In a recent survey, 95 percent of small business owners said they plan to increase marketing. One of the most popular channels to target was social media marketing.

There are a few reasons social media is a popular choice for business owners. One, it often seems easy to do. Two, it can look quite cost-effective on paper.

You might wonder how social media marketing stacks up against other marketing channels. So-called experts seem to disagree. You might ask, “Does social media marketing really drive business ROI?”

The answer is yes, social media marketing can and does generate some impressive returns on investment. Here’s how.

Choosing the Right Social Strategy

The data about social media marketing’s effectiveness is mixed because people look at paid options and organic options together. In some cases, they may even be looking at organic alone.

This is more likely to lead to the conclusion that social media marketing isn’t effective. That’s because organic posts are much more difficult to get traction with. “Boosting” a post on Facebook often looks quite affordable, but you might as well be throwing money down the drain.

If you look at paid social media tactics alone, you’ll see a different story emerge. These ads tend to have more reach, and they usually drive better results.

You can’t make a sale if nobody sees the ad. As social media platforms have shifted their algorithms, they’ve devalued organic posts. That makes it much more difficult to reach your audience with them.

Paid social media is thus more likely to find the people who are actually interested in what you’re selling.

Choosing the Right Platform

Your business ROI will also depend a bit on which social media platforms you choose to use. Most marketers gravitate to Facebook and Instagram.

It’s easy to see why. Facebook is the largest social media network in the world. Instagram keeps adding impressive numbers of new users to its base.

You’ll need to remember your own audience, though. Instagram’s user base tends to be younger, so if your product or service is for seniors, you may not drive results. Facebook might be a better bet.

LinkedIn and Pinterest are two more options you’ll want to consider. LinkedIn is a great choice for B2B marketers. In fact, the platform drives almost half of all social media referral traffic on the Internet.

Pinterest is often forgotten by marketers. It’s responsible for a good deal of retail referral traffic. If you want to sell to consumers, Pinterest might be one of your best options.

By selecting the right platform, you’ll see a higher ROI for your social media campaigns.

How do You Measure Business ROI?

One of the most challenging parts of social media marketing is proving ROI. Part of the issue is the sheer number of metrics people follow to “prove” their campaign is generating ROI.

Are likes, shares, and comments really generating a return though? Some people might argue yes, if your goal is to get more likes.

Following these social statistics is okay for brands that are most interested in visibility or brand awareness. Most of the time, though, they don’t mean much at all. Getting likes might feel good, but it’s not driving sales or revenue for your business.

There are some other metrics you’ll want to take a look at if you’re trying to show the value of paid social media marketing. First, you want to look at conversions. How many people clicked your ad and bought something?

You can then look at the value of these sales versus the money you spent on the ad. Most often, you’ll earn back much more than you spent on the ad.

That’s the most direct measure of ROI on social media. You can also look at clicks, which tells you how many people are interacting with your ad. These people may not convert to paying customers immediately.

They are leads, though. If your goal is lead generation, then taking a look at how much interest the ad is piquing is a good way to measure ROI.

Sifting through Alphabet Soup

There are a lot of acronyms floating around when it comes to measuring ROI, but a few of them are quite important to know.

You’ll want to measure your return on ad spend, as mentioned. You can also then look at the cost-per-acquisition or CPA. CPA measures, on average, how much you spent getting each sale.

To find CPA, take your campaign budget and divide it over the number of sales you made. Cost-per-lead, or CPL, is similar. You’ll take the budget and divide it over the number of leads the campaign generated.

You’ll also want to track a few longer-term metrics, such as the lifetime value (LTV) of a customer. If you spent just cents on the dollar acquiring this customer, every order increases their value to your company. Average order value is another good metric to track, as it lets you see how much, on average, people spend when they order from you.

This can help you prove business ROI. If the average customer spends $100 with you, you can show these customers are worth reeling in. If you can also show that these customers are likely to return and spend more over time, their LTV increases.

Start Seeing Real Results

Social media marketing is still relatively new, which means marketers are still discovering how to make it as effective as it can be. Proving its effectiveness by measuring business ROI may seem like a trick, but it can be quite simple.

Are you ready to discover a better way to market your business on social media? Get in touch with the experts and stop funneling money into ineffective tactics. Social media can be more effective for your business, and the right team will help you drive the results you want to see.