Social media ROI is one of the most heavily debated topics in the online marketing world. Why? Because measuring the effectiveness of social media marketing efforts isn’t as clear cut as, say, running Google AdWords campaigns. It’s hard to tell how much revenue a Tweet you sent out last week brought in, or if your last Instagram post boosted your bottom line.
And judging by the numbers, a lot of businesses are struggling to grasp the financial impact social media marketing is having for them. In a survey from Convince & Convert, 41% of companies said they had no idea whether or not their social media efforts were actually paying off.
A separate study gives some insight as to why companies aren’t measuring their social media ROI. This survey looked at some of the specific challenges companies are having when it comes to measuring the value of their social media marketing efforts.
- 56% said an inability to tie social media to business outcomes
- 39% said a lack of analytics, expertise and/or resources
- 38% said poor tools
- 35% said inconsistent analytical approaches
- 30% said unreliable data
With that being said, measuring the effectiveness of your social media marketing efforts isn’t impossible. The problem is that most companies get so tied up in vanity metrics—like the number of followers on Twitter or Likes a Facebook post gets—that they forget those numbers are really meaningless in the grand scheme of things. What good is a Tweet that’s retweeted 500 times if it’s not helping you reach your overall goals?
It’s time to clear the air and do a deep dive into tracking the return you’re getting across your social media channels. In this post, you’re going to learn:
- What social media ROI really is
- Why you should be measuring it
- How to define your goals
- How to track and measure your goals
- Which tools can help you
What Is Social Media ROI?
You can ask five different people this question and get five different answers. The truth is the definition will depend on what your specific goals are. But at its core, social media ROI is what your company is getting back from the time, money and resources you’re putting toward social media marketing.
Ideally, your return would be measured in terms of dollars. That means you should know:
- How much money is going into your social media marketing efforts
- How much money your social media goals are worth
For most companies, the first part is easy. The second part is where things get a little tricky because it’s completely dependent on the goals you set. But don’t worry, we’ll cover both pieces of the puzzle.
Why Measuring ROI Is Important
Let’s be honest for a second. The reason a lot of companies get into social media marketing in the first place is because it’s mentioned on just about every website that has anything to do with marketing or business. You hear stories of how the top companies are “dominating” on social media, and how it’s where your audience is, so you have to be active on sites like Facebook, Twitter, Pinterest, etc. But unless you’re tracking what you’re doing, what’s being spent and what kind of results you’re getting, it’s really difficult to determine whether or not anything you’re doing is working.
Aside from avoiding wasting your time, you need to measure your social media ROI because:
- You’ll see where you can improve your efforts
- You’ll be able to decide which social media channels are bringing in the most revenue for you
- You’ll see how specific changes impact your social media goals
Imagine if you blindly ran Google AdWords campaigns and never checked how much you were paying per click, what kind of click-through-rate you were getting or whether any of the people who clicked on your ads were actually converting. Sounds like crazy talk, right? But that’s exactly what you’re doing by not measuring your social media marketing efforts.
Defining Your Goals
Like I mentioned, before you can get into measuring your return, you have to start by setting goals. Your goals should be quantifiable and linked to a specific campaign. In other words, they should be things that you can attach a number to. Some good examples are:
- Email list sign-ups
- Contact form inquiries
- Purchases
- Downloads of a whitepaper or ebook
Notice how all of these goals are based on the user taking a measurable action that can be tracked. Specific social media actions like social shares and followers are nice to track too, but they shouldn’t be your main goals. In order to get the the most accurate number, you really want to set your goals based on actions that convert a casual browser to a lead, and ultimately a paying customer. Someone clicking a link to your site in a Tweet is great, but you shouldn’t stop there. You have to know if they’re converting into leads for you.
The second part that’s important is linking your goals to specific campaigns. This is where a lot of marketers miss the mark. A campaign is a planned out effort that has set goals and a measurable outcome. Here are some awesome examples of social media campaigns to get your creative juices flowing.
One of the most important reasons you want to set up campaigns is that it will allow you to track individual links that you share on Twitter, Facebook or other social media channels. That way, you can easily attribute visits from specific links you share. You can set these links up through Google’s URL builder, so the information will be included in your Google Analytics reporting.
And that brings us to the next step, which is tracking your goals.
How to Track and Measure Your Goals
Once you’ve defined your goals, the next step is to track them. The tracking part is why it’s so important to set up goals that are based on your visitors taking action.
The easiest way to track your social media goals is by using Google Analytics.
From your Google Analytics dashboard, go to Acquisition > Social > Conversions
If you don’t have any goals set up, you’ll be prompted to create one. Click on “Set Up Goals”.
This is where you’re going to set up the goal you defined earlier. If your goal was to get newsletter signups, you’ll have to setup a special thank you page on your site for after someone subscribes. But if your goal was to increase time on site for Twitter users by X%, or to get traffic from Facebook to watch a video on a landing page, you’d choose the appropriate goal type. For this example, we’re going to set our goal type as a destination page.
For this part, you’re going to enter the actual destination URL that you want to trigger a conversion. Make sure this page is not indexed in Google, so that the only way for someone to land on it is by going through your email signup process. Otherwise you could potentially mess up your data.
Then, you have the chance to attach a value to each conversion. To figure this out, you can use:
- Lifetime value x conversion rate: Calculate the lifetime value of a customer, and multiply that by your conversion rate (average number of email subscribers who become customers) to find out what the potential value of each visit is.
- Average sale: If the goal of your campaign is to try to get sales, then you’ll want to calculate your average sale amount and set that as the value. In this case, your destination page would have to be the page that shows up after a customer completes a purchase.
Lastly, if you have a specific funnel that you created, you can set that up here too. After you have everything completed, you’ll be able to see your conversions and the actual amount earned from those conversions. It’ll look something like this (except you’ll only see the results from social media traffic).
Your Social Media Expenses
In order to figure out whether you’re getting a positive or negative return on your social media marketing campaigns, you’ll also have to measure how much you’re spending. Here’s what should be included in that number:
- Man-hours: Your time is valuable. Whether you’re a solo-preneur, or you have a social media team, add up the man-hours that go into a specific social media marketing campaign over a specified period of time. Don’t just use an employee’s annual salary, because they’re more than likely going to be working on several projects throughout the year. Measure this investment per-campaign.
- Content: Did you get a landing page written by a professional copywriter? Or maybe you outsourced status updates. These costs are easy to overlook, but they count.
- Social media tools: Using Facebook and Twitter is free, but if you’re using a tool like Sprout Social or other social media management software, you need to add those costs in. Just like with the man-hours, you should calculate this on a per-campaign basis. So if your campaign lasts for one month, only add in the cost of a month of the software, not an entire year.
- Ad costs: If you’re running a Promoted Tweet, Facebook Ad or boosting a Facebook post, add in that cost as well.
Once you have your expenses calculated, you’ll be able to calculate your ROI for each social media campaign with this simple formula:
(Earnings – Costs) x 100 / Costs
You can figure out the specific ROI of each social media site by segmenting your earnings and costs per social channel, and using that same formula above. After looking at the numbers, you’ll be able to decide which social platforms are doing the best for your company, and focus in on those. For any social sites that are bringing in a negative ROI, you can either try to adjust by spending less, or by making your campaigns more effective.
Tools To Help You
You probably noticed that you don’t have to use a ton of tools to do this. We’re keeping it lean! Here’s a quick recap of the tools I’ve mentioned:
- Google Analytics: To track your campaigns and goals
- Google URL builder: To assign trackable links for your campaigns
- Sprout Social: To schedule your social media posts
- Customer LTV Calculator: To calculate the LTV of your customers
Tracking Social Media ROI is Possible!
As you can see, tracking your social media ROI isn’t impossible. You just have to take a planned and strategic approach. The more organized you are, the more accurate your numbers will be. And as you start to create multiple campaigns, you’ll be able to fine tune your numbers, like the LTV of a customer and your expenses.
But one thing that you should also keep in mind is that social media gives intangible benefits too like brand building. Or even earning natural backlinks from people who find your site through a Tweet, and deciding to link to it on their own site. That might not add up to a measurable monetary value, but it’s definitely something that you have to factor in when determining whether social media marketing is helping your company.
What are your thoughts on social media ROI? Do you measure it? Let us know your experience and drop a comment below!
The post Ultimate Guide to Measuring Social Media ROI appeared first on Sprout Social.
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