ROI, or Return on Investment, is a term marketers and business owners use to define how much money or engagement they are getting from their efforts. While traditionally “return” referred to a dollar amount, with social media marketing it can refer to a number of things.
In this post, we set out to explain the importance of social media marketing ROI and show how you can measure your own returns on investments in 3 simple steps.
1. Set a Goal
It can be hard to nail down a goal when it comes to social media marketing, because it is such a vast field and there are countless possibilities. But to measure your ROI, you have to start with something tangible. Some analytics that might guide you could be:
- Views to your website from social media (which can be tracked with Google Analytics)
- Likes or Retweets
- New followers
- Form fills or appointment requests
Obviously these metrics will come in different amounts and must be measured appropriately. For example, you may get 100 new followers a week, but only one appointment request. But by establishing a quantitative goal, you can start to measure your ROI.
2. Track Your Goal and Monetize Your Returns
This is the tricky part, and why marketers shy away from social media ROI. You need to track your goal and assign a dollar amount for each engagement. For example, let’s say we decide to track new followers on our Facebook page.
Facebook makes it easy to track followers because when you administer a page, you get a daily report of your follow count. To find the monetary value of each follower, compare it to a PPC (pay-per-click) campaign. According to Buffer, a Facebook page like averages to 50 cents a like.
Now, you can monitor how much your likes would amount to if you were paying for them. If we got 500 new followers a week, for example, that would equal $250 of returns.
3. Calculate Your Investment
Social media platforms are free, but we can all agree that our time is valuable. To get an accurate ROI measurement, you must establish how much time and money you spend on social media marketing.
To monetize your time on social media, multiply the amount of hours you spend managing your accounts by how much you make an hour. For example, if you spend 4 hours a week on social media marketing and get paid $50 an hour, your social media marketing time would cost $200 a week.
Add in any other social media marketing expenses you may have, such as scheduling tools and paid campaigns. All of these values equal your investment cost.
Now that you have all the data needed, you can use the simple equation:
ROI = (return – investment) x 100 / investment
Here is our example from above:
Return = $250
Investment = $200
ROI= (250 – 200) x 100 / 200 = 25%
Your result, because you multiplied by 100, will be a percentage. In the above example, we had a 25% return on investment. This is a good example of a positive ROI.
Unfortunately, not all ROIs will be positive. If you find that you are losing time and money on social media marketing, you may have to analyze your strategy and figure out what works well, hire an assistant (with a lower hourly rate) to help, or automate your social content.
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