How to measure the ROI of your social media
Social media ROI can be beneficially informative, giving insight on where to direct future efforts and expenditure. However, how to measure ROI is always tricky. Knowing the right or wrong way to do it can actually be highly individual.
What matters is that it works for your business so that you can direct your social media campaigns more effectively in the future.
Of course, we previously covered how to measure the ROI of your content marketing, so let's take an even further dive into the specifics around social.
Social media ROI is a measure of value – for example, how well are your social media platforms achieving your objectives? ROI differs from other measures in that it actually aims to quantify this in numerical, and even financial terms. In its simplest form, this can seem easy to calculate. Take raw costs, such as advertising spend and compare it with the amount of business brought in.
In reality, how to measure ROI of social media is far more complex. The costs involved in social media are not always clear cut. For example, how do you quantify exactly how much time was spent on one campaign versus another?
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However, even harder to pin down are the returns. Especially when looking at B2B social media ROI, we can expect leads to bounce around different touch points before a final sale. So, how do you determine the value of each of those touch points relative to each other?
Nonetheless, it is useful to try measuring the ROI of social media campaigns, simply because the exercise alone will be revealing and give you some great insight.
Slimmed down to a basic calculation, social media ROI is:
Value generated by social media activities divided by investment in those activities
You can then multiply this by 100 to get a percentage.
There are various different social media ROI tools which can help you with the process.
Aside from the actual insights it gives you, marketers are usually expected to justify their costs and spends in terms of value driven. ROI is a core way of placing a figure on this. Indeed, research has revealed that 58% of marketers have to prove their B2C and B2B social media ROI in order to achieve approval for future expenditure. In short, ROI is a term that strategic management understands.
Whilst social media ROI tools measure things in different ways, and measuring ROI of social media campaigns is notoriously difficult, the information helps determine what’s working and what isn’t. You can then redirect efforts in the best way.
With social media, you cannot do it all. It’s an enormous beast. So, you need some way of narrowing down which social media posts and channels are worth your time and effort. Obviously, the more you spend on something, the more you need to be sure that it is worth it. It can highlight inefficiencies, stumbling blocks and areas for potential growth.
Social media ROI also helps you begin to determine exactly how much value you are offering to your audience. With B2B social media ROI this can be particularly beneficial as you always want to be relevant and driving revenue.
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What truly matters is what counts as a “good" ROI for your business and industry, and that you are increasing your ROI over time. Therefore, measuring against your specific business, over time, is vital to understanding ROI overall. Also, ensuring you consistently compare the results of the same social media ROI tools is important, so that you are comparing like for like.
When you choose how to measure the ROI of your social media, consider how you will use it over time so that the data is valuable. You can then benchmark results within your own context.
For measuring the ROI of social media campaigns there are multiple social media ROI tools and strategies you can use. To choose, you will need to have a clear idea of your business objectives. You may well choose to eliminate the financial element and focus very much on value, in other defined terms. By considering the ways that a campaign can add value, you can then measure your success against that objective.
With these objectives and goals set for your B2B social media ROI, you can then choose different performance metrics to measure them. You may use things such as reach, traffic, engagement, lead generations, conversions or revenue generated.
You then want to review your metrics consistently and regularly over the lifetime of the campaign.
Alongside this you want to understand how much you are spending. This may involve premium costs, memberships, social ad spending, cost of creating content, hours spent by personnel and outsourced expenses.
Armed with the information, you may discover that you want to improve your B2B social media ROI. There are multiple ways in which you can do this.
- Testing: Use A/B testing to see what approach delivers the best results, perhaps using different audience segments.
- Optimize: Use your information from testing to refine and optimize your efforts. It’s a matter of changing things as you learn what works and what isn’t worth the effort involved.
- Brainstorm and research: Talk with others and look at what competitors do. See how they are gaining value and where they spend their resources. From this you can create your own hypothesis.
- Adapt: Keep your customer in mind and how they use social media to see how this changes over time. You will then need to adapt your strategy to meet them where they are.
- Give things time: With social media there can be a slow-burn element. By only measuring ROI in the short-term you may miss the long-term value of a campaign, or even an individual piece of content. Improvements to your brand reputation and customer relationships are not instant wins, but they are hugely valuable.
Knowing how to measure the ROI of your business and how to improve it over time ensures that you can track success and strategize effectively over time, understanding how your campaigns meet the needs of your audience, and ultimately turn into revenue.
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