Social Media ROI Guide

Measuring the effectiveness of social media marketing efforts isn’t as clear cut as a Good Adwords campaign for example. It can be difficult to tell how much revenue a Tweet you sent out the other day brought in, or if your latest Instagram post gave a boost to your bottom line. Truth be told, determining social media ROI is not easy.

Many businesses are having a difficult time grasping the financial impact social media marketing has on their business. A survey conducted by Convince & Convert found that 41% of companies said they had no idea whether or not their social media efforts were actually paying off.

To gain insights as to why companies aren’t measuring their social media ROI, we’ll need to look at a separate study. In a survey by Altimeter, they 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

All that said, measuring the effectiveness of your social media marketing efforts is not impossible. The issue is that many businesses get caught up in “vanity metrics” meaning, the number of followers on Twitter or Likes a Facebook post gets. These businesses forget that those numbers mean nothing in the grand scheme of things. If a Tweet is retweeted 200 times but is not helping you reach your overall goals, what is the point of the Tweet?

What is Social Media ROI?

If you ask several different people, you will get several different answers. If you’re looking for a “by the book” definition, the answer will depend on what your specific goals are. At its heart, social media ROI is what your company is getting back from the time, money, and resources you’re putting toward social media marketing.

In a perfect world, your return would be measured in terms of dollars. Because of this, you should know:

  1. How much money is going into your social media marketing efforts
  2. How much money your social media goals are worth

The first part is something you should be able to figure out relatively easily, it is the second part that it becomes more difficult.

Why Measuring ROI is Important

The reason a lot of companies get into social media marketing, to begin with, is because you simply cannot get away from it. It seems like everywhere you turn you hear stories of how different companies are “dominating” social media, and how it’s where your audience is, so you have to be active on Facebook, Twitter, Pinterest, you name it. But, unless you’re tracking what you’re doing, what’s being spent, and what kind of results you’re getting, it’s hard to figure out what’s working, and what’s not.

So why do you need to measure your social media ROI? Well, there are 3 reasons. Number one, you’ll see where you can improve your efforts and number two, you’ll be able to decide which social media channels are bringing in the most revenue for you. Lastly, the third reason of why you need to measure social media ROI is so you can see how specific changes impact your social media goals.

For example, let’s say you ran a Google AdWords campaign without stating goals or measuring and you 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. Does this sound like this type of campaign would be successful? Probably not. Unfortunately, this is actually what you are doing by not measuring your social media marketing efforts.

Set Your Goals

Before you are able to measure your return, you have to start by setting goals. Your goals should be things that you can attach a number to. Some good examples are email list sign-ups, contact form inquiries, purchases, and/downloads of a whitepaper or ebook.

Do you notice anything about the examples above? 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. To get the most accurate number(s) be sure to set your goals based on actions that convert a “window shopper” to a lead, and then finally, a customer. A user clicking a website link in a Tweet is good, but you have to know if they’re converting into leads for you.

Another important aspect is linking your goals to specific campaigns. Why is this so important? Because it will allow you to track individual links that you share on Twitter, Facebook, or other social media channels. Do this enables you to attribute visits from specific links you share. Creating these custom links is simple with Google’s URL Builder and what’s even better is that the information will be seamlessly included in your Google Analytics reporting.

Your Social Media Expenses

To determine whether you’re getting a positive or negative return on your social media marketing campaigns, you will need to measure how much you’re spending. Here’s what to include.

Man-hours: Not matter the size of your marketing team, whether it’s one person or 50, add up the man-hours that go into a specific social media marketing campaign over a specified period of time. Don’t view this data based on employee salaries as they will most likely be working on several different campaigns. Instead, measure investment on a per-campaign basis.

Content: Was the landing page created by a professional copywriter? What about status updates, maybe you outsourced these? Be sure to take these costs into consideration.

Social Media Tools: Are you using tools to help you manage your social media channels? Just like with the man-hours, you should factor these costs in on a per campaign basis. So for example, if your campaign lasts for one month, factor the cost of a month of the software rather than the entire year.

Ad Costs: Are you running a promoted Tweet, Facebook Ad, or boosting a Facebook post? Add in the cost of this as well.

Once you have your expenses calculated, you will be able to calculate your ROI for each social media campaign using this formula: (Earnings – Costs) x 100 / Costs

After reviewing the numbers, you will be able to determine which social platforms are doing the best for your company, and hone in on those. For those social channels that are bringing in negative ROI, you can adjust your budget to spend less.


Tracking your social media ROI is possible! You simply have to take a planned and well thought out approach. The more organized you are, the more accurate your numbers will be. It is important to note, while much of this post was focused on tangible line items, social media gives intangible benefits too like brand building. It could even give you the opportunity to earn natural backlinks from people who find your site through a Tweet, or Facebook post. While these don’t add up to a measurable amount of money, it is certainly something that you have to factor in when determining if social media marketing is working for your company.

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