The best possible return on investment (ROI) has become a holy grail of the social media marketing world. No wonder: high social media revenue can be great proof of the success of your strategy. If you're still wondering how to calculate it, here's everything you need to know about measuring your social media ROI:
1. What is social media ROI?Social media ROI is a metric showing how much value you generated with your social media investments. It is usually a sum of money, but some companies view ROI as a non-monetary value such as comments or newsletter signups. What social media ROI means for your own business depends entirely on your objectives.
2. Why do you need to measure your social media ROI?
- Demonstrate the value of social media marketing to your company
- Prove that your social media marketing strategies are effective
- Identify areas of your strategy that are particularly successful to shift more budget towards them
- Pinpoint aspects of your strategy that aren't working and fix them
- Support social media budget requirements
3. How do you properly calculate social media ROI?
Profit - the money you’ve earned from your social media marketing efforts
Investment - the total cost of your social media marketing efforts
Of course, you can stop here and assume that 10 ebook downloads is what you got from investing $50 in your Facebook ads. But you can also dive deeper to find out how much money you generated through the ebook downloads.
How do you do that?
Next, also add Facebook Pixel to your download Thank-you page to track the volume of users who actually got your ebook.
Events such as ebook downloads, newsletter signups, or trial registrations are often labeled as "micro-conversions." They are basically small checkpoints along the marketing funnel that users hit before turning into customers. The volume of micro-conversions can help you make a rough estimate of the number of the final macro-conversions, such as product purchases.
In order to do it, you need Google Analytics and their conversion tracking tags, called UTM parameters. Add these to the hyperlinks within your ebook that lead to pages on your website where users can buy your products. This way, you'll find out how many people made a purchase and how much money they spent.
This is it: now you know exactly how your audience went from clicking on your Facebook and Instagram ads to converting. As you can see, monitoring the customer journey and your revenue can't be done without integrating your social, digital (web), and business data and analyzing it in one place.
Social media ROI is not only about your sales profit, but also about the lifetime value of your customer. If your customer retention is low, you'll need a significantly higher ROI to justify your investments. If, on the other hand, your customers stay loyal to your brand, you can afford to spend more on your social media marketing activities.
4. What you need to calculate your social media ROI
- Facebook Ads with Facebook Pixel - add Facebook Pixel to your website's key pages to see how many people interacted with your Facebook ads and which ads led to to conversions
- Google Analytics with UTM parameters - add Google Analytics UTM parameters to your social media ads' URL to find out how much traffic and conversions your social media marketing efforts are generating
- Socialbakers Ads Benchmarks - measure your social media ROI in context by understanding how the return on Facebook ads investment is fluctuating day-by-day across regions and industries
5. How do you identify good social media ROI?
To understand how good your social media ROI really is, you need to benchmark it against the market. This way, you'll know how much your competitors are investing in their social media marketing efforts, what they're getting in return, and how your own revenue stacks up.
6. Calculating social media ROI - 3 case studies to inspire you
The company's social media strategy was straightforward - they were actively engaging in building relationships through conversations with their followers. Despite its simplicity, the approach turned out to be hugely successful in generating revenue.
Within the first three weeks of social interactions, the company gained 3,000 Twitter followers. They also received orders for a total of 40,000 cupcakes, and exceeded the revenue forecast by 600% in the first year.
The company is using the platform mainly to raise awareness of their restaurant and provide customer service. However, they also frequently tweet about seasonal and daily offers - often in a fun way, with a sprinkle of creative hashtags.
AJ Bombers' clever use of Twitter paid off - within the first year of joining the platform, the company's weekly sales increased by 60%. Additionally, they managed to build an impressive American food-loving community of more than 20,000 followers!
In order to achieve their objective, Blendtec focused on creating a series of YouTube videos. These weren't any ordinary videos, though, but clips showing different objects being shredded to pieces in the company's blenders.
The videos, organized in a series called Will It Blend, hit it off with the YouTube community. Within five days of posting, they received 6 million YouTube views! The videos also drew the attention of major news outlets, including CBS and Discovery Channel, and skyrocketed Blendtec's sales 700%.
7. How do you report on your social media revenue?
- Analyze each social media platform, ad format, and ad placement separately to assess the biggest contributor to your revenue
- Align metrics you want to include in your report with the company's marketing objectives
- Measure and present data stretching over a period of time that's long enough to demonstrate the impact of your social media marketing activities
- Don't focus on just talking numbers and instead present key insights that accurately describe how your marketing efforts contributed to the business's bottom line
- Identify areas of your strategy that were profitable and those that fell short and explain why
- Map out the future strategy that will allow you to generate even more social media ROI
8. State of revenue measurement: 9 essential social media ROI statistics
- 56% of marketers think they're unable to track their social media revenue
- 58% of businesses measure ROI in terms of engagement, such as likes or shares
- 21% measure conversions
- 16% measure amplification (share of voice)
- 2% measure customer service metrics
- The most-tracked metrics for paid social campaigns are audience reach and growth, clicks to site/page, engagement, and conversion rate
- Social media advertising budgets are predicted to double by 2023
- Facebook boasts almost $20 average social media ROI per user
- Instagram users spend the average of $65 per referred sale (that's $10 more compared to Facebook and $19 more compared to Twitter)
9. How do you improve your social media ROI?
Improving your revenue starts with social media optimization (SMO). In practice, this means spending money where you can get best possible results in return. Here's how to use your social media budget in a more efficient way:
- Don't rely on your gut feeling when choosing content to promote or put money behind all of your posts. Instead, be smart about using your budget. Use your social media management platform of choice to keep track of performance and selectively invest in posts with the biggest potential to drive results.
- Publish your content when your audiences are online and most likely to respond. This way, you'll maximize your chances to receive interactions and make the most of all the resources you've put into creating content.
- Look into the content your competitors are promoting, find out when, and how effectively to make more strategic decisions about which posts you should be boosting to be one step ahead.
You May Also Like
Nike vs. Snap Influencers: The Data View of the…
Nike and Snap (previously Snapchat) may not seem alike, but they have one thing in common and that's influencer marketing. What's a deciding success factor for any influencer campaign? It's choosing the right partner! In the case of Nike and Snap, the results of the two campaigns are entirely different, but one thing is clear. Aligning your brand with interests an influencers' audience cares about can create a lasting impact!
How to Ace Social Media Collaboration: An…
Managing social media is a complex process for any business. But it's especially complicated for enterprise brands who have multiple social media teams scattered across different offices all around the world.As a person overseeing your company's marketing activities, how do you bring all of these teams together and facilitate cross-department collaboration to reach targets?Read on to learn how to set up your social media teams up for success with hands-on social media collaboration tools and tips: