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How to Calculate ROI for Social Media Marketing
ROI (Return on investment) shows how successful your marketing campaigns performed. When it comes to social media marketing, ROI can reveal which campaigns soared and which need improvements so you can continue to improve your strategies.
In the end, social media ROI is what a company receives in return for their time, money and resources invested in their marketing strategies. ROI allows us to track the financial impact of ad campaigns. This is calculated based on the benefits generated from our investment and the money invested.
Why Is ROI Important for Social Media Marketing?
Plenty of companies invest a lot of time and money to get more visibility on social networks. So, what’s the issue? Lack of measurement. If they don’t track the return on investment, they won’t know how their social media strategy is working.
Measuring ROI helps you:
- Understand which areas need improvement.
- Observe which social networks generate more income.
- Discover the actions that generate bigger impacts.
It’s also important to note that ROI doesn’t have to just focus on money. Since social media has a variety of metrics and campaign types, we can also measure ROI in terms of clicks, impressions, and engagement.
How to Calculate ROI
Before jumping straight into calculating ROI, as a brand you first need to decide what goals you are hoping to achieve when it comes to your campaigns. Only analyzing the number of impressions or how many people viewed your ad will not help you understand if you made money off this ad.
You must always consider KPIs (Key Performance Indicator) for measuring ROI as these metrics track and quantify the performance of your investment in social networks. By diving a little deeper into the analytics, you can discover key information that will help you continue to improve your ads and campaigns.
Social media ROI formula
This is the standard formula for measuring social media ROI:
ROI = VALUE OR EARNINGS FROM SOCIAL MEDIA – INVESTMENT/ INVESTMENT x 100
Social Media ROI Examples
Let’s take a look at a simple example. If you were to invest $1500 into an advertising campaign for Facebook and Instagram, and you made $2000 from this ad, then your profit here is $500 and your ROI would be 33%.
Any ROI value greater than 0 indicates that you saw a positive return on investment for that action.
Taking alook
How to Measure ROI for Social Media Marketing
Although you now know the formula to calculate general ROI, we can go even deeper to find information across the entirety of your social media profiles. First, let’s breakdown a few metrics that you can use
1. Metrics to measure social media ROI
The main data that you should consider to understand return on your investment is:
- Reach: Number of people who receive your content. The number of followers that you have on your social networks is very relevant for this metric.
- Engagement: What percentage of your audience is interacting with your content.
- Traffic: It tracks reference sources on your webpage and analyzes the traffic coming from social networks. It allows you to monitor the performance of your social media strategies and their impact.
- Conversion rate: The part of traffic that turns into real sale opportunities. It’s important to know the conversion rate on the different social networks so you can use it for a comparative analysis.
- Impressions: We can find out how many people see our content with this data.
2. How to monitor social media ROI
Define your goals:
First, you must establish your goals and what numbers you want to achieve, so you’ll know when you reach your objectives. Make these goals attainable and reasonable for your brand.
Analyze your KPIs:
These indicators will tell you whether you are meeting your objectives or not. Depending on your set of goals you will monitor different KPIs.
Use tools to monitor your social networks:
Nowadays, there are plenty of tools that analyze metrics and can assist you in monitoring your social networks. Metricool provides you with in-depth analytics about your social media presence with key information on how your content is performing, how your ads are working, and what platforms are seeing the most growth. You can also utilize free ROI calculators, such as Calculator.Net and Credit Karma to find your ROI easily.
Analyze costs and calculate ROI:
Analyze all the expenses incurred for your investment to make sure you really know all the money spent.
Once you know the costs, consider the effort involved towards your social media strategy and calculate ROI.
Once you have monitored your networks and measured ROI, you can introduce improvements to your social media strategies. Now it’s time to focus on your strategies and track their ROI. You will know if they have the success that you were looking for. You can also utilize this social media marketing guide for creating your winning strategy.
Measuring Social Media ROI with Metricool
Metricool’s Analytics allows you to analyze the most important metrics across all social media channels and advertising platforms. Calculate your ROI for both paid and organic content across all platforms, without needing to leave the platform. Plus, you can create detailed reports with all the important data in hand about how your efforts have performed in specific periods.
By creating your free Metricool account, you can analyze all your social media metrics in the same place and create and run social media campaigns for Facebook, Instagram and Google Ads. Upgrade to any Premium account and access advanced tools such as customizable reporting. So, want to take your social media game to the next level?