Social media can seem like the panacea to all that ills marketers today. Need to build brand awareness? Try social media. Hoping to increase engagement numbers? Try social media. Looking to promote a new product line? Try social media.
Does it really pay off, though? It can take time, money, and a lot of creativity to run a solid social media presence, and in the end, it can be tough to decide whether or not the social media return on investment is worth it to your overall campaign. As you begin to think about the true social media marketing cost for your company, though, it may help to learn how to calculate your ROI so you better understand whether this marketing strategy is working well for your business.
Isn’t There a Simple Way to Measure It?
There is a fairly easy way to measure your social media marketing ROI. You just subtract your investment costs from the value you get, divide that number by the investment costs, and multiply the entire thing by 100. As long as you hit more than zero, you’ve made some money. Hit a negative number, and you’ve lost money. The problem with that simple formula, though, is defining the value that you get. For most companies, understanding what that value actually looks like is fairly complex.
Defining Value
Exactly what defines the value of a brand? That depends a bit on your organization’s overall objectives. For example, if you’re trying to raise brand awareness, your numbers may look very different than they would if you’re working to have a direct impact on brand revenue.
In the world of social media marketing, the most common way to define value is to look at engagement, and for good reason. Engagement may not lead to direct conversions or have an obvious monetary value, but it does mean increased brand awareness, and that could lead to more actual sales down the road.
No matter what your goal is, value is directly tied to that, so start the process of understanding your ROI by defining the overall goal of social media for your brand. There is no single right way to use social media, but you have to understand why you’re there to build any real value.
Once you know your key metric, the next step is to set some goals that surround that metric. Maybe it’s downloads of your free ebooks. Maybe it’s contact form inquiries. Maybe it’s just customers @ing you in a post. It can help to make your goals specific to a campaign cycle. Looking at the bigger picture of your social media presence can be difficult, but looking at it on a campaign by campaign basis can help simplify some things.
After that, all that really remains is to measure your goals. Use Google Analytics to better track what you’ve hoped is working for your company.
After You Know What Value Looks Like
Once you understand what your measure of value might be, you can begin to look at the actual ROI of your efforts. It begins with a calculation of your costs. Don’t forget to include things like the actual cost of the tools and platforms you’re using to manage your social media presence as well as the more obvious costs like the ads, content creation, salaries, and consultant fees. Then you can use the formula above to look at costs vs value and create an ROI report that clearly defines the impact of your overall efforts.
Don’t Stop There
Despite the fact that you’ve defined value in one way, don’t forget that social media can have some added value that you may not be measuring. You can use your performance to mine additional data. You’re already looking at lots of potential measurements through your dashboards.
Typically, in addition to the information about the value of your campaigns, you can get a closer look at which types of content are performing best, where you’re getting engagement, how often you’re seeing that engagement, and what channel is really working for you. Mining that data can really add to the overall value you get from social media, so even if it isn’t quite meeting your original expectations, it may be offering you more than you think.
Understanding your ROI from social media hasn’t always been easy, and it may not be easy going forward. Fortunately for most, though, things are changing quickly. In a 2022 study by social media scheduling platform Hootsuite, over 80% of those who responded said they feel more confident than ever in the process of turning their ROI from ideas to numbers. If you’re ready to feel that confident in your social media work, there’s never been a better time to contact us.
