were struggling in measuring ROI, while 55 per cent said they’re somewhat able to measure social media ROI.
But how do you exactly measure ROI?
In measuring social media ROI, the focus is in the intent. Intent are the goals that are the reason for running the campaign. With social media campaigns, organisation can focus either on sales, brand awareness, revenue, customer satisfaction, and other goals. That’s why measurements can depend on the organisations’ objectives. Here’s a straightforward formula in measuring social media ROI that was formulated by Social Bakers:
Profit (the returns from the investment) / Investment (the total cost of the resources used) x 100 = social media ROI %
However, this formula will become complex when the organisation starts to include the business objectives to the equation. For instance, if the organisation is focusing brand awareness, then the ROI can be determined based on the number of likes, followers, fans, comments, and mentions. The increase in number from the interactions and engagements can be considered as conversions.
Ideally, measuring social media ROI begins with several steps in order to ensure accuracy of the measurement:
- Define Your Conversion Goals – You will need to identify which actions taken by your target market counts as a conversion. Either they download a form or purchased a product from the online store.
- Track Your Conversions – In order to keep track of your conversions, you will need to use online tools such as Google Analytics or Facebook Pixel codes. Some basic scripting and webmaster knowledge will be needed in order to successfully capture conversions using these tools. Fortunately, Google and Facebook, for example, have provided a very easy roadmap in setting up these conversion tools.
- Assign Monetary Value for Each Conversion – This could get tricky but this one is based on a case to case basis. While ordinarily, we can’t put a price on each inquiry made, we can however put a price on the product that has been sold online. For example, you are selling clothes via an online clothing store that you manage and market. If someone purchases a jacket worth $100 AUD, assigning that monetary value in tracking each successful purchase via cart checkouts will net you on how much sales has been generated in promoting that jacket.
- Measure all Conversions then Segment – If we use the online clothing store scenario again, measuring total sales for each product line that was assigned a monetary value will yield interesting data in the long run. These data could show either the following: (1) Which product is selling the most. (2) Which product is not selling despite the promotional efforts. (3) Do products sell more when you apply a discount or voucher? Segmenting numbers will allow you to focus on each product line’s sales and it will help draw up a number of strategies to further improve their rate of success.
- Determine the Total Cost of the Campaign – Let’s say you’ve counted all purchases made online. Now let’s identify the cost to produce or run the sales campaign. How much was your budget for paid promotions? How many hours did you and your team managed to put in during the campaign? All these are running costs and must be determined and plotted against sales to determine net sales.
- Analyses and Insights – Post campaigns are a time for analyses and drawing insights from numbers found on the amount of sales versus spent for each campaign. This is where we draw reasonable conclusions on what has worked, what has not worked and how we can improve its method of delivery. This way, the next campaign can be in a better position to be better as we have the performance data as benchmarks to improve upon.
Are there tracking tools for this?
There are a lot of tools found online in measuring social media ROI. For each social media platform such as Facebook and Pinterest, they have dashboards that show costs and conversions. To start, you can use Google Analytics, a popular and powerful social media measurement tool. Aside from it being a free tool, it has the ability to record track traffic, bounce rate, click through rates, conversions, and referrals from the social media campaign. Other examples of measurement tools are Kissmetrics, Customer Lifetime Value Calculator, and Cyfe.
The secret to tracking social media ROI is aligning your goals with formulated metrics and Key Performance Indicators (KPI) by leveraging the right tools in measuring social media ROI. Learn how to create strategies and measure social media conversions by achieving a Social Media Marketing Diploma in Melbourne under the Melbourne City Institute of Education. Call 1300 737 004 or email email@example.com for more information.