How to Measure your Social Media ROI

What is social media ROI?

Social media ROI is a ratio that calculates the net profit from your combined social media efforts. Simply put, it’s the end result of everything you do on social. Like any other business activity, you need to weigh the time/money you’re investing against the tangible benefits you’re receiving. In traditional contexts, ROI would only involve monetary sums (eg profit). However, depending on your business objectives, you may want to use other metrics to gauge your ‘return’ from social media. More on this to come.

Why do you need to prove social media ROI?

The very existence of a social media team is predicated on the assumption that a positive ROI is being (or will be) generated. Vague reasoning like, “in this day and age, every business needs social media marketing” just isn’t sufficient. The C-Suite wants to see measurable results. But, if your social media ROI is unclear, then your team’s contributions to the company are subsequently unclear.

So, as an SMM, if you feel overlooked by the C-Suite or have difficulties securing budget, proving your ROI could be the remedy to these issues. Additionally, calculating your social media ROI can uncover key performance insights which, in turn, can guide strategy, budgeting, and resource allocation.

All things considered, you should have a system in place to track social media ROI because it:

• Demonstrates the value of social media marketing to your company
• Proves that your social media marketing strategies are effective
• Supports social media budget requirements
• Identifies areas of your strategy that are particularly successful 
• Pinpoints areas of your strategy that aren’t performing well

In this guide, we’ll explore each of the above topics in depth and take you through the process of calculating your true social media ROI. So, without further ado, let’s dive in.

Conducting a social media audit

Before anyone else can understand why your social media endeavors are worthwhile, you, yourself, must understand. In this section, we’ll explain how you can use social media auditing to gain a deeper knowledge of your situation and performance. We know it’s tempting to jump ahead into the ROI framework— after all, that’s why you’re here. But trust us: this groundwork needs to be laid before moving on to ROI calculations. Do the groundwork now...you’ll thank us later.

What is a social media audit?

As the name suggests, a social media audit is a thorough assessment of your organization’s social media presence and performance. By compiling all your data “under one roof,” you’ll be able to pinpoint both strong and weak areas. Ultimately this enables you to improve your strategy and maximize ROI.

Consider this: the commonly cited “80/20 Rule” (also known as the Pareto Principle) holds that 80% of your results come from only 20% of your actions. To take this notion one step further, Intel’s Global Content Strategist, Luke Kintigh, observed that 10% of content drives 90% of traffic.

Now, let’s assume that the same phenomenon is occurring within your social media initiatives. How can you systematically identify the critical 10-20% segment that’s largely responsible for your success? It starts with an audit.

A social media audit will help you:

• Develop (or adjust) a social media strategy that aligns to actionable business goals
• Discover trends you can use to create or modify social media campaigns
• Receive valuable insight into customer sentiment and brand perception
• Justify social media spend and provide a look into what is or is not working

Now that we’ve covered what a social media audit is—and what it aims to achieve—let’s walk through the details of how to perform an audit.

1) List your owned channels

This first step may seem somewhat mundane, but it will help you stay organized and keep the bigger picture in clear view. Start by listing every one of your company’s social profiles including the handles, hashtags, and follower counts. Note the internal owners for each channel, as well as password/governance considerations.

Once you have the complete list, go through each channel and describe its primary purpose. For example, perhaps your focus on LinkedIn is lead generation, while Instagram is more for brand awareness. Also jot down what you know about your audience on each platform—the more descriptive you can be, the better.

Finally, take note of each profile’s “congruence” with the other channels. Is there consistency in the tone, imagery, branding guidelines, etc.? Or are there notable differences?

2) Review channel performance

Now that you have all the profiles side-by-side, begin assessing each channel’s performance as a whole. Look at the traffic you’re receiving, the current follower count, the follower growth rate, the number of mentions, and the number of shares. How does each channel stack up against the others?

B2C companies will want to pay special attention to their community/ engagement metrics. How many messages are you receiving? How many are you responding to? What’s the sentiment rating across your messages and mentions?

Another, more operational metric to assess is posting frequency. Is your posting schedule aligned with the best practices for each platform?

3) Review content performance

At this point, an overarching view of your social media “footprint” should be forming. The next step will require you to zoom in to a more granular level: content performance. This phase will likely form the bulk of your auditing time, as you’ll need to observe metrics at the individual post level.

The underlying question you should be seeking to answer is, “which specific posts and content pieces are performing best—and why?”

There are a number of different stats you’ll want to consider during your content performance review. Here are some examples to get the wheels turning:

• Best and worst-performing posts
• Posts with the most engagement (likes, shares, comments, video views)
• Audience (demographics and psychographics)
• Publish time for top-performing posts Posting frequency vs. performance
• Click-through rates (CTR)
• Post reach and impressions
• Sentiment
• Video views

This list isn’t exhaustive, but it should put you on the right track toward an insightful analysis of your posts. Then, when combined with your channel review, this data will help you understand your overall performance on a deeper level.

4) Review ad campaigns

If you’re running ads on social media, you should review your ad performance separately using the built-in analytics tools on each platform. You’ll want to approach this similarly to content performance (above), but with the additional considerations of ad spend, a/b test results, cost-per-click (CPC), cost-per-acquisition (CPA), and cost-per-mille (CPM).

When analyzing your advertising metrics, it’s important to keep your goals in mind. The goal of your ad campaign will determine which metrics you should be paying the most attention to. For example:

• If your goal is awareness, you should be looking at volume, reach, and amplification.
• If your goal is engagement, you should be looking at likes, shares, and comments.
• If your goal is website traffic, you should be looking at clicks and conversions.

Remember, the underlying question you’re addressing with all of this is, “What’s working well, and what isn’t?” Every brand’s social media presence will have relative strengths and weaknesses—it’s your job to define exactly what they are.

5) Competitor analysis

Up until now, the entire audit has been focused on your brand’s social media efforts. It’s time to turn the focus outward and size-up the competition. Since social media is an inherently public-facing medium, you have a great deal of visibility into other companies’ efforts.

Scan through your competitors’ social media profiles and take note of:

• How they are using social media
• How many followers they have
• How much engagement they’re receiving on their posts
• How they engage with their followers

Assessing your competitors will reveal how you stack up in comparison. You might come away with some inspiration for a new initiative—or perhaps you’ll discover some gaps you’d like to work toward narrowing. Either way, this is valuable information that can help you refine your tactics and strategy.

So, now you know how to do a social media audit. Now, do you:

1. Carry on working in the blind, cross your fingers extra hard, and hope for the best, or...
2. Do the work so you can improve and refine your strategy to make sure those potential leads haven’t forgotten you by tomorrow?

You’d be surprised how many brands seem to find themselves going with the first option. Instead of measuring, responding and refining, they just keep on keeping on. Eventually, that stops working.

This concludes the auditing portion of the guide. You should strive to conduct an audit of this depth at least once a year—although it would be beneficial to track key metrics (E.g. best/worst-performing posts) on a continuous basis. This will allow you to make adjustments accordingly.

Calculating your social media ROI

The first step in any ROI calculation is quantifying your investment. While that may sound straightforward, it can be quite multifaceted.

You need to factor in the salaries of social media team members, ad spend, content creation costs (eg freelancers, agencies, etc.), management/analytics tools, and even time spent by non-dedicated employees. As you can see, your ‘investment’ (in this context) needs to be thought of holistically.

Here’s an example of what a (monthly) investment calculation might look like:

That monthly investment total will then be used in the final ROI calculation, which is:

(Net profit / Investment) x 100 = Social media ROI

So, for the sake of demonstration, let’s assume your net profit from social media that month amounted to $10,000. Your social media ROI calculation would then look like this:

(10,000 / 31,000) x 100 = 32.3% ROI

Now, it’s important to note that we made a large leap when we assumed the profit figure. In many instances, the outcomes from social media do not produce a profit directly, so the calculation is not as simple. However, you can often determine your ROI by estimating the value of each desired outcome (also known as a micro-conversion).

Assigning values to micro-conversions

Throughout the customer journey, there are many “micro-conversions” that can take place between the first touchpoint and the final sale. Email signups, webinar registrations, and app downloads are all examples of valuable micro-conversions.

While these events do not yield an immediate profit, we can still attribute revenue to them. To illustrate this, let’s consider the examples below.

Example 1

Suppose you spent $1000 on Instagram ads which drive 90 webinar registrations. Your past data shows that your webinars have a conversion rate of 10% with customers spending an average of $200. From this, we can make the following calculation:

• $200 (average sale) x 0.1 (conversion rate) = $20 (value of a single registrant)

In this calculation, we’ve used what we know about your webinar performance to determine the approximate value of each webinar registrant ($20). So, returning to the Instagram ads, we can regard those 90 registrants as being worth $1800 (90 x $20). We can then go on to determine the ROI:

• ($800 net profit / $1000 Instagram ad spend) x 100 = 80% ROI

Example 2

Suppose you’re promoting a $200 product to your email list and you have a conversion rate of 5%. Similar to the webinar registrants above, we can conclude that each new email address is worth $10 ($200x0.05).

Now suppose that your primary goal on social media was to drive email signups in the month of March. You drove 700 email signups and your total investment in social media was $4000. From this, we can calculate:

• 700 (email signups) x $10 (new email value) = $7000
• ($3000 net profit / $4000 investment) x 100 = 75% ROI

These two examples are very specific, but they both demonstrate the same general mode of thinking. Notice how, by using conversion rates and average sale prices, you can arrive at an estimated value for a single micro- conversion. And, once you have that, the ROI calculation follows naturally.

Assigning values to micro-conversions is an effective method for calculating social media ROI—but it’s not applicable in every scenario.

Certain business goals, such as increasing brand awareness or customer retention, are far more difficult to evaluate with concrete dollar figures.

Nevertheless, the results are still valuable and can be regarded as a non- monetary ‘return’ from social media. Ultimately, what social media ‘ROI’ means to your business is entirely dependent on your objectives.

In the following sections, we’ll explore the different types of social media goals along with key metrics to measure your success. Then we’ll cover various benchmarking approaches to help you assess your social media ROI from a non-monetary perspective.

Business goals and metrics

To develop a true measure of your social media ROI, you need to relate your business objectives to your social results. Social media won’t be a valuable channel if you’re using it to boost brand awareness when your company’s biggest challenge is customer retention. So, when analyzing your performance, you should have a clear answer to the question: “What are our primary goals on social media?”

Let’s take a look at some common business goals paired with examples of corresponding social media goals.

Notice how each of these goals would be measured with an entirely different set of metrics. For this reason, identifying your primary goals is a critical piece of the analytics process.

Common social media goals:

• Drive traffic to your website
• Advertise a product/service
• Grow revenue (through signups and sales)
• Communicate with customers
• Increase brand awareness
• Run an awareness campaign
• Establish online authority

Choosing the right metrics

Once you’ve identified your goals, the next step is to select the appropriate metrics. Tracking the right metrics will help establish the connection between your social media activities and your goals. This, in turn, will allow you to clearly demonstrate how social media is contributing to your company’s business objectives.

Let’s start with the four main categories you’ll want to consider:

• Reach
• Engagement
• Conversion
• Customer Experience

Notice how these four categories align with the different stages of the marketing funnel. At the top, we have Reach, where the customer journey begins (eg brand awareness). We then move down the customer journey through Engagement and Conversion, ultimately ending at Customer Experience (E.g. retention and lifetime value (LTV)).

So, thinking back to your business objectives, which stages of the marketing funnel are your goals aimed at? If you have top-of-funnel goals, you’ll want to use top-of-funnel metrics. Likewise, middle-of-funnel goals will require middle-of-funnel metrics (and so on).

Now let’s take a closer look at specific metrics for each of the four categories.