Recent studies show that roughly 72% of Americans use social media for one purpose or another. With so many people connected, using social media for your business is a no-brainer. But when it comes to measuring ROI, how do you know if your social media campaigns are working?
If you’ve been looking for ways to begin measuring social media ROI, we’re here to help. Read on for a quick guide that covers all the necessary information for you!
What Is Your Social Media ROI?
ROI stands for “return on investment” and is a marketing term you can find everywhere. In short, it’s a measurement of how well your investments perform.
For example, if you pay a large sum for a marketing campaign, your ROI would show whether the investment was worth it. You can calculate how much you earned vs. how much you spent to see a profit. If your ROI is in the negative, you lost money on your investment.
Why Bother?
It’s easy to see why any for-profit business would need to see what their ROI is! Knowing how much you earned from an investment is crucial to keeping you in the black.
Additionally, you can see what sorts of metrics you should use later on. Was this campaign underperforming, or was it a massive hit? Knowing these details can help you decide whether you want to repeat the marketing campaign later.
How to Calculate
With social media, calculating your ROI can sometimes prove difficult. Primarily, this is because a social media marketing campaign can bring in things that aren’t necessarily profits.
A social media campaign might bring more attention to your site even without selling a single product or service. In total, this ends up being a great thing, as you have more potential customers!
But quantitatively, it can feel as if you’ve lost money without making any. Because of this, measuring everything against your investment becomes more necessary.
Measuring only your financial profits is tempting and much easier, but you won’t have the full picture. Look at how much your site traffic increased and any ad revenue you may have earned from the social media campaign.
You also should keep tabs on your analytics to see how many visitors converted. A thousand visitors who all left within a few seconds are effectively useless. A hundred visitors that all bought a product or spoke of the website to their friends is an incredible profit!
Finally, a high visitor count can help in your search engine optimization. With higher views and visitors, search engines will present you at a higher ranking than competitors. This alone can attract as many customers as any marketing campaign, making it profitable.
Quick Calculations
As far as a quick profit-and-investment calculation, it’s a simple division problem. Divide your profit by the investment and multiply by 100 to get the % of profit you’ve made.
For example, $5,000 in profit over $3,000 in investment turns out to be a 166.66% profit. Of course, this is a much more simple calculation than you’ll usually have.
Is Your ROI Too Low?
What’s a healthy and profitable ROI look like? You can assume that any ROI in the negative is drastically too low. A negative ROI means that you’re losing money on your investments and needs addressing immediately.
One good thing about social media ROI is that social media marketing tends to cost less than other methods. Purchasing a billboard, ad space, or a commercial can cost thousands. Social media campaigns often cost significantly less!
Social media ROI is also highly customizable compared to other methods. You can run an ad on Twitter or pay an Instagram influencer to promote your product. Facebook videos, YouTube promotions, Reddit advertisements, and more all count as social media marketing.
All that translates to meaning that your ROI for social media is likely to be higher than you expect. Many companies report ROIs well above 100%!
How to Increase Your ROI
If your social media ROI is too low, there are plenty of ways to increase it! Here are some of the best things that you can measure and how to improve on those categories.
Narrow Demographic
One issue you might have found during your measurements is that your demographic is too broad. You can measure this by checking what demographics are visiting your site. If your product favors young women of color in the United States, you may not benefit from white European males visiting your site.
In this case, work to narrow your demographic. Let your social media campaign focus on the demographic you’re targeting rather than throwing a wide net.
Working Content
Another great measurement to keep track of is how long people are staying on your site. Visitors who leave after your landing page loads aren’t doing you any favors. Check your analytics and measure how long people are staying and visiting your site!
To improve on this measurement, make content that draws your audience in. Videos, graphs, images, and other easily-consumed media are great. Giant walls of text on a white page will make anyone want to click away.
Frequent Posts
Your social media ROI is likely low if there’s nothing to see on your site. How often are you posting, and do people care about those updates?
You should update and post on your site frequently. That way, your social media campaigns are directing people towards relevant, fresh content. It also will give repeat customers something else to interact with!
Trim Down
Ultimately, a business is a business, and the best way to stop losing money on an investment is to stop investing.
If your social media campaign isn’t working, stop doing the campaign. Put that money towards other marketing that is more effective. If the campaign is being managed by a social media expert, consider putting them elsewhere in your company to accommodate them.
Measuring ROI and Social Media Impact
Measuring ROI for social media is difficult. There are dozens of factors that go into the full “return” on your investment, with financial profit only being one. Look into your analytics to measure social ROI so you can act when necessary.
For more information on measuring social media ROI and improving your marketing ROI, feel free to contact us to learn more!
