Calculating your social media ROI can be a complicated process. But what's even more challenging is determining how good your social media ROI is relative to your business.
Simply put, establishing social media ROI consists of calculating the amount of profit or advertising objectives completions you generated from your social media marketing investments. To do that, you can follow this simple formula:
But even after you include all these variables in your calculations and pinpoint your return, it’s difficult to you know for certain that your social media ROI is good. Are your numbers really representative of your success? Or, perhaps, does your ROI fall below the industry's average?
Here's how you can get answers to these questions:
Identifying good social media ROI for your business
Next, you need to find out whether your social media ROI is sufficient in your market. Keep in mind that an ROI that's enough to sustain your business might in fact be too little to help you grow and outperform the competition.
For that reason, you need to evaluate your social media ROI in the context of the market.
Leveraging market context to pinpoint good social media ROI
At this point, you're probably wondering how exactly you're supposed to uncover the competition's ad spending and performance. After all, it's not like businesses advertising on social media are eagerly sharing this type of data.
Luckily, there is a way to unwrap the Facebook spending in your country, region, and industry, learn how much value is generated with those investments, and create accurate criteria to compare your own revenue against.
To find out how you stack up, first look into metrics such as Cost per Click (CPC), Cost per Action (CPA), Cost per Mille (CPM), and Cost per Page Like. If your spend is much higher than the average, you might want to reconsider your marketing strategy (for example by tweaking targeting options, improving your ads' quality, or adjusting your bidding) to achieve better social media ROI.
Then, delve into the market's average volume of engagement. Remember that ROI doesn't always have to be a monetary value and can also be the number of times your advertising objectives were completed. Compare your results against the country, region, and industry to assess if you're getting enough return off of your social media investments.
The analysis of these metrics will demonstrate how good your social media ROI is. It will also give you a detailed understanding of the areas of your social media strategy that could be improved to generate more social media ROI.
But there's one more crucial factor that can heavily impact your social media ROI - Facebook relevance score.
Improving your social media ROI with Facebook relevance score
Facebook advertising landscape never stays the same: there are News Feed algorithm changes, holiday campaigns or new brands entering the market - all of which can impact your revenue. Keeping an eye on how your ad benchmarks change on a daily basis is pivotal to measuring how good your social media ROI is.
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