Social Media ROI

Your post on Facebook or Instagram received super high engagement, impressions and reach but you’re not sure what dollar value that brought to the company?

You’re not alone. If you’ve had difficulty measuring ROI on your social media marketing, know that it’s a common problem.

Most businesses measure engagement which includes the metrics Views, Likes, and Shares instead of conversions. These are valuable especially if your social media strategy includes increased exposure, more website traffic, developing fan bases, and generating leads. Looking at these alone however is not enough, as they don’t always connect with your overall business outcomes.

So how do you measure ROI from social media?

Leverage Google Analytics and Social Pixels

If you have a website, you should already have Google Analytics set up. From here, make sure you're using UTM parameters. These are custom URL's that enable you to track the activity of users from a specific post or advert. You can be as broad or detailed as you want, but it's a great start to assigning a value to your social media efforts.

You'll also want to make sure you have goals set up in Google Analytics. There's a whole host of goals or actions to track. For E-commerce it's a little more straight forward. You can link up platforms like Shopify with Google Analytics to see both the number of sales and the revenue. For a service based website your goals might be newsletter signups, phone calls, ebook downloads, people filling in your contact form, or bookings through your website.

Make sure that you install the Facebook Pixel. This snippet of code tracks Facebook users that visit your site, and those that converted after viewing your Facebook Ad (including those that didn't click on it).

Track your goal and assign a monetary value to this.

Again for E-commerce, it's relatively simple. If you have Shopify linked to Google Analytics, it will show through reports.

If you don't have them linked up to show the revenue, then you can always track the number of people going to the cart page and assigning an average sales value to that.

Here’s an example of tracking E-commerce revenue attributed to social media.

For services, you might be measuring the number of calls or people filling in the contact form. An easy way to put a monetary value against this is by looking at the lifetime value of your customer, divided by the conversion rate. Once they contact you online, how many of them do you convert to a customer? For example, if your average customer lifetime value is $300 and you know 1 in 5 people who contact you becomes a customer, then the value of someone filling in the form is $60 ($300/5)

Then calculate your investment

Here's some of the social media inputs to consider when looking at your investment.

- Your time (labour cost x hours per week/month/post/campaign attributed to social media).

- Your social media tools.

- Advertising spend. The amount you spend on boosting Facebook posts, split tests, ads etc.

- Analyse results and improve.

From the above steps, you should be able to work out the ROI per channel/campaign/promotion.

ROI = ((Benefits-costs) x 100) /costs

For example; you pay your staff $25 per hour to create the post, it takes 4 hours for the month and they use a scheduling program that costs you $20 a month. Your costs would then be ($25 x 4)+20= 120
You might only get one sale a month because of your social media worth $300.

ROI = ((300-120)x100)/costs = 150%

But remember

Avoid measuring your social media results in a silo. Social media is only part of your marketing mix and works more effectively when used in conjunction with other media.

Only looking at your financial ROI does not show the holistic, long-term effects of having social media. Social media marketing offers value beyond just looking at the financial return. Direct engagement with customers can also build and reinforce credibility, create brand awareness, and help consumers to find aligned values with your brand.